Banks have invested substantial time and energy in preparing concise statements of what they stand for; that is, what the bank's strategy is and how it intends to achieve its goals. These mission or value statements also usually define the institutions' aspirations or hopes.
Value statements, however, are doomed to the trash heap of business cliches (toward which the quality movement may also be headed) unless management crafts them with the active involvement of line and staff bankers.
Success is further predicated on management's use and refinement of these statements in the daily management of the bank.
At all levels, when used effectively, corporate value statements offer banks a lever to change employee attitudes and performance.
Despite the current vogue, value statements are not appropriate for all financial institutions. In fact, the statement itself may not be all that important. Rather, the focus should be on the tactics for achieving the goals that the statement sets out.
Senior management should initiate the creation of a value statement only when it is aware of the longer-term implications of this process.
If writing a headline for the annual report or a value statement becomes a "one off" exercise that results only in a motto laminated in plastic sitting on a credenza, then the process should never have begun.
Key Definitions
Financial stability and meaningful profitability should be clearly defined before the value statement exercise is begun. But assuming that the bank has the opportunity to perform relatively well or is already on an even keel, bringing together teams of employees to develop a vision statement can offer real benefits.
Not surprisingly, many value statements include phrases like: "We want to be the best at . . ." or "high levels of customer service" or "first-rate product offerings."
Unavoidably, the core value statement is woven from apple-pie-and-motherhood kinds of statements. It is not surprising that many bank value statements frequently seem interchangeable.
First, these phrases represent excellent goals. Second, banks are trying to differentiate themselves even while selling products and services that are increasingly viewed by customers as commodities. It is simply not that easy to be different from the competition.
As the organizational focus of the value statement increases, that is, as the statement proposes to represent the entire bank rather than a specific business unit, it is extremely difficult to go beyond the obvious.
An alternative, visionary approach to wording value statements is unlikely. One does not expect that financial institutions will ever adopt the approach used by the British-based Body Shop.
Its value statement emphasizes an emotional, almost Zenlike approach to business: "Make compassion, care, harmony, and trust the foundation stones of business. Fall in love with new ideas."
Where's the Value?
If the fundamental themes of a value statement are largely similar to other financial institutions, then, what is the point of writing one?
The most meaningful value statements focus on an individual business unit or support area. This allows the statements to be more specific and to have substantial impact on business practices.
Further, after the statement of aspiration is complete, management must develop an approach to achieve those goals.
Let me use private banking to illustrate my point concerning how the creation of the value statement can be a catalyst in an ongoing process.
Assume that a team of private bankers has developed a value statement: "We want to be the best bank at providing a full range of private banking services to our customers. We intend to be known for the quality of our service."
In tone, if not in exact words, this phrasing may seem similar to many of the actual statements being created today by U.S. banks.
The statement, however, raises more questions than it answers, and many of the questions are fundamental. How can this bank become the best at providing private banking services? What exactly does that mean? What are the implications of that goal for the bank?
How should you measure what being the best bank means? Benchmarking of your unit's profitability versus competitors? Greenwich Research results? In-bank customer surveys?
What does a full range of products mean? What is the quality of current private bank product offerings? Can you improve them by internal product development? Can private-label products be provided by others?
Who Will Deliver the Service?
And just who is the customer? Does he or she possess both high income and net worth or are they part of the "emerging rich" with longer-term prospects but a current need to borrow? Should all customers receive the same level of service? Should service be segmented? Who will deliver the service -- an individual or a team?
When the value statement process brings bankers together to discuss such strategic and tactical questions, the result can be an improved, tighter focus for the business unit and, ultimately, the entire bank.
Clearer near-term tactics as well as longer-term strategic goals will shape marketing plans, product development, and customer service.
Given that a bank will not only waste time but also damage employee and customer goodwill if the value statement does not lead to concrete actions, management needs to approach the process with a game plan.
People of Stature
Who should be the leaders in drafting this statement? The team crafting this statement for adoption by the entire group must have earned the respect of internal employees, customers, and, when possible, shareholders.
This team should also know from day one that they are also being asked to make the value statement more "concrete" by developing a detailed road map to achieve the goals. They will be asked to recommend quantitative measures, tied to productivity, profitability, and customer satisfaction to measure the degree of success.
How should the statement be framed? Any 20-word summary will doubtless contain many of the "Mom, and apple pie" phrases mentioned above. The "how to" statement comes next, in which a bank lists the key steps required to achieve its goals.
Assigning Roles
Finally, the various members of the banking team need to agree on their specific roles in reaching the stated goals. The opportunity is here for various line groups (in our private banking example, lenders and investment mangers) to better coordinate their marketing and customer service.
There may also be opportunities for line and back-office professionals to discuss how they can better work together for the benefit of the bank.
Getting more internal cooperation between the line and back office should be justification enough for beginning the value statement process.
How can the statement become part of the fabric of the bank rather than a short-term exercise?
Senior management must take the lead in positioning the value statement as a kind of corporate mantra, but they must insist on results and base rewards upon them. With ongoing management commitment, creating a value statement can result in both a more focused strategy and the plan to achieve it.
