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7 Dysfunctions of Low-Performing Banks
by Roxanne Emmerich

While most banks focus on what they should do, few seriously evaluate what they should not do or allow. Awareness of the common characteristics of low-performing banks can keep you from falling victim to any of these practices before you join the group.

So what are the most common mistakes of low-performing banks?
  1. Keeping Employees Who Have Quit-But Still Come to Work Every Day
    Research by the Corporate Executive Board of 50,000 employees proves that employees who are "true believers"-who value, enjoy, and believe in what they do-displayed 57 percent more discretionary effort and were 87 percent less likely to pull up stakes. Even a number-crunching, poker-faced CFO can analyze the numbers on this one and discover that he or she needs to have a personality infusion and learn how to engage people.
    With the cost of replacing an employee estimated between five to nine months of their yearly salary, low-performing organizations need to take heed that workers in the "just doing my job" mindset are four times more likely to leave.
    Low-performing banks give lip service to their misinformed beliefs on what creates higher employee performance-higher pay or benefits. High-performing companies, who incidentally attract nine times more "true believers," know that employee engagement comes from letting employees feel they are valued and necessary, and that the bank has a "cause" and purpose-far beyond profits.
    Do you have a vision that inspires people to greatness and a system to constantly upgrade the culture of your organization?

  2. Clueless "Sales Culture" Approach-Worse Yet…They Don't Know It Is
    How do you keep from chuckling when you hear yet another banker say some outrageously misinformed statement like, "Sure, we have a sales culture. We set goals and have incentives." What separates the men from the boys is whether the "sales culture" effort goes way beyond goals and incentives to optimal use of sales funnels, measurement of frequencies and competencies that are predictive of future revenues, understanding of what are the optimal high-impact activities to do in a sales meeting, and at least 20 other key items. Facts be known, goals and incentives are minimally significant efforts in creating profit-rich sales growth in comparison to having an integrated approach of systems and skill sets.
    Are you content with less than five or more products per household-or will you be sideswiped by a competitor that's not?

  3. Giving Away the Farm…One Commercial Loan at a Time
    There aren't many commercial lenders who think they need help with their sales skills and yet the vast majority of them consistently price their loans to cut bank margins, accept minimal fee income, and negotiate to match other banks-even after they already have a deal-because they didn't know how to keep the customer from taking that step after a deal has been agreed upon.
    Lenders think they are good sales people because they compare themselves to retail bankers who don't make calls. Yes, in comparison, they probably are better sales people. That said, what other industry has sales people who know so little about the proper approaches to optimize sales at higher margins? You'll be hard pressed to find an industry that has as much lack of sales skill as banking.
    Do your lenders have a "rollover" approach to pricing?

  4. Gee Wally, I Think There Is Dysfunction in the Family
    We all know that a Band-Aid applied to an infected wound adds no value. The same is true of "sales training," new software, and other strategic attempts to improve an organization if they are applied on top of the dysfunctional behaviors allowed within the organization. Most banks don't employ June, Ward, Wally, and the Beav.
    After 16 years of doing "sales and service culture revolutions," nothing is more clear than this: The solution for breakthrough to a higher level of performance ALWAYS lies solidly in changing the mindsets and skill sets of those on the leadership team-how they work together and what they allow and disallow from their people.
    It is rare to find a leadership team that doesn't have "issues" or one that doesn't allow its people to play out their "issues"-and display them so consistently that they are discernable to the trained eye within 10 minutes.
    Whether it's the passive-aggressive personality who doesn't take a stand for what he or she believes but goes on to sabotage the commitment of the department, to people talking behind others' backs, to "whiners" -your leadership team MUST develop the skills to disallow dysfunctional behaviors. Then engage people to apply new and better habits, mindsets, and behaviors to replace all the freed time that becomes available when dysfunctional behaviors are not allowed.
    Do you allow ANY dysfunctional behaviors, or have you identified them and enforce their elimination impeccably?

  5. Wrong People on the Bus-Many Sitting in the Wrong Seat
    NOTHING is more predictive of job performance than emotional intelligence-not past job performance, not personality, not intellect, and not even IQ.
    Most low-performing banks do not undertake emotional intelligence testing prior to hiring or with their current teams. If they do any testing at all, they do "personality testing" or "self-evaluation" testing with DISC, Profiles International, and other tools that either have a low correlation to predict future job performance or can be manipulated by employees with an IQ over 12 to answer what they think you want to hear.
    If you're tired of the "school of hard-knocks" hiring approach, consider a tool we've found-it takes only 10 minutes on the Internet and requires an investment of less than an hour or two of payroll time if you choose to hire the person. And, this tool has been benchmarked to show that those who are identified as "low risk" have a 90 percent probability of being with your firm one year after hiring while those identified as "high risk" have a 10 percent chance of being with you one year out.
    A Texas bank, that benchmarked all employees using this tool, found it reduced employee count by 30 percent within one year while increasing performance and growth of the bank. By getting the right people on the bus and moving their seats so their emotional intelligence best matches the benchmark of the position they fill, you can reduce the highest expense on your P&L-payroll-while dramatically increasing each person's performance.

  6. Wasteful Use of Resources-'Cuz We've Always Done It That Way
    Just because it has always been done that way doesn't make it worth doing again. Advertising is a perfect example of this old adage. Low-performing banks spend their marketing budgets on advertising. Worse yet, they spend it on the worst possible types of advertising-image and rates.
    High-performing banks know that advertising hits too wide of a swath and that what they really want to do is market to the niches and to the current customers who will bring the most opportunity to the financial institution. Most high-performing banks spend less than 10 percent of their marketing budget on media "advertising" and instead reallocate those resources to high-impact, low-cost marketing approaches such as training and incenting their employees, and marketing to current customers, high-profit prospects, and high-potential customers.
    Have you reallocated your marketing dollars away from advertising to profit-rich marketing strategies that cost little?

  7. Fluffy Thinking-Lack of Understanding ROI and How to Get There
    You can be sure that there isn't a board member alive that would encourage a bank employee or manager to miss a high ROI opportunity because the investment monies weren't in the budget…yet, that excuse is given every day as leaders pass over high ROI opportunities-leveraging your people by sending them to an educational event that pays for it self in one month or less, gifts to your top 100 client list that will make those clients want to do more business, and many others.
    "It's not in the budget" is the thinking of low performers. High performers always ask, "How long will it take to get our return on this investment?"
    "Critical-thinking skills" is the other area of breaking through fluffy thinking. High-performing banks are exacting in their diagnosis and process to resolve their issues. Low-performing bank leadership teams say fluffy things like, "We have a problem with communication" as opposed to high-performers who say, "We need to improve the way we disseminate our strategic initiatives and keep people apprised of the process by setting up both a weekly posting to our Intranet and an occasional game quiz with prizes to make sure people are reading the information and remembering it." Specific linear thinking always wins out over "fluff" and "not-in-the budget" thinking. Most banks, if truly honest, know that they have at least some symptoms of these seven dysfunctions. Recognition is the first law of learning and breakthrough. Action to rectify is the second! ?
Roxanne Emmerich is the author of Profit-Growth Banking: How to Master 7 Breakthrough Strategies of Top-Performing Banks. She is renowned for her work with helping many of the top-performing banks in the country stay miles ahead of their competitors.

Copyright Roxanne Emmerich. All Rights Reserved.

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