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Let’s face it: my previous post on workplace culture in banking was a bit gloomy.
But the data is unequivocal. Multiple Accenture cross-industry studies have found that, on an industry level, banking struggles more than it should to attract, recruit and retain talent. That would be a major concern at any moment, but it’s particularly so at this moment of change due to new competitors, new technologies, new customer expectations, and the impact of the pandemic.
Still, I don’t like being the bearer of bad news, which is why I’m excited to share this post. Today we’re going to look at some recent Accenture Organizational Analytics research on workplace culture and employee retention.
And the big picture for banks on this front is much more positive.
The unique role of culture in banking
The data we’re looking at comes from AI-powered analysis of over 485,000 publicly posted comments from employers and employees about workplace sentiment and employee retention.
Not surprisingly, the analysis found that workplace culture plays a major role in employee retention across all industries. What is surprising is what happens when we look at banking compared with other industries.
Of all the industries we studied, culture had the biggest impact on employee retention in banking. Culture matters more than three times as much for employee retention in banking than it does for healthcare. We see a similar story when we look at the impact of employer brand on employee retention.
This is surprising, because workplace culture at the typical bank is increasingly out of step with what today’s workers want. In the wake of the COVID-19 pandemic, we’ve seen a broad shift in worker preferences for employers that offer more collaboration, flexibility and purpose, and less hierarchy, bureaucracy and formality. Few banks today check all of these boxes.
When we zoom in from the cross-industry findings of the research to the banking-specific ones, things get even more interesting. A more positive workplace culture still tracks closely with employee retention within banking, but our analysis also found that banks that are more diverse and inclusive are better perceived by employees.
Diversity and inclusion also have a strong relationship with financial performance. Our research found that organizations that were above the median for inclusion and diversity scores enjoyed 200% higher EBITDA growth between 2016 and 2019, compared with those below the median.
The benefits of a positive and inclusive workplace culture in banking are clear. Yet, as mentioned in my previous post, many banks struggle to offer this. Many of the comments in our analysis from current and former bank employees call for more collaboration and flexibility, less hierarchy, and more meaningful work linked to a strong sense of purpose.
Four cultural drivers for retention in banking
The cross-industry side of this research also highlighted several cultural weak points in banking. Banking as an industry trails the cross-industry baseline when it comes to supporting experimentation, encouraging employees to make ethical decisions, continuously improving their ways of working, having trusted leaders, and responding quickly to changes.
This is a serious concern as competition for talent intensifies across the industry, which is one of the most important trends in banking for 2022. It’s already causing shortages of key digital skills at some banks. A recent survey of 122 executives at banks with assets under $100 billion found that just 25% of these organizations had developers and programmers on their staff, and just 13% had data scientists. I suspect that the bureaucracy, organizational silos, formality, and lack of flexibility at many banks plays a major role in talent struggles like these.
Our research also identified four elements of organizational culture that play an outsize role in boosting employee retention. They are, in order:
- Organizational power dynamics. Retention in banking is correlated with healthy power dynamics and less hierarchical organizational structures. Transparent, clear and frequent communication from leadership is an important part of this.
- Entrepreneurialism. Encouraging people to take risks and allowing experimentation encourage employees to stay. This should include flexible work arrangements and different ways of measuring employee contributions to the organization.
- A climate of innovation. This includes both creativity and a culture of continuous learning. Most banks need to invest more in learning and development programs, and encourage employees to take advantage of them to help employees keep up with the demands of the marketplace.
- Trust. When employees trust their peers and their leaders, they are more likely to stay. Building trust starts with genuinely listening to what employees are saying to find out what they need to do their jobs properly.
While these all might seem like desirable cultural attributes at any employer looking to attract and retain talented workers, many banks hamstring their own efforts to achieve them.
In my next post, we’ll look at the most common ways they do this.
Dive into the details of our latest Future of Work report, or contact me here to learn more about culture change in financial services.Read report