Jeff Judy

Jeff's Thoughts - January 16 , 2013

Skills AND Experience? Skills OR Experience?

I mentioned in my last issue of Jeff's Thoughts ("Hire Experience? Grow Your Own? Both?") that experienced commercial bankers are being heavily recruited, especially in smaller markets. The discussion was started by an article in the Wall Street Journal on November 26, 2012, titled "Lending Skills in Demand."

In that previous issue, I wrote about the trade-offs between trying to hire "ready to go" commercial bankers, compared to developing your own from less experienced employees. Regardless of where, on that spectrum, you decide to look for your next commercial banker as the economy improves, I'm concerned that many banks will make hiring decisions based on an oversimplified concept of "ready to go."

To start with, I agree that, other things being equal, it makes sense to hire someone with more skills in commercial credit than someone with fewer skills. The problem I see is that the skill set on which these hirings are based is often too narrow.

The Wall Street Journal wrote, "Many young bankers don't have the underwriting skills that are required in the current environment ...". But great underwriting skills are not enough to make a commercial banker successful. How do you choose between someone whose strength is in relationship management, good at working with customers, and someone who has less interpersonal aptitude, but who has spent years underwriting and structuring transactions?

No employee is perfect. If you haven't thought about the total constellation of skills you would like to see in the ideal commercial banker, how can you make the best decision when you are comparing candidates that fall short in different areas of the optimal skill set?

Perhaps more importantly, too narrow a focus on basic credit skills sometimes leads banks to equate "years of employment" with "desired skills and knowledge." For these banks, hiring a banker with 20 years' experience is almost an irresistible opportunity.

But does that candidate have 20 years of learning from experience? Or has that candidate been doing things, and thinking about customers, credit, and risk management, pretty much the same way for 20 years?

After all, the banking world is very different today than it was in the 1990's. If your potential new employee has just spent two decades becoming more and more entrenched in habits that may not fit your own approach to building a sound credit business, maybe all those years on the job are not as valuable as they seem. At the very least, an in-depth interview with highly experienced candidates is needed to get beyond all the impressive figures on their resumes.

If you can hire a commercial banker who already fits your needs, go for it. Just make sure you aren't taking shortcuts by concentrating on years of working with a small skill set. Look instead for the complete breadth of skills, and the learning from experience, that will enable that new employee to make a contribution to your success right away.