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Regional Financial Services Company

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Regional Financial Services Company

Top 20 regional bank creates culture of success through proactive performance management.

Traditional is a word commonly used to describe the culture of the banking industry, and altering tradition is a difficult task -- especially if that tradition has been working for you. Try convincing a group of bank executives that it’s time for a culture change when the present culture has been reinforced by over 100 years of extraordinary success. Such was the challenge last year for a team of performance specialists who were called to help one of the 20th largest banks in America shift into a new way of doing business.
 

“They’ve been phenomenally successful, predominantly through the use of negative reinforcement, some overt fear and intimidation, but lots of management through the numbers,” said David Uhl, corporate consultant. “The thing is, this bank has at least a 20-year track record of double digit growth,”

 

Situation:

In other words, this banking organization’s top corporate tier didn’t see that anything needed fixing. The bank had thrived during the S&L scandals, expanding exponentially through savvy mergers and acquisitions, but the fast and furious pace of the ‘80s and early ‘90s is not the business reality of the new millennium. The bank faced the reality of an increasingly saturated mature market and needed to create a comprehensive performance management strategy for the first time. However, organizational leadership had not necessarily acknowledged that need until a group of senior bank executives attended a conference at Cambridge University, presumably to receive instruction on revising the bank’s performance appraisal form. Instead, they attended a seminar concerning the scientific management of human performance, presented by Dr. Aubrey Daniels, founder of Aubrey Daniels International (ADI). “The senior vice president of HR had enrolled the group for the seminar. He recognized that the bank’s challenge was larger than just revising the appraisal form. They needed to more proactively manage performance and currently they did very little of that,” said Uhl.
 

Solution Implemented:

Although at first a bit miffed by the change in subject matter, at the end of the session, the executives agreed to train 670 bank managers in a behavior-based performance management system – Precision Leadership. The system includes the components of specifically defined valued behaviors and results, measurement, performance feedback, consequence management, and positive accountability. This commitment represented a huge first step for an organization that had, in over a century of doing business, never dedicated resources, time, or effort to the development of managers or employees. Uhl knew that his work was cut out for him when, during the first session with the executive group he overheard one of them remark, “You mean we’re going to spend five whole hours on people skills?” This was leadership’s overriding sentiment, reinforced by remarks from the bank’s CEO that the group’s direction should be to “manage the downside and let the upside take care of itself.”

Eyebrows rose when Uhl told the group that the bank’s management had effectively “operationalized” the term negative reinforcement. “I said, ‘If the people in your organization are only worried about managing the downside, performing not to fail, you are operating in an environment of negative reinforcement and punishment,’” said Uhl. “They needed to understand that they were no longer in a high growth market and that the acquisition market is not the same as it once was. If they wanted an ongoing growth curve and continued success, they needed to find a way to tap into the discretionary effort of their employees.”

The Precision Leadership® process that the group subsequently adopted as an ongoing system includes the following components:

  • Identifying valued and non-valued performance for the managers themselves and their direct reports
  • Developing strategic action plans for performance management at all levels
  • Acquiring effective skills for providing clear direction and ensuring ample competence of the skills and knowledge required for every job
  • Maximizing opportunities through optimally designed systems, processes, and infrastructure
  • Managing motivation and assuring accountability through consistent and primarily positive consequences

Several of the key factors in effectively implementing the Precision Leadership strategies included:

  • An online Leader Scorecard (an anonymous feedback mechanism in which employees provide direct information to their managers by rating a set of statements that evaluate the managers’ skills in areas such as clarity of expectations, regularity of performance feedback, and recognition of improvement
  • Ongoing topic-centered facilitated group discussions and follow-up sessions
  • One-on-one coaching
  • Redesign of incentive systems such as setting up criteria for sales incentives that are not limited to the same “Top 10” winners
  • Gaining the buy-in of division and branch leaders to model the new performance management concepts
     

“We evolved into their business partners, helping them to address current and pressing business issues using these tools,” Uhl stated. “Also, key senior leaders have done a good job of changing some of their behaviors, the nature of their interactions, and people are keenly aware of it.”

Results of Intervention:

The implementation of new performance management strategies began just over a year ago. For a culture that prided itself on conservatism and traditional methods, this super regional bank has made much progress in applying new management techniques.

One year ago, an employee commitment survey reflected a disenchanted workforce and the bank had the numbers to prove it. Despite recruiting the brightest and the best from top business schools around the country, they found that those with the most potential for success were leaving after brief employment with the company. A recent employee survey and turnover rates indicate that the negatives are changing to positives. Managers from newly acquired businesses, long-term branch managers, officers, and executives are slowly but surely realizing the positive affects of precise communication, performance accountability, feedback, and recognition.

In a business where change is viewed skeptically and instituted rarely, this organization has committed to having every one of its new managers complete Precision Leadership training. They are also beginning to see how knowledge of an area once labeled somewhat derisively, as “people skills training” can contribute positively to all business initiatives. For example, they plan to use the tools acquired from Precision Leadership to facilitate future mergers and acquisitions in terms of employee retention and accomplishing smooth transitions.
 

“They have accepted the importance of proactively managing performance where before that was viewed as a non-valued activity,” said Uhl. “We gave them a new definition of culture as patterns of behavior that get reinforced or punished by people or systems over time. They realized if they could define organizational culture as patterns of behavior, then they could manage that culture. Now they can create the kind of culture that they want.”

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