Employee Retention for Customer Service
With revenues under pressure and cost-cutting measures moving to the forefront, the next few years are likely to be difficult for bank employees. Managers will have to work hard to maintain employee morale – particularly for tellers – in order to continue delivering the customer service levels required in a very competitive environment.
Some lessons in employee morale-building can be learned from Fulton Financial Corp., a $16-billion holding company with six affiliate banks based in Lancaster, Penn., that is known in the industry for its high employee retention rates – and particularly the longevity of its officers. In the following interview, Senior Executive Vice President/Community Banking Craig A. Roda, himself a 33-year veteran of the bank, explains how Fulton Financial works to keep its employees happy and productive and how this translates into good customer service. The company ranked fifth in the mid-Atlantic region in the J.D. Powers 2011 Retail Banking Satisfaction Study, with an overall score of 785 compared to the regional average of 743.
Q: Compared to its peers, does Fulton Financial have a low employee turnover rate and a high tendency to keep people in place?
Roda: I don’t think any of our peer group really publishes their turnover ratio, so for me to opine whether or not we’re doing better or the same would be out of line. I can tell you, though, that Fulton Financial’s overall retention for 2011 was 84%, and we are very proud of this number.
The other thing I think is really important is that many of our competitors have done a lot of big mergers and acquisitions. In the wake of that, they have gone through efforts intended to reduce large numbers of staff to get more efficient and lower their cost structure. Obviously, we have not had to do anything of that magnitude so we’ll probably look a little bit better than some of the larger banks.
Q: Are you including tellers in your 84% retention rate?
Roda: That’s our overall retention rate. Our non-exempt rate, which encompasses hourly wage employees such as tellers, is 80% and the retention rate for our exempt, or officer-level employees, is 91%.
Just to clarify, our non-exempt employees represent a lot of different positions throughout the organization beyond tellers. We have a lot of people in the back room who support our operations area, deposit, accounting, etc., so it’s throughout the organization, taking all hourly wages into consideration.
Q: What specific policies do you have in place to encourage those very high retention rates?
Roda: I think the main reason for this high retention rate is the corporate culture of our company. Our core values of consistency, integrity, teamwork, respect for the individual, good corporate citizenship and caring and compassion have not changed and have been in our mission statement for many years, and they provide the foundation for everything that we do. These core values help create a positive environment for our employees and for our customers.
The other thing I think is really important is our Customer Promise, which is actually also an “employee promise.” It’s a focused initiative that we started a number of years ago and it says that we will “Care, Listen, Understand and Deliver.” We firmly believe that same promise applies to our interactions with our internal customers – our employees – because if our employees don’t have positive experiences when dealing with their co-workers, supervisors and management, then it will be difficult for our employees to embody these principles when they are serving our customers. It’s the old “Do unto others” philosophy.
So, we’ve been very committed to making sure that we continually measure how our employees feel about the organization. We do employee engagement surveys every single year. About every three years, we also do a comprehensive employee opinion survey that compares our results with a national norm based on banks our size. We generally rate very highly compared to the national norm when they do those studies.
The other thing I think that’s very important is that every time we do that study, we look back at the previous study from three years earlier and see if we improved or declined compared to the national norm. There are 12 major areas of focus, and if we fall below the national norm in any of them we require the manager in that area to come up with an action plan to improve for the next survey.
Q: So, clearly, you do believe in the connection between employee engagement and customer engagement?
Roda: We’ve always believed in that and have come up with additional benchmarks to measure that. For example, we have a score card of performance metrics for the CEO of each one of our six affiliate banks – these metrics extend to the branch manager level on the retail side. The performance metrics really include any employee who has management responsibility, whether it’s a branch or back-office department.
Q: Do you see a statistical link then, between your efforts to maintain satisfied employees and your customer satisfaction rates?
Roda: We actually do. Our customer satisfaction index has always, in our opinion, scored very highly compared to industry averages. And, I can tell you, that’s also part of the score card that I referred to. How well our employees feel about the department they work for, or the manager that they work for, and their overall opinion about the organization is inter-linked with how the customer feels about doing business with our company. When employees feel good about where they work and who they work for, they have a lot of pride in the organization and it shows to the customer.
Q: What about tradeoffs? While good retention may provide your organization with consistency, it would seem to work against bringing in fresh blood, new ideas. How do you balance that, particularly among the officer ranks where you have 91% retention?
