How Thriving ESOP-Owned Banks Keep Employee Turnover Low

People Practices Help Local and Community Banks Thrive, Even in Tough Economic Times discusses two ESOP-owned banks that are thriving, even in today's financial environment. The banks use employee ownership and other techniques to keep employee turnover low.

Phelps County Bank, one of the only 100% employee-owned charter U.S. banks, keeps employee turnover low by having an extensive training and mentoring program and providing performance-based financial incentives:

They've done all this while keeping employee turnover at around 8 percent, far below the industry average of 13.3 percent for 2007, as measured by CompData Surveys. What do they do internally that makes all this possible? All new hires go through an intensive, eight-week training program that covers both compliance issues and on-the-job training with the help of a mentor. They are also big on industry training to spur professional development, working closely with employees to help them match their career objectives to available opportunities. Finally, there are performance-based financial incentives. Since implementing its ESOP, the bank has created at least nine millionaires.

Paducah Bank & Trust keeps 80 percent of their loans in their local county and manages employee turnover by using employee ownership, comprehensive on-site and off-site training, and daily meetings:

The bank has managed to grow revenues steadily, at roughly 12 percent from 2005-2007, keep employee turnover down to around 10 percent over the same period and increase its market share over the past decade by a whopping 200 percent by using a combination of employee ownership mechanisms, comprehensive on-site cross-training for new hires and supporting off-site development of longer-term employee-owners, and using daily meetings with all 140 of their associates to underscore the personal attention their customers have come to expect and appreciate.

Both banks are recent Top Small Workplaces winners.