Reengineering means watching the little things, too.

The buzzword in banking today is "reengineering," but to the community banker this should really mean common sense in controlling costs.

Sure, there have been many examples of banks that have dug into operations and found redundancy beyond belief.

Often they find that pointless habits have evolved, like requiring the production of reports read by nobody or by only one person, whose job is to read them and file them away.

Reengineering in some banks has thus resulted in peeling away layers of management. This has not only reduced costs but also given the remaining people a higher level of authority, and a morale boost.

But reengineering need not be that drastic. It can involve little items as well as big ones.

A good example of this was the revelation by superregional Fleet Bank that. it had found that it was spending $50,000 a year on plastic foam cups for coffee an expenditure that, could be eliminated by asking each employee to buy his or her own mug!

Hold the Lettuce

This is similar to actions taken in the airline industry. Delta, for example, saved hundreds of thousands of dollars by eliminating the lettuce leaf under the salad, since no one seems to eat this leaf. Other airlines have cut costs by removing olives from martinis.

This is why some community bankers have assigned one person as ex officio purchasing agent: to get volume discounts, eliminate duplication and look for the small saving that can quickly add up.

I remember one newsletter publisher explaining why he billed for newsletters four times a year instead of doing it once for the full annual rate.

"Usually the officers have a spending limit of $50 an item without second authorization. If we bill $36 a quarter, they can approve it without asking any higher-ups. But if we bill the whole $144 at once, that additional approval is needed - and often it is not forthcoming."

Such a subterfuge should be easy for a banker responsible for approving expenses to catch.

Similarly, an officer will take a subordinate along when he has a luncheon that is not truly a bank expense. By having the underling sign for the lunch, the expense meets the bank's policy that your expenses need someone else's approval. The letter of the law is met, but the spirit is broken.

Who's Calling Whom?

Banks also find that phone expenses can be badly abused when no one monitors them.

Community bankers report that if they once or twice take the phone bill generated by each extension and adult it - requiring the employee to explain each toll call - this can help cure the attitude of so many employees that the phone is a "free good," or at least a fringe benefit.

In this regard, back when I used to make collect calls - before direct dialing became so cheap that it didn't pay to waste time going through the operator - I would call Mr. Jones collect and a Mr. Jones would accept without even knowing who was on the line, when frequently the call was for another Mr. Jones.

The solution: no collect calls, unless it is a department that solicits such communication as part of marketing.

One other suggestion. Every bank should have an unlisted "800" number for employees calling in from the road. The cost is vastly below that of a credit card call, and the monthly maintenance cost is now minimal, due to communications companies that buy time wholesale and offer the service.

One company has even sent out fliers offering this 800 service for a $1-a-month service fee, plus 25 cents a minute in business hours. Compare that with your credit card from a major carrier and it should join small savings that add up so quickly when the bank undertakes this type of reengineering.

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