ABA Banking Journal - October 2009 - (Page 42)
BEST PRACTICES—HR Make entry-level hiring How to reduce turnover and build a great bench for the future using effective recruiting an asset anking is a great fit for thousands of new college grads every year. Credit analysis, loan operations/servicing, loan origination, branch manager trainee programs, customer service, and personal banking all offer great entry points for the right candidates. Yet, in talking with bank executives, we know there is a pretty significant level of angst related to hiring college grads to fill entry-level positions. That’s not surprising. Entry-level hiring is tricky—from how to recruit college grads to the cost of training to finding the right fit. The downside of a poorly designed program is turnover, and turnover is expensive. How expensive? If you add together recruiting and training costs from the original hire, new recruiting and training costs to find a replacement, lost productivity from the position being unfilled, administrative and other costs, it is commonly believed that the total cost to replace an employee is equal to two to three times their annual salary. Now, consider the following example. Say you hire ten trainees per year at an average salary of $40,000. Assuming a replacement cost of two times the annual salary, if you experi- By Robert J. LaBombard, CEO, GradStaff, Inc. The author has over 25 years of experience in the chemical, environmental and staffing industries. GradStaff, which provides outsourced college recruiting services, serves clients in a variety of industries, with heavy emphasis on financial services. email@example.com 42 OCTOBER 2009/ABA BANKING JOURNAL ence 30% turnover in the first year, your total cost to replace exiting employees will be $240,000. At 50%, the replacement cost rises to $400,000. Larger regional and national banks hire hundreds of new college grads every year. Using the metrics discussed above, turnover is costing many institutions millions of dollars. Some executives will say that they factor attrition into their recruiting programs. While some attrition is obviously inevitable, if turnover in the first year exceeds 10%T AKEAWAY A common mistake is to 15%, this strategy develop a candidate profile that is akin to adding oil to your car’s engine identifies too many desired every week in lieu attributes. The more you look for, of fixing the leak. In short, you’re the less likely you will find the wasting resources. perfect candidate. Typically each Based on the position requires three-to-four cost of turnover, many small and essential attributes. mid-size banks have opted not to hire at the entry-level. They prefer to have larger banks train for them and then hire away trained people after working elsewhere for two to four years. While managers should be opportunistic in hiring experienced people, over-reliance on this approach can be costly. This will become apparent when banking professionSubscribe at www.ababj.com
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