Personnel - a key success factor

HR survey at medium-sized banks

Rising costs fuelled by tighter legislation, cut-throat competition, and the financial impact of international crisis: Small and medium-sized banks face huge challenges these days. Then there are growing customer expectations and rising competition. To make business more profitable, many banks are pumping more and more resources into sales promotion. Unfortunately, this often results in disgruntled staff and quality losses in customer services. A recent HR survey conducted jointly by the business consultancy zeb and the School of Management & Innovation (SMI) at Steinbeis University Berlin examined the impact of HR excellence on commercial success. 

The survey was conducted amongst medium-sized financial institutes in Germany, Austria and Switzerland. The underlying concept was developed by the SMI, who also analyzed results. The HR survey examined whether prerequisites had been fulfilled to deal successfully with challenges, whether the prerequisites of success were fully exploited and whether using them centered on successful outcomes. Together, these three factors constituted “HR excellence.”

The prerequisites of success are high-grade HR instruments and processes, even if in isolation, these are no guarantee for success if ideas run into snags during implementation or are badly received. It’s only when everything is coordinated and agreed properly, from initial plans to implementation and reviews, covering all stages of the HR life cycle, that implementation works smoothly in terms of HR recruitment, placement and development, as well as remuneration and management.

Analysis of the survey indicated that, measured in terms of profit and costs, HR excellence dictates 65% of commercial success. Skeptics typically say this does not prove that HR management contributes to success – surely, more profitable financial institutions can simply afford superior HR management? Based on the findings of this survey, however, this argument can clearly be dismissed: HR management makes a tangible contribution to commercial performance, even if more successful enterprises don’t necessarily have above-average HR management.

The leading banks in particular have clearly already understood the significance of HR activities. These banks describe their HR work as significantly more important and achieve a 20 to 25% higher score in terms of implementation standards. At 50 to 60%, the standards achieved by the leading banks still trail far behind the top scores achieved across all industries, namely 70 to 80%. Leading banks believe in flexible working arrangements and hours, a sensible work-life balance, and doing justice to different customer requirements. They achieve revenues that are significantly higher than average and keep costs below average by supporting senior management with HR and succession plans that are tailored to strategic needs – and by supporting employee performance with carefully designed target and remuneration systems. As part of this, the leading banks often accept that HR costs will be somewhat higher.

The significance of HR work has risen sharply amongst medium-sized banks since 2009. This is reflected by the fact that more money is being spent on HR development than in 2009. Emphasis is also being placed on improving companies’ image as an employer. Despite this, only 11% of banks have already taken direct action.

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