HOW ARE YOU HANDLING THE STAFFING CHALLENGE?

The Headache: With many banks facing lower revenues and the costs of many factors of running a bank heading up, some tough decisions have to be made these days. Often it's hard, but some banks come out the other side of the process with improved outlooks.

Our Question: How has your bank reorganized its staff or revamped its approach to staffing?

Has your bank reorganized its staff? Has your bank reduced or revised staff?

Banks face financial pressures, and in a series of questions we asked prescribers how they have been addressing them through repricing, diversification, and staff reorganization. Repricing was covered in the previous Aspirin. This column provides answers prescribers gave about staffing.

And if you would like to join our regular list of "prescribers," to whom we send questions, please email This e-mail address is being protected from spam bots, you need JavaScript enabled to view it today.

Let's hear your views and ideas below! (Editorial Note: Contributions to Pass the Aspirin may also appear in our print edition. While we will ask for your e-mail address, this is only as an aid to verifying identity and will not be used for any marketing or promotional purpose. The e-mail address will not be published.)

Laurie Stewart, president and CEO, Sound Community Bank, $355.1 million-assets, Seattle, Wash said:

When the recession finally reached Northwest Washington we tried to put our head in the sand for a little while. But then we realized we were truly going to consummate our first foreclosure in 17 years. So about 24 months ago we decided that it was no anomaly and we had better get organized for a new reality. So, we took a hard look at how we were organized and at the silos that had developed over the boom years.

We first focused on managing growth without discouraging sales and new business. Then we carefully flattened the organization and looked at similarities in functions instead of differences. We had become organized around specific product lines and as a result had many jobs that were "similar but different" and required a layer of management.

We have not yet achieved all opportunities identified about 24 months ago, but we are much closer to a more ideal organization. The advantages were not just cost savings. We created an environment where employees have more opportunities to learn about different facets of our business.

Some examples:

* A processor could learn to process and close all product lines.

* We made our lenders full members of the retail branch teams. Instead of just "renting" space the resident lender answers phones and helps with opening and closing procedures . While lending is the specialty and the lender and branch manager report differently, they identify themselves as a branch team vs. lending and retail.

Overall, senior management became more connected to the front-line functions across all product lines and now it is our culture to question how we can do something more easily.

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October 12, 2012
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Stacey Bentley, Cedar Valley market president, Community National Bank, $228.4 million-assets, Waterloo, Iowa. said:

Fortunately our staffing has remained stable over the past year and a half. We had went through a major reorganization in January 2009, eliminating almost 15% of our employees, which equated to approximately 15 positions. Job duties were reassigned and team members took on additional responsibilities. While it was a difficult situation at the time, in hindsight it was a positive move as it forced us to take a hard look at all positions and job descriptions and work more efficiently as a company. Following the restructuring, we reviewed our business plan and profitability, indicating the need to close one bank branch and three supermarket branches in 2010.

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October 12, 2012
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Daniel C. Yates, president and CEO, Brattleboro Savings & Loan, $179.2 million-assets, Brattleboro, Vt. said:

	Our teller lines are now staffed primarily by part-time employees, with full-time supervisors. This allows us to ensure the busy times of the day are covered without having to swell the ranks of full-time staff, saving us money on wages and benefit expenses such as health care.
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October 12, 2012
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John Bothof, president, Northwest Bank, Omaha, Neb. said:

	As a result of the changing economic conditions and regulatory oversight, we have taken advantage of the retirement of two specialty lending functions within the bank and hired new personnel who have broader coverage in all areas of commercial banking.
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October 12, 2012
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Charles Funk, president and CEO, MidWestOne Bank, $1.7 billion-assets, Iowa City, Iowa said:

Our company is the product of a 2008 merger of equals that brought together two organizations of between $700 and $800 million. Shortly after the merger, the economy collapsed, asset quality eroded, examiners showed up, and all the while we were trying to navigate through a merger.

In short, not a pleasant time!

By yearend 2009, it was clear we were on the path to better performance. One sticking point was that no matter how one measured our head count, it was clear we had far more FTEs than a bank our size should have. Progress was achieved by taking several, relatively simple, steps.

First, for nearly a year, I talked up the need to become a more efficient company and that our head count was too high. This was never done in a threatening way; the tone was always one of providing information.

One person, our Chief Operating Officer, had responsibility for the project. As we now say, she "had the 'D' " (decision making authority). Next, our senior management team achieved 100% buy-in. This did not come overnight but in looking back, I cannot emphasize how important this was. Third, we hired a consultant to analyze our head count. We had worked with this person in the past and had a high degree of confidence in him. The consultant came back with his recommendations and we closely analyzed each one. We did not agree with everything, but implemented most of his plan.

The result? During 2010, we reduced our FTE count by about 8%--roughly 33 positions were eliminated. I am most proud of the fact that we did this with only seven severance packages being needed. The other positions were eliminated through attrition. I believe our employees respected the fact that we did everything possible to treat each person with dignity and respect.

In the end, 2011 was a record year for our company with the highest earnings per share in its 77-year history. Our efficiency ratio at the bank--excluding two large extraordinary items--was in the mid 50s for the first six months of 2012. We've come a long way since the merger of 2008 and our rightsizing project in 2010 stands out as one of the biggest reasons for our improvement.

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October 12, 2012
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Fred Brashear, Hyden Citizens Bank, Inc., Hyden, Ky. said:

With the local economic slowdown--hardwood logging has been hit by the housing slump and coal by environmental issues, we've has reduced FTE by three utilizing less part-time teller activity and not replacing three employees who left. To address long-term needs, a consultant has been hired to evaluate work flows; to perform a skills inventory of current staff; and to assess future needs. This will help as a significant portion of our management team approaches retirement and as we focus on recruiting, hiring, and training future employees.

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October 12, 2012
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Mike Murphy, EVP/CFO and Cashier, First American Bank, Norman, Okla. said:

Fortunately, Oklahoma did not experience the depth of problems much of the nation did. Nonetheless, falling rates and increasing regulatory costs have certainly made many of us look again at our expenses and our revenue streams. One area we realized early on is that our staffing levels were getting too high. We have now reduced our staff by over 20%, or over 30 people, from our high point in late 2008.

We started by reviewing every opening we had to see if we needed to refill it or if we could move duties around to get it covered. If we did need to fill it, could we fill it with a part-time person? We also have several full-time employees who no longer work a full 40-hour week, thus lowering the salary burden. We use a floater pool to fill in as front- line staff leaves or moves around between locations. We have now made it a habit of continually looking at our processes and staffing levels. We constantly ask ourselves not only do we need to replace this person but do we need to do this job or create this report? Is there a better way?

Our courier is now a part-time position instead of full-time. We realized that with improved technology on the back end, such as teller capture and document imaging, we did not have to shuffle as much paper.

In many cases we outsourced some of our job functions in areas such as janitorial, maintenance, audit, compliance, loan review, and marketing. Just last year, we partnered with an unrelated mortgage company which leases space from us in several of our offices. Their loan officers originate home mortgages to our customers and provide us a referral source for their customers to meet other banking needs. They also partner with us on a number of community events, lowering our costs there, as well.

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October 18, 2012
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