Saturday, April 05, 2014

Bankers: Are We Passing On The Tough Decisions?

"One of our problems is our long-term employees", said a banker to me. I have heard this so often that it probably applies to a significant percentage of Jeff For Banks readers. In an era of unprecedented industry change, if your employees embrace change like a cat embraces water, you might have a problem.

In my life, I have experience in two industries: banking and the US military. Well, I've also been in the newspaper business (paper boy), a top chef (Mickey Dee's), gasoline distribution (Hess boy), and food service (college caf worker). But I wouldn't exactly call a job designed to earn beer money or to bolster my eight track tape collection experiences worth reflecting on. Note the paper boy gig was not for beer money.

But in both banking and the military, employees resisted change, and leadership balked at making tough decisions. Tough decisions are not limited to employees. More broadly, tough decisions involve identifying a clear path, one that may be different than your current path, and allocating the resources to effectively succeed. This reminds me of one of my favorite quotes by Chris Lowney:

"The best business leaders I knew distinguished themselves, in part, by a willingness to focus energy, resources, and effort. The wishy-washy tried to cover their bases by doing and pursuing a little bit of everything, clearly fearful of committing to the wrong path. In the end, they succeeded only in diluting already scarce resources and scattering their focus to the point of inefficiency. Great managers, on the other hand, made tough either-or choices that directed effort and talent toward a limited number of objectives."

- Chris Lowney, former Jesuit and JP Morgan investment banker, and author of Heroic Leadership.

The above quote is part of nearly every speech and class that I teach regarding strategy. Why? Because it speaks to a significant challenge in banking. We mis-allocate resources and fail to make tough decisions daily. And it's putting our future in jeopardy. 

The most difficult decisions involve people. Technology and customer preferences have changed the epicenter of banking success from back office, transaction facilitating personnel to front-line, customer facing employees. But back office personnel are gripping old school ways with white knuckles. They use terms like regulation, compliance, policy, procedures as key reasons for holding their sway and allocating resources to their department. But are most transactions processed in bits and bytes versus the old way of moving paper from one inbox to the next? Then why have we not modified processes and shifted resources towards strategic priorities? The sergeants that run our support centers and resist change... tough decision.

Front liners have their habits too. How many FTEs do you have per branch? I challenge you to sit in one or two branches for a few hours. What are those five or six FTEs doing? Could they be spearheading a direct mail campaign to local businesses? Making follow up phone calls to those they recently sent direct mail? How about calling single service customers, or calling the branch's most profitable customers to ask "how are we doing serving you"? The resistance to doing this is monumental and confounding to me. If your branch employees aren't doing this... tough decision.

How about the tortoise pace in developing products or product packages to distinguish you in serving your niche? Don't have a niche that dictates resource allocation?... tough decision.

I once had a CEO tell me that they should keep a branch to maintain a presence in a particular town. The branch was losing a quarter million a year. If you are losing a quarter mil, do you want to be in that market? Tough decision.

In my career I have faced tough decisions. And I admit to making some painfully slow, especially when people are involved. I am not proposing dispensing of our humanity when making tough decisions. But when our very survival is at stake, you have to ask yourself if you have what it takes to make the tough decisions, or have somebody else, such as a buyer, make them for you.

Are you making the tough decisions?

~ Jeff

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