Last week, we had Brad Federman lead our Employee Engagement Roundtable. This blog post is a summary of that webinar as well as his firm’s research on the topic.
Cultivating Champions: Why Strategic Onboarding is the “Silent Tax” Shield for Modern Banks
In the fast-evolving landscape of community banking, a quiet crisis is brewing. While leadership often focuses on interest rate margins, regulatory compliance, and digital transformation, a “silent tax” is eroding the bottom line: employee disengagement. According to recent global research by PerformancePoint, analyzing over 60,000 voices, the cost of failing to engage talent is no longer just a “culture loss”—it is a direct hit to the P&L.
For institutions like those served by the Barret School of Banking, the solution begins long before an employee hits their five-year tenure. It starts with a shift in how we view the gateway to the organization: Strategic Onboarding.
The High Cost of the “Silent Tax”
Disengagement acts as a hidden drain on productivity and innovation. The data is stark: employees who lack psychological safety are 40 times less likely to offer the discretionary effort required for innovation. Furthermore, in a market where replacing an employee costs 1.5x to 2x their annual salary, the financial “hook” of inaction is too steep to ignore.
Retention risk is particularly volatile when development is ignored. When managers fail to discuss growth, the likelihood of an employee leaving increases by 2500%. For banks, where specialized “Bank language” and complex regulatory frameworks create steep learning curves, a “sink or swim” onboarding mentality is a recipe for expensive turnover.
Onboarding: The First Step in the Engagement Flywheel
Engagement isn’t a static HR metric; it’s a dynamic system known as the Engagement Flywheel. This cycle moves from Motivation to Pride, then to Advocacy, which ultimately drives Retention and Performance.
Strategic onboarding is the initial spark for this flywheel. New hires are 20 times more likely to become advocates for the bank when their onboarding is welcoming and intentional. By contrast, the flywheel “stalls” when employees feel motivated to work but lack the clarity or inclusion to feel pride in their new home.
The “Why” Behind the Work
One of the most significant shifts in the modern workforce is the demand for purpose. Today’s bankers—especially those under 30—are not satisfied with “movement orders without vision”. They need to know the “Why”:
- Why does this task matter to the community?
- Why is this regulatory check vital to our mission?
- Why am I the right person for this role?
Effective onboarding must move beyond paperwork. It must connect every tactical duty back to the bank’s vision. When employees understand how their work contributes to something meaningful, they are 35 times more likely to stay.
Bridging the Generational Divide
Banking often brings together a multi-generational workforce, and onboarding must be nuanced enough to address their differing psychological needs.
- The Potential Cohort (Under 30): Their loyalty is driven by velocity. They need continuous feedback and visible celebration of early wins during their first 90 days.
- The Legacy Cohort (Over 45): They value validity and fairness. Onboarding for internal transfers or senior hires must respect their historical contributions while providing a clear path for renewed growth.
Lessons from the “Minnow Swallows the Whale”
A powerful case study highlights how prioritizing engagement during a major transition led to a $310 million exit for a digital security firm. After an acquisition led to “The Dark Ages” of dissatisfaction, the company stabilized by “going public” with bad survey data and explicitly asking employees for help. They operationalized their values into every process—starting with recruiting and onboarding—proving that “soft” investments in culture lead to massive financial appreciation.
Turning Knowledge into Action
For members of the Barrett community, the message is clear: the manager is the primary leverage point for retention. To protect your bank from the “silent tax,” consider these immediate steps:
- Review your “Bank Language” training: Don’t let new hires feel like “idiots” because they don’t know the acronyms.
- Foster Vulnerability: Encourage leaders to admit “I don’t know” to build immediate trust and psychological safety.
- Implement the Four Elements of Growth: Ensure onboarding includes Discomfort (challenging new tasks), Value (personal benefit), Time (space to struggle), and Reflection (coaching).
In the end, people don’t stay where they are paid the most; they stay where they can be their best selves. By mastering onboarding, you aren’t just filling a seat—you are cultivating a champion.
AI was used in the summarization of content