'The Power of Sharing Capitalism'
In our video interview with Bill Marshall, CEO of Phelps County Bank of Rolla, MO, a 2007 Winning Workplaces/Wall Street Journal Top Small Workplaces winner – see below to access the video – he explains how he and the former leader of the bank had a mutual understanding that was aimed at nothing less than changing bank employees' lives. They saw that "the power of sharing capitalism" could yield outstanding customer service, and the increased business that resulted could fund a robust retirement plan.
Today the 95 employees of the 44-year-old bank, which maintains three locations in Rolla and another in the nearby town of St. James, have 100 percent ownership in the bank – one of only two banks in the U.S. that are fully employee owned. The employee stock ownership plan (ESOP) that's in place has, in part, led the bank to success in a number of key metrics:
- Revenue growth (18 percent over the last three years) that's kept pace ahead of employee growth.
- County deposit growth has increased annually by 2 percent with account growth rates of 3.5 percent. Nationally, the average spread between deposit and loan rates has shrunk.
- The highest average employee tenure of the 2007 Top Small Workplaces: 13.5 years.
Clearly, the bank is a textbook example of how a well-managed ESOP can improve retention and financial performance. But to stop there and label Phelps as merely an ESOP company wouldn't do justice to the other workplace and people practices it has in place that work in tandem with the ownership structure to achieve success.
Helping to keep the aforementioned employee growth manageable – a key theme among all of this year's winners – is a core value of promoting from within. For example, Wendy Young, who joined the bank in 1989 as a loan receptionist, has risen through the ranks of the loan department to become vice president of residential mortgage lending. She has used her increasing experience in loan processing and compliance to help people in Phelps County realize their dream of home ownership, whether they're first-time home buyers or on their fifth or sixth home.
"It's very rewarding for me to close a loan for someone, and see their excitement about it. I have a feeling that what I do makes a difference in this community," says Young.
Another core value that manifests itself first in on-the-job training for employees, especially new hires, and in practice at all locations is the encouragement and freedom of all employees to make decisions on the spot to better serve the customer. "It's really important to know that when I make a decision, the company and the employees are going to stand behind me and trust that I've made the right decision," says Felicia Richards, who was a full-time teller at the bank's Highway 72 branch for two summers while she was in college, and who has served as a part-time teller in a permanent role at the same branch since graduating earlier this year.
When you listen to what Phelps' customers say about how this mentality makes their life easier and keeps them coming back, the dots connecting this end result to training and practice become abundantly clear. "There's no comparison with other banks," one customer raved. "They don't have an answering tree, and I love it. You immediately get someone who can usually answer your question."
The success of employee ownership of the bank is tied to extensive employee training. The level of training each employee is expected to undertake has an impact on both customer satisfaction and employee job satisfaction. "When new hires come in, immediately they go through tutorial training on basic job functions, from both a compliance standpoint and on-the-job training," Marshall says. "Then that employee is also assigned a buddy under our buddy system. This is someone who doesn't work with them directly, but they spend the first six months with them, once or twice a month taking them to lunch or ferreting out any concerns the employee might have."
The training is rounded out by local vendor-provided seminars on everything from customer service, leadership and phone skills to improving vocabulary and posture. "We spend a lot of time with employees working on improving the things that in a typical job – a typical teller job – they're really not going to get exposed to," Marshall says.
Although the bank is making money and keeping and promoting its people, it, like other small business, faces its share of challenges. For instance, although the ESOP is helping to retain people, as more employees reach retirement age, Phelps faces the obstacle of funding the balances. Their steps to mitigate this problem have included allowing employees to take a portion of their ESOP balance each year, as well as making payments for retiring employees over five years as opposed to a lump sum all at once. Marshall also says that while banking industry trends such as the much-reported subprime lending crisis have not affected the bank's profitability to date, he is actively working with employees to keep increasing profitability to help weather any profit-endangering issues that might emerge in the future.
It is apparent that whatever challenges this local bank faces, the leadership will not be alone – all employees will be in the same driver's seat. "I love working here," says Richards. "Ever since I was young I wanted to go to law school and become a lawyer. When it was time to graduate last May and get prepared to take the LSAT, I was working here over the summer again and I realized I'm very happy here. The customers are nice and with the employees it's very family oriented. So I thought, 'Why leave?'"
Company: Phelps County Bank
Website: www.phelpscountybank.com
Industry: Local community bank
Location: Rolla, MO
Number of employees: 95
Sales: $3.3 million
