Banks manage financial assets and the management of success depends on the capabilities of the people managing these assets.
Therefore, growth in this sector depends on effective management and leadership capabilities, and dominance in retail services is directly related to the expansion of the branch network through which the bank’s retail products and services are distributed.
The central branches or the bank’s headquarters form the bank’s nerve center by creating direction, developing new products and services, handling high value investments, financial management and credit activities. However, it is through the network of bank branches that the retail services developed by the central marketing function are distributed. The network of branches serves as the five senses as well as the arms and legs of the body by sending critical information from the field to the central departments and implementing the business strategy by successfully connecting the public’s needs to the products and services developed to meet those needs.
The quality and quantity of this exchange between the branches and the central branches has a major influence on the bank’s ability to utilize its products and services in the market. In short, the branches are the selling points for all retail products and services developed by the bank. Although sophisticated products and services of high value are facilitated by the central departments concerned, the ‘retail services’ are Cash Cow. A bank’s ability to expand its branch network through which its products and services are distributed is therefore critical to its growth and profitability.
The question arises – “What does this growth depend on? And the answer is -” It depends on the human capabilities available in the form of individuals who have the skills, knowledge, experience and personality that successfully control newly established branches. This is one of the biggest challenges many banks face: Their needs and their readiness to open new branches both at home and abroad are frustrated by the lack of individuals who are really able to successfully launch a new branch or ‘turn around’ an existing branch.
The purpose of this article is to explore some of the causes of the scarcity and suggest some things that can be done about it in the short term and longer term.
8 challenges and 8 possible solutions
Challenge 1: There is no training and development program specifically designed to prepare individuals to go from ‘competent employee’ to ‘competent branch manager’ with the necessary management skills.
Solution: Identify people with leadership potential as early as possible in their careers through various activities and through multiple sources and methods. For example, if ‘management’ is identified as one of the bank’s core competencies and it is fully integrated into the assessment system at all levels, there will be regular feedback through the performance appraisal system. This feedback can be further validated through regular assessment and development centers designed to identify talent in various fields. Once identified, a clear career path needs to be presented to these individuals and a systematic development program is used to ensure that we not only identify talented individuals but that we retain them. A clear career path with well-defined requirements to move from one position to another contributes very strongly to the maintenance of ambitions and talented leaders. When linked to ‘Succession Planning’, there will also be a timeline ensuring adequate preparation for successors and minimal disruption to work due to sudden wards.
Challenge 2: The competition for talented individuals who have the potential to lead is very high because demand far exceeds supply. This increases costs because pay levels need to be raised to attract and hopefully retain the best talent.
Solution: Recognize that intelligent and talented individuals are looking for something more than just the salary. So make your bank one that attracts the kind of people you want. Intelligent people with leadership are looking for a credible organization where they can grow and where they have the opportunity to contribute as well as enjoy the fun and challenging work of the place.
Challenge 3: The type of person who is good at managing branch operations and observing all administrative details may not necessarily be good at managing and managing a bank branch from a commercial perspective. Therefore, the assumption that it is possible to promote the operations manager to the branch manager and then bring someone up from the ranks to handle operations is simply not valid.
Solution: Recognize that ‘Work Settings’ is an even more powerful predictor of job satisfaction and productivity than academic qualifications and experience. ‘Work preferences’ must be measured, understood and incorporated into career management and staff retention programs. A person who is good at one thing may not necessarily be good at another. The ‘Job Settings’ that make a good Head of Operations are the opposite of what makes a good Head of Department. When positions in Operations Manager and Branch Manager are filled with people whose ‘Job Settings’ align with their skills and roles, this leads to complementarity. This greatly increases the potential for good performance. Therefore, ‘Job Settings’ should be included in recruitment, selection, career planning, talent management and succession planning and retention programs at the bank.
Challenge 4: The “critical success factors” for the position of branch managers must be redefined to reflect current market realities. The branch manager must certainly have a solid foundation in banking knowledge that brings the highest revenue to the bank – Credit and Trade Finance. There are far too many department managers who are not really able to discuss business relationships with their more sophisticated clients satisfactorily. In addition, many are also unable to adequately coach their staff with efficient preparation of credit files or document financing and credit for trading.
