How Banks Can Hire For Innovation

Data For Hiring


Before credit, asset-liability positioning, deposit gathering and customer engagement, there is one process that is more important that bankers must get right to be successful - and that is hiring. Get this process wrong and your bank will be an underperformer. Make some good hires and you will likely excel in key parts of your organization. Make hiring a discipline of the bank, and you will dramatically tilt the odds in your favor. There is no single function more important to a bank. None.


Yet despite its importance, many banks give hiring the short shift. They don’t cast a wide enough net, rush the interview process, don’t give real work as an interview test, just do the bare minimum for reference checks and have no formal onboarding process. Who you hire impacts every part of a bank starting with its culture and ending in a bank’s ability to execute. It impacts your vision, your morale, your ability to innovate and your ability to adapt. If you are looking for your best investment, it’s people – by far. A good person can produce rates of return measured in the tens of thousands.


A Big Mistake In Banking


Banks are conservative by nature and are reluctant to take chances on hiring someone too different than the norm. There are multiple studies that show we tend to rate people more highly if they look, think and act like us. Hires that affirm our opinions, share the same background, studied the same thing in schools, have the same belief system and communicate the same way are always “safe” bets. If you doubt this, pause reading this and look around your bank. How is your diversification?


Worst case, the tendency to hire people like ourselves is discriminatory. It punishes people because they are different. Best case is hiring people like ourselves is not conducive to building a high-performing bank. Homogenous banks lack a variety of perspectives, are likely slower to recognize and solve problems and are often late to adapt.


Look how hard it is for banks to innovate.


Like A Special Forces Team


Find a high performing team and you will likely find a variety of different backgrounds and training. The SEAL teams, Delta and other special forces all make hiring and diversification a hallmark of their process. Creating top performance means assembling a portfolio of people whose skills and attitude can be called upon depending on the situation.


This is never truer for banks looking to innovate. Innovation involves taking risks. What banker wants to stick their neck out for a start-up that might not be around in a year?


If your bank is looking to innovate, or just become more adaptable. First, define what attributes you want and then hire to fulfill that need regardless of race, creed, background or difference in thought. This is a more quantitative way to hire, and it is becoming a trend with many banks. At CenterState, we use several firms to help us with this, one being Caliper.


Caliper is a leading provider of talent management solutions and their assessment, the Caliper Profile, is used by banks for selection, development, identification and development of professional talent. Caliper’s pre-employment assessments show how someone will perform in the job before you bring them on board. It allows for you to decide what qualities are needed for success within your organization and how to determine if someone has them. The Caliper Profile is a part of a process of gathering an individual’s natural strengths, motivators and potential to succeed in a particular role.


Hiring For Innovation


One important measurable trait for innovation is abstract reasoning, a subset of intelligence – how does this person input and encode new information. Are they able to easily connect the dots, or do they prefer to take things in a more methodical fashion? The former helps with ideation while the latter is more useful for execution. Both are important, but the former is harder to find in a bank environment and is an example of a trait that is helpful to identify and be proactive at acquiring.


In addition, to the ability to communicate and specific job skills, when hiring for innovation, we might identify the below traits that are important to lead change. These descriptions are just a handful of the attributes but it is illustrative of how to hire for change.


Ego Drive: This is the degree of satisfaction gained from persuading others. Highly ego-driven individuals should be motivated to win others’ commitment. People with low scores on this attribute are unlikely to invest much effort into gaining consensus. According to Caliper’s Performance Models, Ego-Drive can sometimes inhibit performance. In those Job Families, individuals with strong Ego-Drive could overemphasize gaining people’s agreement at the expense of accomplishing work goals. Those with low scores would be unlikely to allow the need to convince others to interfere with their job performance.


Urgency: The tendency to take quick action in order to obtain immediate results. High scorers on this attribute tend to be driven to act quickly. Individuals with low levels of Urgency are inclined to take time when handling tasks.


Risk-taking: Willingness to take chances. Individuals scoring high on this attribute are likely to take chances on untested initiatives. People with low scores tend to be reluctant to risk failure.


Abstract Reasoning Ability: Potential to solve problems and understand the logical relationships among concepts. People who show a high level of Abstract Reasoning Ability should be capable of understanding complex issues and integrating information. Individuals with low levels tend to be most effective when handling issues that have straightforward solutions.


Idea Orientation: Preference for thinking creatively and generating new ways to solve problems. Individuals with high Idea Orientation are likely to be motivated to develop creative, original solutions while low scorers are inclined to use well-established methods. In certain Job Families, high Idea Orientation can derail performance. In these Job Families, people who show high scores are apt to be distracted by their need to generate new ideas. Those with low scores are unlikely to allow the desire to innovate to become a disruption.


Putting It Into Practice


As can be seen above, hiring for a particular attribute is a balancing act. By graphically mapping the above attributes with a host of others, a picture can be gained from your candidate that is hard to manipulate. This prevents those candidates that interview well but don’t have the overall composition to succeed in the position.


The two graphics below demonstrate how a “traditional banker’s” Caliper Personality Profile compares to an individual that very clearly exemplifies “innovative” traits.

Using Data To Hire


Employees who are learning agile are better equipped to solve problems, more willing to adapt, and able to generate more creative ideas. Learning agility drives innovation. Community banks need to be intimately connected to innovation if they want to stay relevant in today’s fast-changing world.


Just like you don’t want a whole bank full of innovators, you also don’t want a whole bank full of accountants or business development officers. Hiring a mix of people seems like a path to success and getting more quantitative about hiring provides to tool to measure the effectiveness of a hiring discipline built around a core process.


We know that sometimes banks fear the person that is full of ideas that challenge quo, but that in fact is what we need. By hiring individuals who are willing to speak up and challenge the way things are done in order to make them even better, banks are making one of the best investments that they can make.