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Keep Checking the Rear View Mirror to Avoid Disaster: Objects in our industry's mirror change on a rear-view basis.

WP 06.15.2010

The Department of Motor Vehicles driver handbook states that an attentive driver should be checking all her mirrors every six seconds. I know this fact because I am currently reliving all the traffic rules I have forgotten while I help prepare my oldest daughter for her written and road-test to receive her driver’s license, or as the 16-year-old crowd calls it: “The Fight for Freedom.”

I know, your reaction is probably the same as mine... Six seconds? I’ll be lucky if I’m checking the mirrors six times during my trip. The reasoning behind this, so states the manual, is that all the variables around the vehicle can completely change in that amount of time. And that, of course, got me thinking about our community banking industry.

One of the single greatest challenges I see community banks face today (and I get to meet with over 200 of them every year) is their lack of focus on reviewing the status of their “car” (and by car, I mean bank) in relationship to the traffic around them. Given that prospect, is there anything worse than an employee who thinks “I’ll just keep my head down and keep driving”? We need updates from all our bank’s drivers telling management exactly how our car is handling. If we think of our CEO as a head mechanic, strong feedback from the drivers allows our pit-crew president to tinker with the engine in order to maximize performance.

For example, our industry seems to just accept this idea that it’s a sound business practice to push all image capture out to the branches. But doesn’t this fly directly in the face of the old adage of “consolidate, centralize and specialize?” Did that old philosophy just get blown up because the core processing providers had a new service they could integrate into the core? Sometimes the question is not “How is it working?” but “What is this going to lead to next?” I know several banks that are asking each of the individual branches to balance the GL each day. So now our tellers are accountants too?

Given that example, the car analogy continues: In order to be competitive, regular pit-stops are necessary. Question to our Pit-crew presidents: What mechanisms do you have in place for your drivers to comment on what they are seeing in their mirrors (markets or branches). Please refrain from the “open door policy” response that every leader in the free world can say without actually implementing. Industry practices might say weekly reports on customer profitability, product profitability and new customer accounts would be the foundation. We have found that weekly team meetings are necessary to drive creative solutions for any potential potholes that are identified. Team meetings without the pit-crew-president or business-line-manager to stall potential solutions by identifying all the problems associated with each idea. Nobody likes a back-seat driver. That’s why there aren’t steering wheels in the back seats of limos, even though we all know who owns the car.

Case in point, I recently had a wonderful lunch with three of the top executives (President not included) at a large community bank about to cross the billion dollar asset mark. These individual leaders all expressed frustration of having paid top-dollar for plan facilitation (selected by the President), and yet not having any mechanism to track, monitor, and manage the actual implementation of the plan that was developed. One of the executives stated: “He got what he wanted out of it, and that’s all that mattered.” Upsetting as this was, it’s not unusual.


This problem with not checking our mirrors is not one for Presidents, CEOs and Board Members alone. The fact is that top executives at a bank are much like players on a sports team, they will take on the attributes of their leader. Management will manage to the level of expectation placed upon them. If one of your bank’s strategic goals is to maintain NII levels (given the circumstances around Reg E, this is a very admirable goal), have you developed a plan for your tellers, loan agents, customer service / help desk representatives that is going to first define the problem for them and then systematically demonstrate how their daily actions are part of the solution to this absolutely critical business issue and strategic goal? If not, then an accident is immminent.

Just check your mirrors if you don’t believe me.