22 HќќѠіђџȱ юћјђџ ђяџѢюџѦȱ2014 /(1',1* &5(',7 In 1997, the McKinsey & Company ȱęȱȱȱ “the war for talent” would separate winners from losers in the years ahead. Sixteen years later, the banking industry is on the cusp of losing the war. To understand the issue, consider a talent management planning session conducted by a community bank a ȱ¢ȱȱȱęȱȱ hit. Like many community bankers, the CEO of this bank started his career in the credit department of a ȱȱȱȱŗşŝŖǯȱ ęȱȱ his own background, over the years he had hired commercial bankers with similar training and experience. As the CEO evaluated his bank’s talent, he discovered good and bad news. The good: He had a solid team. The bad: No one was under the age of 40. Concerned, he instructed his HR manager to build the bench of commercial bankers. To his surprise, HR came back and said it could not ęȱȱ Ȭǰȱ¡ȱ commercial banker under 40 in the marketplace. Why were there no young and well-trained commercial bankers in his market? The CEO discovered that the bigger banks in the region had stopped running traditional credit departments back in the 1990s. ȱȱȱ ȱ ȱ ȱȱęȱȱȱȱ change. First and foremost, much of the industry was in bad shape at the time, which drove consolidation. ȱřǰŖŖŖȱęȱȱ failed from the early 1980s to 1993. ¢ȱę¢ȱ ȱǯȱ Banks responded as expected; weak ones merged into stronger ones, and hiring and training slowed. As the industry started to heal around 1993, mergers accelerated. As merger mania struck full force in the midto-late 1990s, many banks found themselves with excess talent. Second, credit departments began to morph into centralized risk management functions, overseen (so we were told) by risk experts. The evolution of credit scoring models and more technical credit products led to a concentration of top credit experts in risk management ǯȱ ȱȱȱęȱ evolved into “relationship managers” who didn’t need an understanding of how to analyze loan applications. In truth, they were sales representatives who relied on product specialists and credit underwriters to support them when customers and clients wanted a loan. Third, in the late 1990s — despite a rebound in bank hiring from college campuses — new recruits explored ěȱȱǯȱ ȱ no longer moved into general management with an emphasis on credit training. Instead, they took on specialist careers in bank disciplines including human resources, supply- ȱǰȱęǰȱȱȱ on. Fourth, some banks that retained general training programs discovered that the programs were not cost- ěǯȱ ȱ¢ȱȱȱȱ of training is the income realized when graduates serve clients and ȱȱȱęǯȱ ȱ competitors without programs realized that they could recruit newly ȱȱȱęȱȱ ȱ ¡ȱ ȱ DZȱ ȱ яќѢѡȱѡѕђȱ Ѣѡѕќџ Richard J. Parsons is a former executive vice president and corporate operational risk executive with Bank of America. The author of Broke: America’s Banking System, Common Sense Ideas to Fix Banking in America, he is a frequent contributor to The RMA Journal and the American Banker, has been published in Wall Street Journal and appeared on CNBC’s “Closing Bell.” Parsons has presented at several state bank trade associations and at the annual conferences of The Farm Credit Council and The Risk Management Association. He earned a bachelor’s degree from Ohio Wesleyan University and an MBA from the University of Virginia. The author can be reached at richardparsons8@gmail.com.
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