What Do Your Employees Need To Learn And What Will It Cost?
BY KAREN EPPER HOFFMAN
Of all the rules and codes and acronyms hurled at new hires, ROI is top of mind for institutions investing in training. Trainers pursue the business cases for a range of third-party and Web-based options.
Institutions are challenged by the need to cost-effectively provide front-line employees with the necessary technical training, regulatory expertise and customer service savvy. Some banks build up their internal training capabilities, while many more are turning to third-party training companies to provide both tailor-made and off-the-shelf solutions. Underlying it all is a focus on developing criteria and measures to cost-justify investments.
Today’s new hire can expect to have his head filled with a blizzard of rules, regulations and codes that his financial institution employer deems essential to be considered “trained” for the job. But of all the acronyms hurled at the new employee, ROI is the one likely to be top of mind for management.
Training is seen as a critical instrument for transforming new hires into the types of frontline employees banks need today. While training executives agree that training cannot necessarily fix bad hiring decisions or overcome other internal failings, bank Human Resources (HR) executives are convinced that well-targeted training programs can directly impact how employees view the bank and how they reach out to customers.
“Training allows you to take the satisfactory employee and knock them into an outstanding employee,” says Brian Townley, senior vice president and human resources director for Gatesville, Tex.-based National Bank. “We want to give them the knowledge to be very, very good at what they do.”
The training path today, then, involves much more than the traditional two-week immersion in products and basic operational procedures. Competitive pressures are forcing banks to vie more aggressively to retain and win deposit and loan accounts, so sales training is on the rise. Additionally, an increased emphasis on compliance and security issues is forcing those same tellers and platform personnel to become steeped in the applicable rules and regulations (see “The Front Line As The First Line of Defense”). Mergers and acquisitions further complicate training matters, since training departments need to significantly step up their timetables and approaches to accommodate “new” employees.
Different banks are taking varied approaches. Some banks that focus especially on customer service favor their own internal bank “universities” (see “In-House Training Cultivates Service Culture,” pg. 22). A more common approach is to seek outside help from third-party training companies and learning management systems. These outside developers can design custom programs focused on institutions’ specific needs. They can also provide off-the-shelf programs to teach compliance, security and technical training, issues that demand consistency and timeliness.
Even as they devote more resources to training, executives want to know that they’re getting their money’s worth. An increasing number of banks are looking at the business case and the return on investment behind each new program and approach to training. Depending on the priorities of the individual bank or business line, training departments are becoming more sophisticated about gauging the potential effectiveness of a training course and then tracking its payback in terms of reduced costs or increased revenues for the bank.
“I don’t know if the position of teller or customer service representative is any more important today than before,” says Mike Vantrease, senior vice president and learning and development manager for Bank of the West in San Francisco, who has himself spent 20 years on the front line and managing branch and call center positions. “But one of the things we’re attempting to do is align our training activities more closely with the needs and objectives of the organization.”
Meeting Business Goals
Jobs of tellers, branch salespeople and even call center representatives are undeniably more complex than they were 10 or 20 years ago. These front-line jobs require more technical expertise and an expanded skill set to satisfy the new demands related to sales and compliance. Combine those requirements with the high turnover ordinarily seen in these entry level jobs and bank trainers have their work cut out for them.
Bank employees have always required more training than is commonly found in retail services. Linda Eagle, president of The Edcomm Group, a New York City-based training company with more than 200 bank clients, says customers who are selecting a CD or mortgage or even opening a new deposit account typically require more support than if they were at a clothing store buying a blouse; the relative knowledge and helpfulness of the staff makes a much bigger difference.
“In banking, training is the only way that management can really encourage its people to meet the business goals of the organization,” Eagle says. She adds that in recent years the average retail bank customer has gotten more sophisticated and expects a higher level of professionalism and knowledge.
This balance of technical aptitude and customer service is not always easily achieved by banks, who are motivated (and trained) to control risk, says Theo Moumtzidis, vice president of the retail banking group for First Manhattan Consulting Group of New York City. Banking is one of those industries (along with health care and airlines) that tend to rank at the bottom of most consumer surveys focusing on customer service.
“It’s been easy for banks to fail on service, because they’re so focused on risk,” Moumtzidis says. But in today’s more competitive environment, he adds, banks are “giving more attention to the customer experience... and the whole human resources function behind that.”
Some weaknesses in bank training emerged in recent research by BAI entitled “The Frontline Experience.” While the study “gives banks high marks on the essentials like professionalism,” it shows that banks are not nearly as adept at cross-selling, according to Paul McAdam, senior managing director of research at BAI.
Case in point: 63% of respondents to BAI’s survey said the bank representative who opened their checking account was professional, but only 38% of customers were asked if they were interested in any of the other products the bank had to offer. Further, McAdam says, front-line people, “who are having trouble trying to dialogue with customers,” would benefit their organizations more if they could do a better job of identifying the various types of customers who come into the bank, based on their relationship with the bank. (In its study, BAI Research categorized consumers into five distinct segments. For more on this research, please see www.bai.org/bankingstrategies/2005-nov-dec/cover/index.asp).
