Recent research findings reveal a big gap between financial organizations and high-performing companies when it comes to customer focus. Just two-thirds of financial services employees (67%) describe their organization as customer-focused, compared to 79% of the world’s best performing companies. And while three-quarters of top companies have faith in the quality of their customer support, the same is true for only 61% of financial companies.
These statistics matter more than ever right now. Banks are under serious pressure to raise their game with service – pressure from regulators, upstart competitors and from peers who are wise to the competitive edge it offers. Good service cannot, however, be achieved by isolated initiatives like smarter technology or a new playbook for branch staff. Mostly, it’s a function of how “engaged” employees feel, or the degree to which they come to work willing to “go the extra mile” in their jobs.
Our research has consistently confirmed that this, in turn, is a function of leadership: how effective branch managers are at creating high-performance work climates. Leaders influence climate (“what it feels like to work here”) by up to 70%. And work climate affects team performance, which in turn impacts customer service, by up to 30%. So, when leaders create better climates, everyone wins.
How can motivational leaders be developed? One international retail bank, mindful of the need to reconnect with its customers, took the view that its branch managers should re-assume the role of “traditional” bank managers, with local knowledge, relentless customer focus and the skills and tools to run a branch like a franchise. Central to their approach was ensuring that branch managers were able to motivate employees at every level.
A year into its leadership development exercise, this bank found that 73% of frontline leaders had improved the working environments in their branches. This fed directly to the bottom line, driving a $14.4 million increase in revenue and lifting sales from frontline retail mortgage leaders by 26%. Staff turnover dropped by one percent and employee absence by 25%. And over half of regional customer satisfaction levels increased.
This experience is in line with what we have observed elsewhere. Much depends on strategy and specific organizational context, but we have identifed four ways in which leaders can potentially be developed to engage staff better:
Start with a clear, compelling vision. This is a feature of most high-performing companies in all sectors. When leaders and employees alike have a shared view of what their business stands for, it is much easier to motivate people to perform. To achieve this, it’s first important to ground corporate visions, which can become too abstract. For example, Durham, N.C.-based Square 1 Bank was founded in 2004 to provide financial services to entrepreneurs and venture capitalists. Its stated commitment is to “add value in an industry that deserved a more focused approach” and to “be accessible and responsive, direct and honest.”
A vision should be reflected in training, development and the key performance indicators (KPIs) and rewards of both employees and leaders. Some organizations make major efforts to align their people behind their new vision using a cascade of well-orchestrated events, such as “town hall meetings” or employee success days. These balance reflection on “hard” drivers like financial metrics with “soft” factors such as emotional commitment to the vision.
Vision is critical, particularly when facing challenging tradeoffs. New York-based Citibank, for example, made the conscious decision to continue to invest in developing leaders in line with their core values of “apprenticeship” and “outstanding leadership,” even while its short term bottom line was under pressure.
Set a baseline. An employee and leadership survey will tell you two important things: what people think of their workplace, their job and their leaders; and whether the leaders themselves are up to the task. Armed with this information you have a clear picture of current engagement levels and leaders’ development needs.
Ground programs in performance. Use real metrics – like scorecards and branch performance reports – to support and drive the development program and ensure that skills are developed to match the needs of the business.
Let leaders lead. A two-day workshop doesn’t bring lasting change. Empowering different levels of management to support each other over the long term embeds leadership development into their everyday working worlds. After leadership programs have formally ended, training managers act as coaches to one another to help make change “stick.” In our experience, executives and senior teams that truly hold each other accountable for their performance and behaviour are the ones that lead sustained and successful transformations.
Leadership development can be a low-cost route to high performance for banks in an era when it can cost more to refurbish a single branch than to help a group of leaders inspire staff better.
Mr. Laouchez is global managing director, financial services sector, at Philadelphia-based Hay Group, a management consulting firm. He is based in New York and can be reached at [email protected].
Holly Hughes, BAI CMO, will share BAI’s latest banking channel research and host a conversation with Colleen Wilson, Vice President, Product at MANTL, on what the trends mean for financial services leaders....
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