Solution: Develop a rigorous testing and evaluation system in these areas and use it as a prerequisite for promotion to branch manager. In other words, if candidates for promotion to the post of branch manager are unable to pass a knowledge test and a practical skills assessment, they will need to develop their skills and pass the tests and assessments in these areas before their promotion can undergo.
This will help build a sense of professionalism in the sector.
Challenge 5: There is little or no emphasis on the essential ‘soft skills’ of branch management. This includes effective leadership of people – inspiring, motivating, developing and challenging them to get the best results. The soft skills are underestimated in comparison to banking techniques, while equally important. Here, there is a wide range of skills that are essential to success; the least of which is customer relationship management that goes beyond dinners and lunches or funerals and weddings. Business ethics is another critical area that needs attention in the face of the recent global economic crisis.
Solution: Develop a set of company values and a clear set of interpersonal and managerial competencies that are incorporated into the psyche of every employee through an ongoing coaching and mentoring program. Train and develop your leaders so coaching and mentoring are part of their daily routine. As they communicate these values and build competencies into daily behavior, they will contribute to the creation of a new corporate culture where those who do not fit will move out and those who do will come up. This will increase the supply of better qualified candidates for leadership and management positions.
Challenge 6: Many think of the branch manager as a PR manager or a liaison officer, facilitating the exchange of documents and information between the central departments and the branch. In fact, many banks have designed the branch manager’s job so that he or she is nothing more than an informed ‘button click’ authorizing transactions through the bank’s operating system. The determination function is certainly a very important function and one that cannot be abandoned. However, this must be considered in light of the role of the branch manager and the optimal utilization of capacity.
Solution: Answer the question of what exactly is the role of the branch manager and what is the most valuable contribution such a manager should make. Unless this issue is discussed in depth and in light of the bank’s future strategy, the role of the branch manager will remain vague and will necessarily be defined by the personal preferences of the person occupying this position. Those who like dealing with people become Public Relations Officers, those who like to handle things and with numbers will become Controllers, those who like ‘challenges’ will become demanding bosses. Each role has its merit, but the bank has to decide what role it wants to highlight and select its executives accordingly. The important thing is that the decision must be aligned with the banks’ business strategy for growth and expansion.
Challenge 7: From the Branch Manager’s perspective, the question always arises: “Do I have any real power or authority within this centrally controlled structure?” There is no doubt that there are those who will take responsibility and confidently communicate with the central departments and get the support they need, and there will be those who perceive themselves as waiting for orders and therefore not really are responsible in the final calculation.
Solution: This relationship needs to be considered and clearly defined, including identifying the inevitable ‘gray areas’. Some individuals will be able to come up to the apartment, but wait to be invited or be told that they have permission from the ‘powers that be’ to interact assertively and openly with the central departments. They are on the same page.
Challenge 8: Industry executives also ask, “Where do I go from here? What is my future? Will I remain branch manager for the rest of my life?”
Solution: The answers to these questions are critical to attracting suitable candidates for the position. This is also related to the role we want our branch managers to play. Are we looking for ambitious entrepreneurs with a solid ethical foundation ready to go for promising opportunities? Or are we looking for ‘click clicks’ that will examine the details, follow the rules and religiously adhere to the procedures? Or are we looking for someone who seems to be a public relations officer and comes out really well with people but lacks the solid banking knowledge that will yield a high return from these customer relationships?
This is an important decision as it will determine who you get to fill the position. If you do not want to just make the first ‘okay’ candidate, a decision must be made.
When we look at these Human Capital challenges and solutions, we lead to proposing two main courses of action. One is to get the most out of the current situation and the other is to be better prepared for the future. Below are the details of both approaches.
Short-term investment in human capital: Take advantage of the current crisis to recruit the talent you really want and to build a pool to choose from in the future. In Harvard Business Review, you will find steps to consider to ensure that when you hire, you hire the right person at the right time with the right skills to ensure that when you need specific results, your people are able to to deliver.
Hire top executives: A comprehensive end-to-end process
1. Predict the need
- Conduct continuous, proactive analysis of future needs.
- Continuously evaluates the pool of potential talent.
- Developing rigorous periodic forecasts for the company’s talent needs.