A Little Outside Help
With the stakes raised for training, banks are looking to outside parties for help. Banking industry-specific companies such as Bankers Training and BankersEdge, and more broadly focused trainers like the Edcomm Group and S4 NetQuest, typically provide support in two distinct ways. They develop custom programs for financial institutions geared toward meeting specific training needs or they provide off-the-shelf training modules that are best suited to providing education in areas such as compliance or security or technical skills, where the consistency and timeliness of the knowledge is key. It also tends to be similar across various institutions.
Given the rapid changes in regulatory rules and the heightened concerns surrounding identity theft, it’s no surprise that training companies say that compliance and security courses are their biggest sellers, especially those trainers who focus on e-learning courses or Webinars. Web-delivered programs can be more easily divided into modules that can be used separately or incorporated into other training.
“Bankers are looking to external training as the best way to get consistent training and to get the depth and breadth of information provided with accuracy and sophisticated technology,” Eagle says. “It doesn’t pay for most banks to build this themselves.”
Many bankers agree. Bank of the West is working with Edcomm on developing an online teller training course, according to Vantrease. Puerto Rico-based Banco Popular, which has worked with Edcomm on sales and service training for its personal bankers, is planning to work with the company on developing custom training for its tellers and call center representatives, according to Lynn S. Crawford, senior vice president for learning and leadership at Popular’s Chicago-based U.S. subsidiary.
BVS Performance Systems, a Cedar Rapids, Iowa-based provider of online training products and services, supplied Banco Popular with its compliance training. “We realized that within the bank’s learning and leadership department, we lacked the technical expertise to put our training online,” Crawford says. While less than one-quarter of the company’s employee training is now done online, that percentage is growing, she says. “The outside companies are wonderful at this.”
By offering a combination of online and made-to-order programs, many training consultancies are covering different subject matter and offering a blended approach that meets the needs of different learning styles as well. “People all learn differently. One person’s going to be great in a classroom, and another person will do better one-on-one or online at their own pace,” says Jean Dunaway, senior managing director for Bankers Training. (Bankers Training is owned by Chicago-based BAI, publisher of Banking Strategies.) Among its projects in development is a set of tailored courses, including a compliance “boot camp,” for McLean, Va.-based Capital One Financial Corp.
Even Roseburg, Ore.-based Umpqua Holdings Corp., which favors internal training, has started to use more Webinars. Umpqua has worked with some outside trainers on developing custom courses for front-line employees on communication and dealing with difficult customers, says Barbara Baker, exective vice president for cultural enhancement and human resources.
Mary Navarro, senior executive vice president for retail training at Huntington Bancshares Inc., worked with S4 NetQuest (also of Columbus) to develop customized training for the bank’s personal branch bankers. Navarro describes it as a work in progress. “We’re kind of in the middle of where we need to be,” she says. One of the ways she hopes to propel the bank is by “looking into more vendor arrangements and less do-it-ourselves.” She says she’s found from her experience with S4 NetQuest that it’s often more efficient to have an outside provider develop a training program than to commit the resources in-house.
The Big Payback
Whether a bank is committing its training resources to developing programs in-house or hiring an outside firm, bottom-line pressures and a cross-industry insistence on more measurement are forcing training departments to analyze more carefully what the bank is getting in return for what it spends.
In other words, if a bank offers a course to its tellers on cross-sales, training departments are being pressed to offer results on how many more products (and what specific kinds of products) were sold as a direct result — and, to go a step further, the actual financial return on investment from that specific course. Some banks not only measure a program’s ultimate effectiveness after the fact, but also build a business case for its potential before the course is even developed.
There’s a defensive aspect to this. Wendy Hirsch, a consultant with Mercer Human Resources Consulting in Milwaukee, Wisc., notes that training is one of the first areas to get cut when a bank needs to reduce its budget. By having hard numbers available, human resources can “protect the programs they know really make a difference,” says Hirsch. “Banks are much more quick to measure... and focus on facts to figure out what policies and practices are working.”
Bolstered by the growing emphasis on measurement and with support from data-rich human resources systems from solutions providers such as PeopleSoft and SAP, organizations have become much more precise in their ability to quantify the impact of training. Hirsch says these organizations will review a host of comparative data that isn’t restricted to employee retention, for example, but might also include dispersion of pay, degree of supervision and general information on unemployment.
So important has measurement become, experts say, that it’s no longer a question of whether or not institutions should gauge the effectiveness of their programs, but more how they should measure it.
Many bankers and consultants say the measures that matter are the ones that have significance to that particular organization. Jim Guikey, president and chief operating officer of S4 NetQuest, says, “We promote measurement from the outset... but it all comes down to what the client believes is important.” For example, he says, S4 NetQuest’s client Huntington Bank subscribed to the idea that growth in checking accounts was a critical measure for the bank. Being able to show that Huntington employees who took S4 NetQuest’s training sold or maintained 50% more checking accounts than employees who did not was therefore a meaningful measure to the bank.
Questions or comments about this article? Post them at the Banking Strategies blog.
Ms. Hoffman is a freelance writer based in Poulsbo, Wash.