The Staffing Conundrum

A popular theory has suggested that traditional branch locations will be completely eliminated once mobile and online channels allow for customers to complete all financial service needs and transactions. Despite this theory, community bank and credit union branches have not vanished. The industry has experienced closures, but bank executives and influential industry experts agree that there is no replacement for a branch entirely.

A recent study by Samsung found that Americans don’t feel they are forced to use branches because mobile and online technology isn’t fulfilling their needs, but because they choose to visit branches. This begs the question, why are branches closing their doors?

Ceto and Associates’ consultants believe the answer is two-fold. While branch locations are overall steadily declining, some local markets have thriving brick and mortar branches. This past year, Bank of America announced they still have more than one million customers a day visit their branches. How could this work? It can all be connected to location and transaction channels.

Multiple Channels Drive Transactions

Yes, people do go to the branch despite technology, but the Samsung study shows that 74 percent of customers, 44-years-old or younger, visited a branch in the past two years. The study also says that 53 percent of the younger demographic are visiting the branch for more complex transactions, such as opening accounts and applying for loans. The notion that sometimes “it’s just easier to talk to a person” still seems to resonate with the younger generations.

Location and Demographics

In areas where branch locations have not declined, the majority of residents are 45-years-old and above. The older generations are more likely to go into a branch for basic banking needs although digital banking channels are available. Retirement areas will continue to need physical branch locations to satisfy their customer base.

But, what happens to branches that are in areas that prefer digital banking channels? Unfortunately, it can often mean branch closures, reduced hours of operation and, ultimately, layoffs. Though staffing fluctuations, both up and down, are a natural part of any ever-changing business or industry, they are still difficult, not only for the people that are let go, but also those who feel a sense of responsibility or “survivor’s guilt.”

We’ve identified that we need to reduce branches and staff. What’s the best approach?

Here are a few tips on how to keep employee morale high when having to reduce staff size:

1. Be honest from the beginning

No one likes to feel that something is being hidden from them, especially something as life-changing as losing employment. Being honest and communicating openly with employees about the nature of the situation can reduce rumors and relieve the stress of uncertainty for employees.

2. Have an open line of communication for individuals to ask questions or express concerns

Big news like staff reductions are inevitably going to lead to big questions. Ensure someone from the company is physically available to address these concerns, whether they are from Human Resources or an executive. Using third parties in delicate situations like this can often make employees feel undervalued and could lower morale.

3. Provide a support system

Losing your job, whether it was expected or not, can often times trigger grief and anger. As mentioned earlier, survivor’s guilt, which is often defined as feeling guilty for surviving a traumatic experience when others did not, can truly hinder a person’s ability to function. It is recommended that companies provide counseling to employees who are finding it difficult to cope with the changes.

4. Ask employees what they need

Lastly, in a situation where staff reductions are not immediate and could possibly be months down the road, make sure to ask employees what could incent them to stay through the end of the term. This often happens in mergers and acquisitions and can result in providing “stay” bonuses.

As you can see, there is no 100% right or wrong answer when it comes to branch staffing and there are many variables that impact the staffing needs of each financial institution, as well as every individual branch. In the case where staff reductions need to occur, follow the four tips above to keep the branch performing as best as possible and mitigate negative risks.