Growing Your "Assets"

The Competitive Advantage of Community Banks 

Attracting new money remains the quest of virtually every financial service organization in the country.  Fresh dollars, like blood, must be flowing or it will certainly perish - a statement of the obvious.  However, outdated thinking, traditions, and mediocrity born of arrogance often drive the pursuit of deposits.   Nonetheless, future great successes in banking will grow out of creativity, courage, and a new set of priorities -  priorities which will re-surface from the roots of community banking.

The life cycle of community banking has come full circle.  Today, our institutions each offer a broad range of commoditized products and undifferentiated services.  Each bank in the community pursues the same pool of dollars using the same products, platforms, sets of rules, processes and systems.  The major question: If everyone continues to do business and think in the same or similar manner, how can any team of leaders expect significantly differentiating results?

I have traveled across the country in my work with financial institutions.  Each and every organization displays all of the appropriate window dressings learned in business and banking school: vision/ mission statements, strategic plans, tactical programs, established goals, etc.  While each organization claims to be unique, in the vast majority of cases, the consumer finds it difficult to discern any differences.  Survival requires a change in the way the organization thinks, acts, and performs.

So much for the rhetoric, the reader’s question remains “Just what changes are needed and how can they be accomplished?”  Let’s examine a few realities.  First, every vision, strategic plan, tactical program, and goal has one basic requirement - successful execution by the rank and file employees.  While the statement seems obvious, the pursuit often falls short due to invalid assumptions or given lip service in the form of some incongruent incentive program.

Unfortunately, recent Gallup studies indicate that approximately 60% of the workforce in the United States can be classified as disengaged. An additional 15% display active disengagement.  Such statistics have enormous importance considering these are the same people who will execute the strategic plans.  Some will say that our bank is not representative of those numbers – I have heard that more than a few times this year.  How does your bank stack up compared to the competition? Let me share some composite data gathered from institutions visited this year:

• 48% of surveyed individuals indicated that communication flow within their institution is seriously inconsistent.
• 47% report that staff at all levels does not meet regularly to focus on improving operations.
• 56% indicate they have little or no process for capturing institutional intellectual property, collective employee intelligence, or documenting best practices.
• 47% reported their institution never or infrequently meet regularly with customers and suppliers.
• 43% responded that they do little or nothing to encourage employees to identify their own developmental needs.
• 61% indicated employees receive less than five days of training annually.
• 57% do little or nothing in providing coaching and mentoring programs for employees.
• 61% of those surveyed indicate their institution do little to nothing in creating developmental plans for all employees.

Surprisingly, at more than one institution, over 20% of all employees said they would not recommend the bank to friends and acquaintances!

Each piece of the above data contributes directly to the level of engagement/disengagement of employees.  The results indicate that the Gallup numbers are fairly reflective for this cross section of community banks.  Assume your bank rises above the averages and only has a 40% disengagement factor among the “executors”.  What would be the potential performance gain if engagement rose by 20%?  Take a moment to consider the cost/reward ratio for undertaking such an initiative.

What paradigm shift will encourage such a change?  We, at Achev believe differentiation will occur when the bank leadership focuses on becoming known as the best place to work, rather than the best place to bank.  The critical focal point in differentiation rests with those “executors”, not the customers.  If the “executors” believe…

1. We are the best financial institution in the area!
2. We offer a platform of products and services equal to any other institution!
3. We CARE more than any other institution!

…then competitive advantage is created!

Yes, people work for pay. However, they willingly perform at their best when they feel challenged in their work and perceive an opportunity to grow and develop.  People will give undying loyalty and affection to the organization that helps them achieve their personal dreams.  Wouldn’t it be great if your bank’s marketing statistic read – “This past year we helped our staff and customers achieve 682 dreams, up 27% over last year.  Our goal for the coming year is 900! We are the bank where dreams become reality.”  It is easy to say “We care.”  It is something else to demonstrate it!

The people who work in the bank are truly the most important asset.  Such an asset, when properly nurtured, will never depreciate. It will grow and attract similar assets, which in turn, create geometric continuous improvement and competitive advantage, resulting in the economic success. 

Where can you start?  First, understand such a change is evolutionary versus revolutionary.  Begin by taking stock of your bank’s current status.  The feedback will provide a number of specific actionable opportunities to positively impact employee engagement.

 Second, look back to the roots of community banking and recall what business you are in.  In the beginning, community banks flourished because they were businesses committed to making a difference in the lives of those who owned and worked in the bank, their customers, and the community as a whole.  Banking was the tool which built dreams. What business will you be in next year?