People costs (September 2009)

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People costs (September 2009)

The Headache:
What is your bank doing to contain personnel costs?

Remedy 1
William Grant, chairman and CEO, First United Bank & Trust, $1.6 billion-assets, Oakland, Md.

We are involving nearly everyone in our effort to control salaries and benefits costs. Next to interest, it is our biggest expense.

We have set out two very broad stretch goals, which are easy to understand, and enable all to observe our progress.

The first is that we want to maintain our FTE count equal to where we were at the end of 2008. This is a tough goal, as we have opened two new branches, hired a handful of specialists, and acquired an insurance agency during the course of this year. That said, everyone has been pulling together and has resisted the temptation to automatically replace a position when vacated. In several instances, we have replaced full-time associates who have left with a part-timer. In light of this, the goal is still a stretch, but achieving it is within sight.

The second goal was to reduce our overtime by 66%. We are tracking that monthly, on a department-by-department basis. Because of this close examination, and through everyone’s cooperation, we are actually ahead of our goal on this.

Remedy 2
J. Edward Norris III, chairman, president, and CEO, Plantation Financial Corp., $694.3 million-assets, Pawleys Island, S.C.

We’re selling a branch and closing a branch. Beyond that, we’re really looking at our overall staffing needs throughout the bank. It’s very hard personally to relocate or discharge loyal employees because of this economy. We have made every effort to utilize our present staff, through reassignments or adding new responsibilities.

We’re not replacing employees who leave, for whatever reason. We have temporarily suspended salary increases and some benefit payments, trying to keep from laying off staff.

Remedy 3
Kerry C. Lancy, administrative officer, Summit Bank, $107.3 million-assets, Eugene, Ore.

We have limited pay increase rates, are not authorizing any overtime, have reduced our external training budget—particularly where travel is needed—and are using more of the ABA online training resources [Ed. Note: For information, go to www.aba.com/Online+ Courses/default.htm] We have also increased the number of officers participating in operational committees of our state banking association, which is a very cost-effective way to learn and stay “current.”

Remedy 4
Blair Hillyer, chairman, president, and CEO, First National Bank, $163.2 million-assets, Dennison, Ohio

We haven’t replaced a couple people that left the bank, partly to control costs and partly due to a slowdown in business during this recession. We also didn’t give pay raises this year, for the first time in many years. Less staff, a lack of additional compensation, and overall turmoil in the banking industry has contributed to employee burnout, and morale is probably the worst in years. We have tried to convey a positive attitude and emphasized the new opportunities for our bank in the current economic climate. We have also reminded our staff that no one has been downsized at our bank during this crisis. It has been a difficult struggle, however.

Remedy 5
Mary Kay Bates, chief administrative officer, Bank Midwest, $519.6 million-assets, Spirit Lake, Iowa

Bank Midwest has taken two specific steps to help contain personnel costs. Both are viewed as long-term measures designed to improve and sustain staffing efficiency.

First, non-exempt weekly work schedules have been implemented as a means towards moving away from a traditional 8:00 to 5:00 (40-hour per week) work schedule. Supervisors are held accountable for staffing schedules that are based upon high/low work volumes throughout the course of a day and month. These employees understand that their work week may vary between 30 to 40 hours per week based upon staffing needs.

Second, we’ve placed closer scrutiny on overtime expense and FTEs. Supervisors are held accountable for their own annual departmental overtime and FTE goals. A report is shared that monitors monthly results. Supervisors are able to compare their team’s OT and FTE stats to those of their peers and budget.

Remedy 6
Karen Cameron, executive vice-president, corporate services, Grabill Bank, $573 million-assets, Grabill, Ind.

Our bank and its holding company are managing personnel costs through attrition, better schedule management, and limiting overtime. All departments are being challenged to assess workflow and make sure that staff needs are current and overtime is limited. As employees terminate, those positions are not necessarily being replaced.

The electronic version of this article available at: http://www.nxtbook.com/nxtbooks/sb/ababj0909/index.php?startid=16