How Community Banks Can Attract and Retain Top Talent

While technology, digital banking and economic uncertainty continue to dominate industry conversations, many bank leaders agree their biggest competitive challenge isn’t technology—it’s people. In fact, a recent study confirmed that 36% of community banks identify talent acquisition and retention as a top concern, with nearly 1 in 4 community banks reporting difficulty attracting compliance and tech talent. Finding and keeping talented employees has become increasingly difficult as fintechs, large financial institutions and other industries compete for the same workforce.

Yet, according to PRI consultant Shawn King, community banks possess advantages that many larger organizations can’t replicate. They offer meaningful work, close-knit cultures, broad career opportunities and the chance to make a tangible impact on the communities they serve. Banks that intentionally communicate these strengths—and back them up with meaningful investments in employee development—can build the kind of engaged teams that drive exceptional customer experiences and profitability. 

Community Banks Have a Story Worth Telling

By their very nature, community banks offer purpose, not just employment. Unfortunately, many of them undersell themselves when they recruit. 

One area in which community banks sometimes assume they’re going to lose out to big banks is on salary, but there’s more to building a team than money. What differentiates employers today is purpose, culture and opportunity, which community banks have in spades.

When a bank plays on its natural strengths of strong community engagement, employees can see the impact of their work on local businesses and families. In addition, smaller organizations allow employees to influence decisions earlier in their careers, giving a sense of ownership in the place where they live and work.

“People don’t just stay for compensation,” King said. “They stay where they see opportunity and purpose. Relationship banking appeals to people who want meaningful work rather than feeling that they’re just another cog in the machine.”

When leadership truly invests in employee development, people can envision an achievable career path. While fintechs and larger banks often offer specialized roles, community banks can offer broader experiences. Individuals can wear multiple hats and develop diverse skills much faster. 

“At a large institution you may own one small piece of the process. At a community bank, you can learn nearly every aspect of the business,” King said.

Community banks are not lacking in hiring advantages. They often simply fail to communicate them effectively during recruiting.

Build Your Talent Pipeline Before You Have an Opening 

King advises his clients to focus on proactive recruiting instead of reactive hiring. Rather than recruiting only when positions become vacant, successful community banks cultivate future employees years in advance. They also spend time and effort developing a succession plan and recruiting from within by readying high-performance employees to step up into leadership roles when people move or retire. 

“Community banks should recruit the same way they cultivate customer relationships—consistently and over time,” he said.

One example of a community bank that does this well is Legends Bank of Middle Tennessee. Tommy Bates, President & CEO of Legends, points out that one of the Bank’s most strategic partnerships is with the local university. Legends has endowed a finance and economics professorship at the school, created a speaker series, supported business school accreditation efforts and helped fund student attendance at banking conferences. For the first time this year, university students are participating in the prestigious Community Bank Case Study Competition. 

“I couldn’t open my doors if all my Austin Peay alums left. I want to know the best kids coming out of that business school so I can start recruiting them,” Bates said. 

Other avenues for developing future talent can come through internship programs, early-career pathways, local networking, community involvement and financial literacy partnerships. 

“There’s a symbiosis going on here that strengthens recruiting and community ties at the same time,” King said. “Future employees often become customers first—and future customers become employees.”

Great Employee Experiences Create Great Customer Experiences 

There is a strong connection between how your employees experience working for you and how your customers experience doing business with you. Happy, respected employees create loyal customers.

• A strong culture leads to more engaged employees who provide better service. 
• Better service creates longer customer relationships and organic growth. 
• Growth leads to profitability. 

Community banks compete on relationships, and relationships begin inside the organization. Customers notice when employees stay longer, know them personally, understand the local market and have the authority to solve their problems efficiently. Those things matter! 

“Remember that retention isn’t only about lowering turnover,” King said. “It’s about preserving institutional knowledge and customer relationships that have taken years to build. The customer experience will never exceed the employee experience.”

King also emphasized that your best recruiters already work for you. Employee referrals are often the most effective recruiting tool, and many banks implement measures such as referral bonuses, brand ambassador programs and word-of-mouth recruiting to boost employee efforts.     

“If you’re not getting referrals from your employees, you’re probably doing something wrong,” King said. 

Invest in Employees Like You Invest in Customers

The fact is that employees tend to stay where they can envision a future. Rather than scrambling when senior employees retire, community banks should be developing tomorrow’s leaders today. Remember that succession planning isn’t a “check the box” activity to take place every three years just to be shelved when the strategic planning session is over. It’s a mindset—not about replacing employees after they leave but preparing them before opportunities arise.

“Many institutions complete succession planning every few years, but never actually invest in developing future leaders,” King said. “That’s a mistake. Listen to your employees’ aspirations and lay out a clear career path that shows them the steps you both need to take to get them to where they want to be.”

Getting employees ready to lead and developing a strong “bench” often involves a strong investment in:

• Professional development 
• Leadership training for people early in their careers 
• Mentoring and sponsorship
• Cross training 
• Institutional knowledge transfer
• Internal promotions and mobility

Publicly recognizing excellent employees, offering opportunities for them to grow and including high potential performers in succession planning all work together to increase retention and build the kind of culture that perpetuates itself. King recommends thinking beyond compensation to implement methods to recognize people that can include:  

• Setting SMART goals
• Individual development plans
• Customer service awards
• Peer recognition
• Monthly coaching
• Small but meaningful rewards

Retention Starts on Day One

King suggests that instead of separating onboarding and retention, banks should connect them.

An excellent onboarding process involves helping new employees understand: 

• Expectations
• Culture
• Career opportunities and path
• How their work contributes to the bank’s mission

Ongoing development should focus on listening to employees and managing each one differently. Some want leadership, while others want flexibility. Some will aspire to work in commercial lending, while others will be interested in the C-suite. At a community bank, employees are not just filling a role. They can build a career, and this is a benefit banks should be shouting from the rooftops.

“Great managers learn individual career goals rather than forcing everyone down the same path,” he said. “Manage to the person—not the position.”

Community banks don’t need to imitate national institutions to compete for talent. Their greatest strengths, which include deep community roots, meaningful relationships, opportunities for growth and a culture where employees can make a visible difference are exactly what many professionals are seeking. Banks that intentionally invest in recruiting, developing and retaining people will build stronger teams, stronger customer relationships and ultimately stronger profits performance.

Our experts 

PRI consultant Shawn King has 30+ years of experience in community financial institutions in the Midwest and the South managing all aspects of credit analysis and commercial lending, loan and deposit operations, retail branch administration and call center. 

Resources

2025 Strategy Insights for Community Banks and Credit Unions – Jack Henry Fintalk

2025 Voice of Community Banks Survey – BNY Insights

Why Every Community Needs “Its Bank”: Legends Bank’s Commitment to Middle Tennessee – PRI

Breaking the Mold: Internship Programs – PRI

PRI specializes in identifying profitability improvement areas for financial institutions through revenue growth, cost control, streamlining processes, and effective use of technology. Contact us to learn more about our personalized approach to propel growth and improve profitability.