Magazine article The RMA Journal

The RMA Talent Risk Survey: Examining the Most Critical Talent Risks Facing the Banking Industry

Magazine article The RMA Journal

The RMA Talent Risk Survey: Examining the Most Critical Talent Risks Facing the Banking Industry

Article excerpt

IS COMMERCIAL BANKING on the brink of a talent crisis?

That was the question posed in a December 2013 Journal article, "The Next Banking Crisis: Talent Risk?"

In response to this question, 28 banks across the country participated in an RMA-sponsored survey about the state of talent in U.S. banks. Although the number of responses is short of a sample size sufficient to create a 95% confidence interval, the findings are worthy of commentary. Respondents to the survey provide insights that risk managers and human resources professionals will want to examine for their own banks.

The banks participating in the survey represent all regions of the continental U.S. except the Southwest. They include banks of all sizes: 21% have less than $1 billion in assets, 43% have between $1 billion and $10 billion, and 36% have more than $10 billion.

The survey asked 12 critical questions related to talent. Eight of the questions are addressed in this article. The majority of responses (92%) are from representatives of a bank's human resources function. Responses from outside the human resources role include professionals from the finance and business banking functions.

This article summarizes the survey findings. In addition, it identifies the industry's top-five talent issues and proposes three actions risk and human resources managers can take to mitigate the talent risks revealed by the survey.

Survey Findings

This article uses a technique called "top two box score" to highlight the most critical talent issues facing the banking industry. Survey respondents to the first two questions used a seven-point scale, with 1 being the lowest and 7 the highest. The first two charts as well as the eighth reflect the top two box scores (6s and 7s).

Finding qualified talent for many key roles is a significant challenge for banks' human resources managers. Roughly two out of three survey respondents expressed strong concern that the industry is experiencing a shortage of qualified commercial and small business lenders as well as chief risk officers. Nearly half the banks participating in the survey believe the industry lacks a sufficient number of qualified compliance and risk managers. It should also be noted that 44% of the respondents expressed concern that the pool of CEO candidates is not deep.

Retention of qualified talent is not as burning an issue as attracting talent from outside the bank, although survey results still show moderately high top two box scores for the retention of at least five bank functions. Half the banks in the survey worry about retaining commercial lenders, relationship managers, and small business lenders. One-third of the banks are concerned about retaining their compliance and risk managers as well as their chief risk officer and CEO.

Human resources managers know that lending drives bank profits. By far the most frequently mentioned position with a supply-and-demand problem is commercial and small business lending. Survey respondents noted that the "low supply of new lenders entering the industry" may be related to a concern that young banking and finance majors are choosing careers in investment management over traditional commercial banking.

Approximately one-quarter of the respondents expressed concern that the demand for compliance, IT, and risk management professionals exceeds the supply.

Finally, several responses highlighted concern that the industry does not have a robust pipeline of next-generation leaders. A number of respondents noted leadership succession as a challenge, especially for "all c-suite positions" and positions requiring "good managers" and "global leadership."

Looking out to 2020, human resources executives identified four talent risks. First, they do not believe the industry is on a path to solve its current shortage of skilled commercial and small business lenders. …

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