Jeff Judy

Jeff's Thoughts -February 20 , 2008

Competitive Advantage, or Suicide Pill?

Ah, the benefits of experience! If your bank has low turnover, with a strong staff that has been with you many years, I'm sure you point that out to your customers at every opportunity. In fact, you may enjoy several very long term relationships, where the same banker has been working with, say, the same business owner or finance manager for ten or fifteen years.

We all know how business owners hate the "banker of the week" syndrome, where every time they need something, they have to deal with someone new, someone who probably doesn't know too much about:

  1. banking;
  2. business in general; or
  3. the customer's business in particular.

If this level of stability and experience is one of your strongest assets, in your competition with rivals in your marketplace, don't get too comfortable. You may be sailing along very smoothly now, but that rainbow you see before you could be the mist from the waterfall you are about to tumble over!

One of the thing that comes with a high, uniform level of experience is a closely packed set of retirement dates for your most valuable staff. Look at your current roster of most valuable employees and figure out how many of them will be gone in five years, how many in ten. Many of you reading this are working in organizations where the majority of the most productive staff will vanish in a few years.

And it not only could be worse, it is worse, for many banks. Remember the long term relationships mentioned above? Many of those will collapse on both sides of the relationship: the banker and the business owner will retire within a couple of years of one another. The new owners, even if they are family members, won't have the same fond memories of how your bank treated them, and it won't matter because they will be working with someone at the bank who knows very little about their business.

So stop basking comfortably in the glow of the competitive advantage your experienced staff bring you, and start bailing! You don't have much time before you may be confronted with:

How can you stave off disaster?

  1. As I said, take a hard look at your staffing predictions. Keep in mind that in difficult times, some employees may retire earlier than expected rather than deal with a lot of new rules and requirements!
  2. Update your recruitment plans. Consider the benefits of bringing in replacement staff in time to transfer knowledge from the people they'll be replacing.
  3. Review and enhance documentation of the information your most experienced people carry around in their heads, so it doesn't go out the door with them.
  4. Look at formal processes for maximizing knowledge transfer, such as regular meetings between experienced and new staff, or mentoring and other collaborative customer management practices.

It isn't too late . . . yet. But remain complacent about this issue for a matter of months, or a year or two, and some very ugly surprises are likely to emerge from the mist and do serious damage to your business success, and ability to compete, in your market.