Banks face challenge to keep talent, hold down personnel costs

Most banks are facing challenges in retaining staff and controlling personnel costs amid the rivalry among banks to recruit competent workers, said Surasak Dudsdeemaytha, executive vice president for human resources at Kasikornbank, the fourth-largest bank.
The turnover rate at commercial banks has jumped into the double digits over the past few years. KBank saw its turnover climb to 12 per cent from 4 per cent two years ago.
Based on its oral survey of the resignations of bankers among the five largest institutions in the first half of this year, KBank ranked the second-highest at 8.45 per cent, while Krungthai Bank was the lowest at 1.47 per cent.
The cost of recruitment has also gone up. KBank’s employee costs shot up to Bt16 billion last year from about Bt10 billion a few years ago.
The days of single-digit turnover and low recruitment costs will likely not return, as organisations can no longer scrimp on pay if they want to retain talent.
The war for quality workers reflects the intense competition in the banking industry. Players must raise their game to serve customer expectations. But they are fighting for a limited pool of high performers because of the shortage of job-seekers. The labour market is relying on people in their 30s, who have a different mindset than previous generations and often venture into self-employment, while some are the successors to family businesses.
KBank has no plan to raise its retirement age from the current 60 years. But Oranuch Apisaksirikul, chief executive of Tisco Financial Group, recently acknowledged that the bank had to extend its retirement age to 65. Turnover has stabilised at 7-8 per cent for the past three years, down from 15 per cent, after the bank focused on the happiness and positive thinking of its employees.
At KBank, turnover was highest among recent hires with one to two years of service. Most were branch employees.
KBank has raised the starting salary for new graduates to Bt14,500 a month. Adding an allowance of Bt2,500 brings total monthly earnings to Bt16,500.
“Our offering to new employees is competitive and in line with the industry,” Surasak said.
The bank’s turnover is high because its talented employees moved to other banks and some employees transferred to the bank’s corporate customers.
Money is not the main motivation for resignation. Unhappiness with bosses and the desire among young employees to do challenging jobs are the main reasons.
This year, KBank will recruit 4,500 employees, versus 3,900 last year. It has a workforce of 18,000.
One-third of the new hires will replace people who have resigned.
Besides training new employees and retaining existing talent, the human resources division will seek workers who can think globally, as KBank has ambitious growth plans for China.
The bank has developed its own information system called KM (K-Management) to increase employee engagement and help smooth work for the newcomers who replace talented employees who have left.
Organisations troubled by turnover might consider rotations to motivate their younger employees and expand their work viewpoint.