In the last 45 days, I have met with bank managers in India, Australia, New Zealand, London, and, much closer to home, California, Ohio, Connecticut, and New York. These bankers, whether focusing on small business, the middle market, wealth management, or retail, all state that one of their major concerns centers on the low level of sales productivity generated by their bankers. Low productivity represents a worldwide issue and one that seems to encompass virtually all areas of a commercial bank. Let’s look at why and what senior management can do about it.

The Productivity Problem

I frequently ask senior bankers, “What percentage of time do your small business or middle market bankers spend selling?” Inevitably, the reply ranges from 25 to 30 percent. Immediately, I discount that figure by five or ten percent to reflect reality versus hope. Managers then shake their heads, either figuratively or literally, bemoaning the little time spent by RMs or BBOs with customers and prospects.

As I have commented in other newsletters, 25 or 30 percent is a pitifully low sales percentage. RMs (and equivalent jobs) represent the main sales force for a bank. How can a bank expect to become a market leader or even generate strong results with its sales staff spending less than a third of their time selling? (I remember a great comment from a former Merrill Lynch exec, “We are not great at marketing, but we are great at selling.” Banks need to become great at selling.)

We all know why the sales percentage is as low as 20 to 25 percent. Bankers spend a substantial amount of their time on activities related to credit and administration. Each of those activities can eat up 30 to 40 percent of the banker’s time. The high percentage of time spent on credit issues occurs even when the RM does not have credit authority for loans; the high percentage of time spent on administration occurs even when the RM has administrative support intended to assume much of the operational burden. My point is that the banker does not have to spend anywhere near as much time as he/she does on these areas. A credit and admin focus by bankers is frequently a matter of their choice and personal preference. They think they are doing what is right, and no one has told them otherwise.

Many banks, probably the majority of the best players, have removed bankers from the credit decisioning process. Yes, bankers will still pitch and structure a transaction but underwriting decisions have moved to credit specialists. Yet, credit-related activities stick to the banker like gum on the bottom of a shoe. Bankers get involved in documentation, renewals, and exceptions, much of which can be handled by a credit specialist assigned to the banker’s portfolio.

As for administration, bankers themselves often complain about the administrative burden they face, but many believe it is an important part of customer service and a key part of their job. In some cases, they believe that no one else can perform these tasks. In other cases, the bankers may be using this burden as an excuse for not selling. The value added component of a high cost banker dealing with administration is very low. Management should try to move the amount of banker time spent on administration down to the single digits from whatever it is today. That is a very doable goal.

Reversing Management’s Failure

When I ask senior managers whether they have instituted a sales management program whereby the bankers are instructed (not asked politely but told) to spend a certain minimum percentage of time selling, the answer is usually “no.” Have they as managers created a team approach to client management so that administrators or parabankers take on the majority of day-to-day customer service requirements? The answer is “no.” Have they introduced an account planning approach to ensure high quality calls on current clients and prospects? The answer is “no.” Do they insist on consistency from banker to banker or allow bankers to, in effect, create their own jobs? You know the answer to that one.

Banker productivity is lower than it can or should be because senior management has failed to provide the infrastructure support, the clear guidelines, the incentives, and the sales management system required for change. Why has this occurred? As a start, management needs to roll up its sleeves and understand the granular details of the banker’s job and the degree of inconsistency from one banker to another. Many managers may have a feel for what their bankers are doing, but they lack an objective information base. The job needs to be pulled apart into its major components with those components evaluated in detail. Some elements of the job can be moved to an admin or credit officer; others may be dropped entirely; some can be shifted to a centralized operations unit.

Once they have the fact base they need to decide where they want their bankers to spend their time and then introduce the structure that will allow them to do so.

In a nutshell, here is what management needs to do:

1. Pull apart and assess the banker’s job today to determine where bankers are spending their time.
2. Decide what level of productivity they want from their bankers.
3. Move as many non-sales activities as possible to others.
4. Introduce strong team/sales managers with responsibility for ensuring high levels of banker selling.
5. Institute an account planning process to improve the quality of calls made.
6. Change compensation to encourage/demand higher sales.
7. Fire those managers or bankers who do not perform.

The above approach, consistently applied, results in management determining the banker’s role and responsibilities rather than, as happens too often, the banker making those determinations for the bank.