| Team Effort
 By
Thomas P. Johnson Jr.
Organizational cohesion has become
a strategic imperative as as institutions grow larger
and more complex. A unilateral management style will not
suffice.
It's already clear that one of the major
challenges facing the banking industry is connecting with
customers. Looking broadly at the major strategic options
pursued by banks in recent years, we've seen how mergers,
product expansions, efficiency crusades and marketing
strategies all fell short when divorced from client needs
and relationships.
Since cultivating the customer requires
team effort throughout the organization, strategists now
face another major undertaking – connecting with
their institution's own managers and employees. Many of
today's top executives are guiding companies significantly
larger and more complex than were typical a decade ago.
They will need to foster stronger organizational bonds
if they are to succeed.
This issue is brought into focus by
authors Luis G. Flores and Narsingh Saxena of Northern
Illinois University, whose academic research uncovered
some major shortcomings in the way banking managers approach
strategy formulation and implementation. Only 15% of the
more than 100 senior executives surveyed at Midwest institutions
said their management teams clearly understood the organization's
strategic vision and were strongly committed to it. Many
banks, especially the least profitable ones, reported
difficulties in implementing strategy and eliciting strong
employee support.
Such findings take on special significance
in light of the '90s mega-mergers. Author Sean Ryan, a
former Bear, Stearns & Co. banking analyst, contends that
some acquisitive institutions have gone too far, reaching
a size "where the price paid in weakened managerial
controls has exceeded whatever gains were achieved in
cost efficiencies." He says large banks must "cut
through the hype surrounding information technology and
product development and pay dramatically more attention
to human resources management."
One specific area where the quality
of managerial control seems pertinent is in commercial
realty lending. As detailed in this edition's cover story,
the banking industry is visibly accelerating construction
and development lending while federal regulators flash
the caution lights. Although credit quality appears exceptionally
strong right now, it still is the case that many portfolio
expansions are occurring on either a multi-state or a
national basis, further underscoring a requirement for
high levels of organizational coordination and collaboration.
Together, these three articles emphasize
the need for a broad managerial outreach to employees.
The '90s drove home the need for a customer focus. Now,
at the onset of the new century, comes a mandate for organizational
cohesion. A powerful nervous system is needed to wring
optimal performance from robust musculature. Senior managers
can capitalize on this insight by recasting their efforts
within a team context.
Copyright © 2003 by Banking
Strategies, published by BAI.
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