STRATEGIC LEADERSHIP ISSUES

Transcription

1 STRATEGIC LEADERSHIP ISSUES Quantifying HR to the Bottom Line Terry Ann Saber Principal Saber Advisory Group, LLC Dassel, MN July 30, 2018

2 Quantifying HR to the Bottom Line! Graduate School of Banking Strategic Leadership Issues (SLI) 2018

3 People: The Other Asset Portfolio! The most valuable asset... Do you really mean that? Let s quantify that to the bank s bottom line... 2

4 Asset Portfolio Analogy Content Quality Performance Risk Rating Pricing New/renewals Compliance Management 3

5 Measuring the Portfolio What does Bank leadership and HR currently use? Monthly Management reporting? Quarterly Management Report? Semi-annual Board Report? 4

6 People Portfolio FTE s Full Time Equivalents Definition of full time Does the bank differentiate differently for benefit eligibility? 5

7 Bank Wide: The Big Picture The People Portfolio 7 Key Measures Across the Company 6

8 People Portfolio: Critical Measures 1. Assets per Employee 2. Core Deposits per Employee 3. Efficiency Ratio 4. Net Income per employee (or FTE) 5. Fee Income to Salary Expense 6. Non-Interest Income per employee (or FTE) 7. Delivery System Capacity 7

9 People Portfolio: Critical Measures 1 Assets per Employee 4.0 MM in Assets per FTE (Minimum) Depends upon: OBS lines of business Niche strategy High Performance strategy 8

10 People Portfolio: Critical Measures 2 Core Deposits per Employee Key: Funding the Bank What roles have responsibility? Building a bank within a bank Driver of franchise value 9

11 People Portfolio: Critical Measures 3 The Efficiency Ratio What question does it answer? Are the 6 components balanced? Where are the opportunities for enhancement? Which are the strengths to maintain.and which are the opportunities for improvement? 10

12 Efficiency Ratio Formula (Basic Version) Total Non-Interest Expense Total Income 11

13 Efficiency Ratio Formula (Detailed Version) (1) (2) (3) Personnel + Occupancy + Other (4) (5) Interest Income - Interest Expense (Net Interest Margin) (6) + Non-Interest Income (Fees) 12

14 Your Bank s Worksheet Use the UBPR Personnel Expense: Occupancy Expense: Other Expense: Interest Income: Interest Expense: Non Interest Income: (%tile of Peer) (%tile of Peer) (%tile of Peer) (%tile of Peer) (%tile of Peer) (%tile of Peer) 13

15 People Portfolio: Critical Measures 4 Net Income per Employee Easy to calculate: Past 3 years Do for current year, budget Are the trends going in the right direction? 14

16 People Portfolio: Critical Measures 5 Fee Income to Salary Expense % of salary expense covered by fee income % of total personnel expense covered by fee income 15

17 People Portfolio: Critical Measures 6 Non-Interest Income per Employee Past 3 years Current year to budget Are the trends going in the right direction? Sources of Non-Interest Income? 16

18 People Portfolio: Critical Measures 7 Delivery System Capacity Core Deposits per office Accounts < 100K per office Revenue per office Key discussion point: How is branch staffing changing? Source: FiServ Bank Intelligence Financial Analyst Tool 17

19 People Portfolio: Other Measures 1. Salaries / Benefits as % of Total Non-Interest Expense 2. Salaries / Benefits per FTE 3. Class Input: 4. Class Input: 18

20 HR Metrics What should your HR Department be responsible for providing managers and supervisors? Know the Metrics! 8 Keys! 19

21 Start with Staffing 1. HR Staffing 2. Cost Per Hire 3. Time to Fill 4. Average Tenure 5. Turnover w/in first 6 mos and/or w/in first year 6. Turnover/Retention 20

22 HR Staff 1 : 100 SHRM 1 : 75 (Saber) Depends on: Internal communications Amount of hiring/turnover Learning and Development Acquisitions / Integration 21

23 Know Your Metrics! 8 Keys Turnover 22

24 Turnover Formula: Number of terminations Number of employees on payroll 23

25 Turnover Industry Average: 18% Involuntary: 8% Tellers: 30 35% (Note: Varies by region/locale) Source: Society of Human Resource Management 24

26 Cost of Turnover 6 months salary, on average 25

27 Large Institution 1.6 B Actual Turnover 28.0% Industry Turnover Average 18.0% Excessive Turnover 10.0% Number of Employees (4MM A per E) 400 Employees Turned 112 Cost per Turnover (28%) 2.9MM Annual 52,000/year=6 months $26,000 Annual Cost of Excessive Turnover: $1.04MM 26

28 Small Institution 360 MM Actual Turnover 20.0% Industry Turnover Average 18.0% Excessive Turnover 2.0% Number of Employees 90 Employees Turned (20%) 18 Cost per Turnover (20%) $468,000 Annual 52,000/year=$26,000 Annual Cost of Excessive Turnover: $47,840 27

29 Time to Fill Track it! Report it! Time to Fill: 42 days 28

30 HR s Responsibility Turnover within first 180 days Track by: Gender Function Age/demographics Hire date /tenure 29

31 Tracking Turnover / Retention Also Track: Retention rate of identified high potentials (9-box grid) Leadership retention rate % of employees with development plans in place 30

32 Know Your Metrics! 8 Keys Employee Demographics Generational Tenure Diversity 31

33 Employee Demographics Traditionalists Pre-WWII Boomers Gen X Gen Y Gen Z

34 Employee Demographics So... Who are the millennials and where do they reside within your company s demographic scenario? 33

35 Gen Z The oldest of them will turn 23 in 2018 What movement are they currently known for? 34

36 Know Your Metrics! 8 Keys Learning and Development per employee 35

37 L/D Per Employee $1208 per employee Less than 500 employees: $1888 per employee ATD:

38 Know Your Metrics! 8 Keys Performance Ratings By Bank By Department, Function, location By Generational Breakdown By job status (Ex/NE) 37

39 Know Your Metrics! 8 Keys 80 / 20 38

40 Know Your Metrics! 8 Keys Average Compa-Ratio 39

41 Compa-Ratio What is the relationship of my individual pay to the market midpoint? 40

42 Bank wide Compa-Ratios By total bank By managers and supervisors By exempt vs. non-exempt employees By gender: bank / job families By top talent / key successors 41

43 Know Your Metrics! 8 Keys Employee Engagement Survey i.e., Know thy customer! 42

44 Know Your Metrics! 8 Keys Management / Supervisory Competencies and Qualifications 43

45 The HR People Portfolio Board Report 44

46 Board / Management Report Monthly, quarterly or semiannually Key targets relevant to your Bank Track, monitor, measure, link Interpret and analyze... not just data! 45

47 Important Resources Assoc for Talent Development (ATD) Society of Human Resource Management (SHRM) PHR Certification SPHR Certification 46

48 People Your Most Valuable Asset... Really? 47

49 Identify Metrics Needing Attention (if any)

50 Questions? Terry Saber Saber Advisory Group, LLC