Labor Market Dynamics, Rising Expenses, & the Inevitable Impact on Bank Operations
Contributed by John Giddings and Ric Guzman, Client Relations Executives
The expression “Great Resignation” was coined by Anthony Klotz, an organizational psychologist and professor at Texas A&M University, to describe the wave of people quitting their jobs as a result of the pandemic . The tight labor market has had an unforeseen influence on businesses as a result of the coronavirus outbreak, and its impact on the banking industry may endure long after the pandemic has been contained . There are a host of reasons that influence people’s decisions to change or leave their jobs. Regardless of the causes behind the higher-than-average employee turnover rate in the U.S., most industries including banks and financial institutions are faced with the challenges of devising effective ways to minimize its impact on operations and customer service.
“A lot of people left the labor market and they’re not going to come back, even with a strong bid for their services. And that’s just the reality we’re going to be facing. We’re going to be chasing that dynamic of not enough people working.” – Brian Moynihan, CEO Bank of America
Not only are banks required to address the labor market pressures with new strategies, it has become imperative to act promptly in order remain competitive as an employer. The primary solutions for the labor market pressures include increases in salaries offered as well as the benefits provided to the workforce. Consequently, U.S. banks will experience higher expenses from workers’ rising wages .
With the inevitable impact of rising expenses and worker shortages on the horizon, banks must fight the tough industry competition by recruiting new workers, creating training opportunities, better aligning business goals and employee benefits – and cultivating a culture that retains industry-leading talent.