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Careers in Banking - A Study of Chicago Banks

Increasingly, Chicago banks are being challenged by greater international competition, rapid changes in technology that call for continuing product and operating innovations, a less restrictive regulatory environment, and important changes in occupational structures and skills. The result has been that the number of entry-level non-exempt jobs in banking is decreasing, while the nature of those jobs that remain is changing.

These changes are consistent with the analysis of career-path dynamics discussed in the theoretical literature. In general, it can be said that career paths emerge and are shaped as a consequence of strategic and negotiated decisions made by firms in a particular economic context. Career paths change as economic circumstances and the relative influence of business firms change.

The major task of this study is to describe these changes, primarily by focusing on three key questions: (1) Can Chicago's financial-service firms provide jobs for those who most need them, including displaced manufacturing workers and those who lack skills and job experience? (2) Can the jobs provide decent wages and opportunities for long-term careers, with the potential for advancement? (3) What sorts of economic-development and employment policies, programs and partnerships will be required to ensure that workers are equipped with requisite skills and are rewarded with appropriate wages, employment security and opportunities for long-term careers?

Preliminary answers to these questions were obtained, based upon a year of analysis of recent research in careers, in general, and in employment and careers in banking, in particular; national-level data on trends in the financial-services industry, particularly related to bank employment; original data on job-entry, development and exit policies in several characteristic local banks; and interviews with additional industry representatives and trainers. The preliminary findings were presented to focus groups of bank employers, trainers, workers and policy-makers to review and discuss the implications for bank employers and employees.

Three large downtown banks and one small community bank -- all of them "full-service" institutions -- agreed to serve as data collection sites. All four banks identified major non-exempt jobs for which the firm recruits and hires from the outside and provided information on the stated job demands and skill requirements for filling those jobs. Three of the four banks provided information on likely career options available to entry-level non-exempt workers, and the combination of skills and experience required to take advantage of such opportunities. Three of the four banks provided anecdotal information on actual career paths of current employees. One bank (the community bank) provided aggregate data on actual hires and promotions over the past four years. All four banks provided information on programs or procedures employed by the firm to help entry-level non-exempt workers explore and take advantage of their career options.

Our investigation of the four banks revealed the following major findings:

(1) All four banks were operating under competitive pressures to shed excess employment capacity; all four had lost employment in most job categories, through either lay-offs or attrition. As a result, these banks were in the process of reassessing and redesigning their human-resource management systems to better serve both the bank and its employees;

(2) The three major points of entry into non-exempt positions at all four banks were account-processing positions; teller; and clerical. At the large downtown banks, a significant proportion of account-processing and teller jobs were part-time, and tellers generally entered at a grade above account-processors. At the small community bank, the pattern was reversed: account-processing jobs started at a grade higher than tellers. For all four banks, these three positions required almost constant effort at recruitment, due both to the large numbers of employees required for these positions and high turnover rates;

(3) All four banks provided a consistent -- though vague -- picture of the skills required to obtain, keep and advance in entry-level bank jobs. A certain level of reading, writing and numbers skills was expected, although all four banks indicated that the level of skills evident in today's labor pool was not as dependable as in times past. Much greater concern was evident in two other areas, less well defined: "Higher-level thinking skills" and what we call "customer-service skills." As examples of the first, tellers needed to be able to "figure out" where imbalances occurred and special data-entry positions often required tracking down, identifying and handling "exceptions" to the routine. Customer-service skills represented a constellation of communication skills, interpersonal skills and attitudes -- e.g., good verbal and written communication skills; ability to work as part of a team; ability to work under pressure; "professionalism," etc.;

(4) In terms of the most likely career options available to entry-level workers, the patterns for large downtown banks and small community banks diverge. The three large downtown banks offered likely career paths that led from the initial entry-level jobs into a position that supervised those same entry-level jobs. Hence, tellers could advance to teller supervisor; account-processors to account-processing supervisors; clerks to clerk supervisors. These career paths were quite short and, in many cases, remained within the non-exempt category. The career patterns in the small community bank were quite different. Both the anecdotal and aggregate data obtained from the bank provided evidence for much longer and more varied career paths (in general, these findings were supported by representatives from another Illinois multi-bank holding company with community-bank presence in the north-and northwest-suburban area). It seems that the traditional pattern of banking careers -- where tellers end up as officers -- is still alive and well in the community banks that we talked to as part of this project. According to hiring and promotion data for the past four years, the principal point of entry into the small community bank was in the teller position.

The major conclusion to be drawn from findings (1) through (4) is the following: To the extent that entry-level non-exempt bank jobs and related career paths remain available to Chicago's low-skilled labor pool, there will be more of such opportunities at Chicago's smaller community banks than at larger downtown banks. However, both large and small banks require additional training -- usually on-the-job-training -- of those workers who successfully negotiate career paths at these banks.

All or some of the foregoing preliminary findings were discussed with various banking-industry representatives in the Chicago area and on the East Coast. The findings were affirmed by all such representatives.

Discussions with local industry representatives (including the small community bank) and trainers also revealed that community banks find it difficult to compete with larger downtown banks for new hires, given the higher salaries and greater prestige of downtown banks.

To the extent that existing local public policies focus on the issue of entry-level non-exempt job training and hiring at Chicago's banks, downtown banks seem to receive more attention than the City's smaller community banks; this represents an important gap of opportunity in local public policy. While the number of community banks in the city is expected to decline, these smaller, full-service community banks will continue to serve local market niches that downtown banks will not.

In Chicago's northwest suburbs, local banks, school districts and at least one community college have developed various programs designed to identify and train local residents for careers in banking. Common among all of these approaches is an attempt to elevate the status of entry-level (and near entry-level) non-exempt jobs in the eyes of job applicants and the banking community and to create long-term career paths with attractive remuneration for younger job applicants and for those interested in a mid-career change. It is recommended that local public-policy makers, industry representatives and trainers investigate these northwest suburban approaches.

Can Chicago's financial-service firms provide jobs for those who most need them? Can such jobs provide attractive opportunities, including the potential for advancement? The total number of such jobs is expected to decline. However, the aforementioned projects currently underway in the northwest suburbs suggest that there can be opportunities for entry-level non-exempt careers in local banks -- particularly at Chicago's community banks. It must be cautioned, however, that these projects are too new to provide long-term, concrete answers. What is clear is that the northwest suburban banks and the small community bank in Chicago have indicated that they want to make sure that meaningful entry-level career paths remain within their respective institutions. In order to maximize the possibility that such opportunities do remain -- at both Chicago's community and downtown banks -- the following should be implemented.

(1) The City of Chicago, the Economic Development Commission (EDC), Chicago's City Colleges, and representatives of the City's downtown and community banks should investigate the northwest suburban approaches to banking career development described in this report;

(2) Training and job-placement efforts that are oriented toward increasing the skill levels and career opportunities for entry-level non-exempt bank employees at large downtown and small community banks should be implemented;

(3) The City of Chicago should establish opportunities for its public-policy officials and representatives of small and large banks to dialogue on a regular, formal basis; and

(4) The City and the Chicago Board of Education should foster local school co-op programs that acquaint public school students with their community banks and develop programs that foster closer ties between such banks and the schools in their communities.

Future research should assess the extent to which Chicago banks may be affected by the imminent changes in the nation's interstate banking regulations. What are the career-ladder implications of having local banks acquired by in-town and out-of-town money-center banks and by superregional banks?

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UIC-Center for Urban Economic Development