2. Specify the job
- Defining the specific requirements for the job.
- Indication of what skills and experience are relevant.
- Identifying the team the candidate needs to work with or recruit.
3. Develop the pool
- Development of a large pool.
- Including insiders, outsiders, insiders, outsiders and inside-insiders.
- Considering people on the periphery of the organization (employees in remote offices, consultants, suppliers, clients).
- Tap into your networks and engage the right external partners.
- Asking candidates ’peers for nominations.
4. Evaluate the candidates
- Using a small number of high-caliber, well-educated, properly motivated interviewers.
- Applying rigorous behavioral event interviews.
- Performing detailed reference checks.
- Includes key stakeholders in the candidate assessment.
5. Close the deal
- Demonstration of active support for the candidate’s interests.
- Describe the job realistically.
- Involving the hiring manager personally, not just HR, in closing the deal.
- To ensure that compensation is fair to other employees.
- Involvement of C-level for top positions.
6. Integrate the newcomer
- Using veteran top artists as mentors.
- Make sure the newcomer checks in regularly with the boss, mentor and HR, even when no problems have occurred.
7. Audit and Review
- Removing bad hires within the first year.
- Regular review of recruitment practices.
- Identifying and rewarding excellent interviewers.
- To hold all reviewers responsible for the quality of their evaluations.
Source: Fernandez-Araoz, C, Groysberg, B and Nohria, N 2009, ‘The Definitive Guide to Recruiting in Good Times and Bad’, Business Harvard Review, vol 87, no 5, p 79.
Long-term investment in human capital:
Identify, develop and retain top talent using a number of structured and unstructured innovations in ‘Talent Management’.
Build your own talent pool
Forward-looking banks today are aware that what limits their ability to expand and develop retail businesses is the availability of qualified executives to lead new branches. The absence of an effective management team on the second or third line of a bank means that the bank will face a succession crisis if there is no quick and effective response to this reality.
The challenge is how to make sure the right people are chosen and that the path for their development and training will be one that properly prepares them to carry the bank into the 21st century. More importantly, are these individuals ready to respond to the impact of political, legal / regulatory, environmental and social changes in the world and in the region? Will they be prepared to deal with the reality of limitless financial markets and the ever-increasing pace of technology-driven change?
There is no doubt that banks already have or are recruiting high potential to bring their banks into the future. However, the problem is how to accurately identify and accelerate the development of these people with great potential so they can get to the place where you need them to be in 1 or 2 years instead of five or ten. The other challenge is how to preserve them.
These are the challenges that this Bank Branch Manager accreditation program solves.
CRITICAL PROGRAM SUCCESS FACTORS
This is an ambitious program and dictates that we continue to pay full attention to the necessary conditions to ensure success.
- Full support and or commitment from top management.
- Choosing merit and competence so that the investment is made in the right people and the program is perceived as credible.
- Choosing merit and competence so that the investment is made in the right people and the program is perceived as credible.
- Address all stakeholders’ expectations to prevent misunderstandings about the program’s performance.
- Develop a supportive succession and retention plan for those in the program and those directly affected by them.
- Set a realistic budget for this project and demonstrate the high return on investment.
- Give the program the optimal time for successful implementation.
The main purpose of this program is to prepare successful individuals to fit smoothly into the role of future branch manager at fast-growing banks that have a regional and or international client base. This will involve a number of minor goals:
- Train and develop future bank branch managers quickly, efficiently and financially.
- Use techniques that bring the best out of your staff and help you without a doubt decide where each one works best.
- Make sure the development program is fully targeted to your bank’s culture and business strategy.
- Identify those who can handle high change and high stress business environments.
- Separate the true team players from those who manage on their own.
- Change your company culture to reflect the values and competencies that are critical to your company’s future success and sustainability.
- Provide real leadership experience with low risk to you and your staff.
- Involve more than one group in the change process to ensure maximum ‘buy-in’ or ownership of the development process.
- Increase the supply of qualified candidates and then reduce the risk of poaching by competitors.
The more we know about human nature and the human brain, the more we realize that the story of our lives is written in every cell of our body and shaped by every significant relationship. The importance of getting the right people in the right place and the right group of people working together cannot be overstated. The right results seem to come as if by magic.