Roda: I think your assumption there is that, whenever we have open positions, we only promote from within, and that’s not an accurate description of our company. When a position is open and we don’t have an internal candidate, for whatever reason, we look externally to see what is out there in the form of talent. We’ve also made a lot of acquisitions over the last 25 years and many employees who joined us as a result of an acquisition are in leadership positions today. So, we kind of balance it both ways.
I’ve been with the organization 33 years and started with our management training program. Today, we still actively go out to college campuses across the Mid-Atlantic states and each year generally hire anywhere between 10 and 14 young men and women to join that program, which is part of our way of renewing and bringing in fresh ideas.
In addition, we have a leadership training curriculum that we started a number of years ago, where we look at the senior management level and identify the next group of leaders in the organization and set aside some time for them to do strategic projects that we feel are important. That’s across the entire company and encompasses all of those individuals that we acquired from other banks.
The industry is changing so much today, with customer preference and regulatory issues, that we all need to be flexible and ready to change. Sometimes, it’s helpful to be able to approach new challenges with a team that is already accustomed to working together successfully. Change is required of everyone, and new ideas have to come forth to be able to meet the new demands, but sometimes there’s a benefit to doing that with people who already view themselves as a team.
Q: A really hot industry topic right now is the configuration of the branch of the future, both in terms of design and staffing. Many industry pundits are suggesting that big cuts are in store for branch networks. What are your general views on this issue?
Roda: First of all, one of the disciplines that we’ve had in place for many years in our organization is for our CEOs and heads of retail banking in each region to evaluate the profitability of their branches and develop an action plan to improve those that are not as profitable over the next two years. If they don’t improve, we do make tough decisions to consolidate and close. We’ve closed a couple of branches this year for this reason. By the same token, we’ve pursued some opportunities in some really good markets to expand and build new branches.
Now, we’re not building as many branches as we did in the past because of the economy, capital requirements, etc., but we’re still doing some new ones. This year, our plans call for us to open six or seven new branches throughout our five-state footprint.
As for the configuration of those new branches, we know that the business is changing; every 10 years or so there’s a new generation that does business differently. But, we’re finding that, while people may not be in the branch as often as they were ten or 15 years ago, they still come to the branch, even though they also use online or mobile banking. The customer expects to be able to go into the branch, just not as often. So, we’ve got to make sure we still provide that service.
We’ve recently developed a new prototype for our branches – it’s an environment that is very different from the one we had just 10 years ago. Our tellers are more consultative. In fact, we don’t really call them “tellers,” they’re really “customer service representatives” who are using automated means of cashing checks and making deposits. While they’re talking to the customer, they are able to pull up a computer screen and talk about some additional services while the automated computer is taking care of the deposit or dispensing the cash. We just deployed that, a little over a year and a half ago, and we’re taking it to selected markets.
Our newer branches are also smaller in scale. They go from 1,000 square feet, on up to a large hub that may have 3,200 to 4,000 square feet. In those hub branches, we now place safe deposit boxes that customers can access by their palm prints, so it’s self-service – no employees required unless the customer has a question or issue.
Those are the kinds of concepts that we’re starting to use. Even so, some of our markets are still pretty conservative, where people want to go up to a teller and hand in a deposit. So we look at each market and try to understand what type of concept will work there. I would say that the skill set in some of our newer markets, which are more in tune with doing things electronically, is a little different from some of our more traditional markets, where they still want the “old-fashioned” transaction to some degree.
Q: On the issue of staffing, some banks like Umpqua are using what they call “universal associates,” who can perform any function in the branch and be shifted around as needed. Is that part of your model?
Roda: Yes, those are the customer service representatives I mentioned earlier. They typically stand behind a teller cash recycler machine and if the customer wants a more complex transaction, they can walk them to another closed or private area. They’re cross-trained to do everything in the branch.
We still have branch managers, but our model is different from a lot of competitors in our market in that our branch managers are decision makers. They are able to make a decision for a customer; they have lending authority, whether it is for a small business loan or a consumer loan. They can also waive fees. Branch managers who work for many of our competitors don’t have that authority – somebody somewhere else makes those decisions.
Looking down the road strategically, we don’t expect our approach to change. Employees who live in the markets where they work, who are involved in their communities, and who have the decision-making authority to take care of their customer – that’s what community banking is all about.