In the last few weeks I have heard very diverse tales from clients concerning the commercial banking environment. In one instance a banker suggested that the competitive environment in effect had gone mad with banks offering rates well below what made economic sense. The manager of another bank stated that, given the risk management requirements of his bank, the number of potential prospects approached close to a null set.
However, a third regional bank I spoke with offered a very different view of reality. Their bank is the local leader in SBA lending and has double-digit loan growth. While also operating in a major metropolitan area with ALL the big banks they seem to be able to compete above their weight. I kept waiting for the senior banker I was speaking with to offer excuses and, instead, he kept telling stories of success.
Why does one bank succeed while others lurch along seemingly spending as much time on rationalizing mediocre performance as on sales activities? Don’t look here for any secret sauce; the answers all highlight basics in leadership, sales management, targeting, a willingness to change employees, and a no excuses culture. Execution, execution, execution may be a dull mantra, but, once you know the direction you wish to go, it is usually the most appropriate path to excellence.
* Leadership. Nothing to note here except for its absence at many banks. Sales leaders push; they are sympathetic and will mentor to improve performance, but they manage to a certain level of expectations. Too often, team leaders and regional managers have fallen into the role of bureaucrat rather than a force for selling. Understandable, given the pressures that banks face, but unacceptable if a bank wants to serve its customers well and generate growth. It is that simple. And complex.
* CRM. Even with all the dollars spent on CRM, many banks lack the basic customer and prospect knowledge they require to be effective. Banks with a CRM culture operate with a distinct advantage over those without one. In many cases senior management has no idea about what operating with a CRM culture means on a day-to-day basis. (More about that another time.)
* Sales Management. It is Monday: Whom are you calling on this week? What is the focus of those calls? It is Friday: What have been the results? Either implicitly or explicitly, good commercial players ask these and similar questions week after week after week. Asking once in a while is no challenge, but making this approach part of the management routine is.
* Targeting. Today, the data and analytics exist to focus bankers on high priority targets and avoid others. Still, many banks pursue a scattershot approach when they need a rifle-like accuracy in order to maximize productivity. Ignorance of what is available or laziness may be factors here.
* Changing employees. Banks tend to be paternalistic places to work. The positive aspect of this is most evident when banks support employees through personal crises, demonstrating the institution’s decency and caring, all good. The negative aspect becomes most apparent related to many banks willingness to tolerate poor to mediocre employees year after year. Bankers do not have tenure.
Recently, I heard the story of one manager faced with an employee who basically lied, distorting information related to a credit request. That banker’s punishment…transfer to another unit. I know of other cases in which poor performers survive, even though they represent a continued risk to the bank’s reputation and revenues. Misguided loyalty often plays a role in this. In some cases banks also seem insecure about their ability to attract excellent employees. In good times they state that competition is too fierce for their bank to attract top people. In tougher times I have heard bankers say they want to keep the employees they have, no matter their mediocrity, because they fear they will not get funding approval for replacement staff. Different circumstances, but still the inability to make a positive personnel change. Good staff may be hard to find but they are findable. Something as basic as frankness in performance reviews and feedback serves as the foundation of employee excellence and the opportunity to upgrade.
* Compensation. Many banks remain in the stone age of compensation. A great performer often makes just a bit more than a mediocre one, undercutting the incentive for excellence. Too much comp is salary based, an approach that encourages safety versus growth. Again, basic. HR can be a help or a stumbling block here, not wanting to change compensation in mid-year or raising issues of complexity rather than trying to find a workable path. HR is meant to service the line’s requirements while keeping the bank on the straight and narrow. But, the line has to communicate its needs and rationale for change.
* No excuses. Ultimately if a unit or banker is not performing, action needs to be taken. Action not excuses. The best banks may be patient, but they are not comatose. Certainly in my lifetime, banking has never been as tough as it is today with multiple internal and external pressures requiring attention. The best commercial bank units deal with negative situations head on, sometimes breaking glass, but coming to a resolution that takes the bank forward rather than going in circles.