Baby Boomers, Technology, Succession Planning…Oh My!

On December 4th, our group interviewed Dan Fitzpatrick, the Citizens Bank’s President and CEO for Pennsylvania, New Jersey and Delaware.  Dan has been in the commercial banking industry for the entirety of his career, working at Bank of America prior to joining Citizens Bank, a subsidiary of the Royal Bank of Scotland (RBS).

When the question was posed to Dan to discuss what he felt were the two largest HR issues the commercial banking industry, specifically Citizens Bank, faces today, he was quick to answer, “the aging workforce and the inability to attract young talent.”  Back in the 1980s, commercial banks would bring in groups of 20 new bankers; hosting yearly training sessions that would help build camaraderie between co-workers and a loyalty for your respective company.  In the 1990s, the banks started consolidating and new technologies were introduced that eliminated a substantial amount of jobs.  This eliminated the need for yearly training events and for large classes of new hires to be brought in.  As a result, commercial banks are facing an increasingly large number of baby boomers getting ready to retire without a valid talent pool to select successors from.  There is no formal mentoring program that exists at Citizens Bank, which would allow for new hires to learn the tacit knowledge that has been acquired through the more experienced bankers’ tenure with the company.

Another issue Dan faces is that his HR function has been outsourced and become more like an IT help desk.  Employees issues related to HR are now being handled by managers instead of being taken to a third party group (eg: HR representatives).  Managers are know having to learn how to multitask and acquire better people skills in order to be able to effectively manage their people, should any HR issues arrive.  In his opinion, more HR training should be provided so managers know how to effectively handle complicated HR situations.

Finally, Dan mentioned that you need to find ways to incentivize employees to want to stay long term.  With the lack of yearly training, there needs to be other ways to encourage employees and build loyalty within the organization.  Human capital is seen as the biggest strategic asset Citizen Bank has.  As service industries offer similar products and services, it is key to ensure you hire and retain the more creative and motivated employees.  His goal was to make sure employees felt they were a part of something bigger than just their day job.  Volunteerism is huge within Citizens Bank, as Dan feels it is important for leadership to be seen within the community.  Their mentality is “around the corner – around the globe;” knowing that they are part of a global company under RBS, but wanting to make their clients feel like they’re just another neighborhood bank

After careful consideration, our group determined that these issues were not restricted to just the commercial banking industry.  Many companies are facing a significant amount of baby boomers retiring and don’t have the adequate resources to backfill these positions (eg: failed succession planning).  Lauren and Lacey have experience first hand at their respective defense companies.  Many executives have been with the organization for 20+ years; however, as these executives are getting ready to retire, some quicker than others, there has not been adequate succession planning to ensure that the transition from one executive to another is as smooth as it could be.  Additionally, there hasn’t been sufficient knowledge management applied to retain the tacit knowledge from these executives and other senior members of the organization.

In regards to HR being treated as a help desk, a lot of HR functions have been outsourced within organizations.  Lauren’s organization has a central organization called Shared Payroll Services (SPS) that manages the compensation, performance review documentation and other aspects of HR from one location; however, this does not detract from each business unit having one or more HR representative to take care of any employee-related issues.  We think that this is something that could be specific to the commercial banking industry, or seen on a broader spectrum; however, it depends on the strategic goals of the organization and how HR aligns with those goals.

We also felt that every organization faces the challenge of finding ways to successfully incentivize their employees.  Most people are driven by intrinsic motivators, such as feeling as though they are contributing to the bigger picture and not so much by extrinsic motivators, such as salary.  Citizens Bank does a great job of allowing their employees to engage in different volunteer activities.  Within the defense industry, it is common for companies to partner with different charitable organizations related to supporting the military, military families, etc.  Lauren and Lacey are part of companies they are large contributors to multiple organizations, participating in various volunteer events throughout the course of the year, either as a sponsor or as an individual contributor.  This has helped to build loyalty and camaraderie within their respective organizations.

When we asked Dan for any final words of advice, his greatest were: “Learn how to listen,” “Lead by example,” and “Trust is critical.”  Learning to listen is something that all managers must learn how to do and be successful at.  Ensuring you are truly hearing what your employees are trying to tell you will take you a long way as a manager.  Leading by example means learning how to be a role model and to set standards and expectations for employees.  When employees see that you are not only giving guidance but willing to do the “dirty work” as well, it shows that you have a vested interest in the team and want to see them succeed.  Having a manager that trusts you is key.  If your manager doesn’t trust you, you could end up doing duplicate work and having them micromanaging your projects.  Lauren has worked with managers in the past that have trust issues with employees.  This has caused a lot of frustration, as she feels that she wasn’t capable of completing tasks on her own and had her managers constantly looking over her shoulders.  By trusting employees to complete their tasks, it allows you as a manager to look at the bigger picture of how your team is impacting the organization and how you can help make the organization run better.

We were able to hear a lot of advice that we felt we could translate and bring with us to our respective companies.  A lot of the issues that Dan brought up are relevant within all of our organizations.  By being able to talk it out within our interview, we were able to learn some ways to combat these issues.  Dan was also able to take away the thought of a more formalized mentoring program, to help bridge the gap between new hires and seasoned veterans.  This project was very beneficial and the interview was very compelling; helping us understand the relevance of human capital in business success and how such valuable resources are nurtured, promoted and fostered within a company.

Credits: L. Caprio, G. Chaturvedi, A. Cheerla, L. Coleman

MBAD262 – Team Research Project