Labor flexibility is a banking innovation

Financial services executives have many important issues on their minds in 2023. Externally, the economic environment, market volatility, and regulatory pressures are ever-present concerns. Customer growth and digital transformation also remain important priorities. The 2023 BAI Banking Outlook survey shows a continued focus on the customer, particularly in terms of new customer acquisition and digital customer experience.

Interestingly, for the first time since the survey began tracking executive priorities, the quest to attract and retain top talent was identified as one of the top three business challenges for the coming year. The war for talent has been a huge challenge in recent years for all industries, including financial services. Many expected labor shortages and wage inflation to be a short-term problem that would resolve itself so we could all get back on track.

But as the 2023 survey underscores, the issues around recruiting and retaining top talent won’t be resolved any time soon. In fact, many financial services executives believe that the staffing challenges will be even more pronounced next year. If this is the case, why are so many bank executives resistant to flexible work models?

Recent research by KPMG found that nearly 70% of US bank CEOs anticipate fully office work environments in the next three years, nearly double that in other white-collar industries, on average. Only 6% of bank executives envision remote-only work environments. Bank CEOs express concern about their ability to maintain a strong workplace culture with minimal face-to-face interaction. They worry about potential competitive disadvantages with customers. They fear lower productivity. Some just want to go back to the way they were. The problem is that the world has changed and it will never be the same again.

The preference for an in-office workforce is understandable. Executives who began their careers working diligently in the office have experienced the benefits of interactions and relationships that develop through in-person settings. But now there is an intergenerational desire for flexibility. Millennials and Gen Zers in particular expect to be able to work in a hybrid model, and many prioritize this factor when looking for opportunities. They think differently, work differently, and have different expectations. The reality is that they just don’t accept the expectation that they have to be in the office.

Of course, some banking functions must be done in person. But with technology and hybrid business practices, many roles can be effectively filled in a hybrid model. This requires a strong management structure that has clear objectives and expectations with both qualitative and quantitative metrics. No one would disagree that this is important. But these principles hold true whether employees are in the office together or working remotely.

I’ve talked to enough executives to know what they’re up against and how much they’re struggling with it. But resistance to flexibility that is important to employees, particularly the younger generation, will likely only exacerbate the talent problem.

In BAI’s recent special report on today’s talent challenges, Megan Burkhart, Comerica Bank’s director of human resources, described Comerica’s successful implementation of a hybrid program called WorkBest. Bank leaders categorized jobs or roles into groups that defined how colleagues might work onsite or in various types of remote arrangements. Burkhart explained, “We recently surveyed our managers and colleagues, and 85% of those surveyed told us that WorkBest enables them and their teams to work effectively and productively while running Comerica’s business and enhancing its culture.”

The strategic purpose of Comerica’s hybrid model is to gain a competitive advantage in the relentless battle for top talent. “We offer flexibility to colleagues while enabling them to engage in rich collaborative experiences while building strong working relationships with each other and preserving Comerica’s rich culture,” said Burkhart. “It takes a lot of deliberate planning to make it all come together.”

For most financial services organizations, designing a balanced mix of remote and onsite work requires new ways of thinking and iterative experimentation. There’s no one way to do this, and there’s plenty of room for customization. If executed right, this combination could be a game changer in recruiting and retaining employees, as well as building engagement. And we know that creating a satisfying and flexible work environment with strong management support lays the foundation for a more engaged workforce.

Now is not the time for bank leaders to reduce career path or professional development resources that are also important to employees. Many large organizations make significant investments in the development of their teams. Small and midsize financial services companies may not have the same level of resources as larger ones, but they can provide professional development resources at levels appropriate to their organizations. This really matters.

Thinking differently about hybrid models is not a one-way street that puts all the responsibilities on executive leadership. The most successful models are based on collaborative thinking and adjustments. For example, one of the biggest concerns is the loss of opportunities for mentoring and building valuable relationships. Less experienced employees benefit when they tap into the wisdom of their more experienced colleagues who have accumulated a wealth of perspectives throughout their careers.

While Gen Zers and millennials may disagree with some of their senior leaders on how hybrid models should work, they still have a lot to learn and can do so by connecting with executives who have more experience and accumulated wisdom on the business and customers. Innovation in mentoring programs (including the always valuable reverse mentoring) is a powerful way to build relationships that facilitate valuable knowledge sharing between generations.

I have spent my entire career in banking and have lived through substantial changes in our industry, including deregulation, the financial crisis, the impact of advanced technology on customer delivery, and the evolving competitive landscape. A strong strategic position depends largely on having the right people who are passionate about their roles, capable of fulfilling their responsibilities, and committed to living the organization’s mission, vision, and values. This won’t be easy without being more open-minded about new ways of working.

Financial services executives have become more innovative in nearly every area of ​​the business, including technology, customer service models, product packaging, pricing, and how they serve their communities. They can capitalize on this innovation expertise to build a hybrid model that provides flexibility for team members and positions the organization to achieve its strategic goals.

Success may require a fundamental shift in a mindset that has historically equated high performance with face-to-face time, and members of the workforce must think outside the box about what flexibility means to them. Together, executive leadership and all segments of the workforce can creatively collaborate to redefine flexibility, achieving powerful strategic competitive advantages.

Debbie Bianucci He is President and CEO of BAI.

To learn more about the trends we’re seeing this year, we encourage you to download the latest BAI Executive Report, Addressing Banking’s Key Business Challenges in 2023.