in earnest last year, management was faced with putting together a cohesive team of employees from three acquired companies.

To create a common culture, investment banking co-heads W. Barnes Hauptfuhrer and Stephen E. Cummings hit on a three-pronged solution -- a team-based compensation structure, a 360-degree review process, and the organizing of all wholesale and investment bankers into industry groups.

"Our goal was to get our investment bankers as productive as possible," Mr. Hauptfuhrer said. "Instead of just being a raft floating down the river, we decided to add a motor and really direct what we were doing."

Similar situations are cropping up across the banking industry, as commercial banks develop corporate finance capabilities by buying small, far-flung investment banks or specialized teams. Chase Manhattan Corp., for example, agreed in late September to buy the equities specialist Hambrecht & Quist Group of San Francisco.

For Charlotte, N.C.-based First Union, business lines such as mergers and acquisitions advisory were built through a series of deals and hirings that began with the January 1998 purchase of Richmond, Va.-based Wheat First Butcher Singer Inc.

Four months later the $235 billion-asset company bought the mergers and acquisitions specialist Bowles Hollowell Conner & Co. of Charlotte.

This year another 30 traders, bankers, and salespeople from Deutsche Banc Alex. Brown's Baltimore office also came on board.

Finally, in October it bought Chicago-based Everen Capital Corp., adding real estate investment banking capabilities and more equity research people.

Mr. Hauptfuhrer and Mr. Cummings said their approach to creating a shared philosophy for the business uses modern communication tools such as e-mail and eliminates the need to locate all its bankers in one city.

"We have no intention of moving everyone to one location," said Mr. Cummings, who came into the First Union fold in the Bowles Hollowell deal.

Influencing their decision to let investment banking professionals remain in place is the premium placed on skilled workers. "It's just very competitive to get talented people," Mr. Cummings said.

To ensure that all First Union's bankers communicate and work with the rest of the team, Mr. Hauptfuhrer and Mr. Cummings assigned each person to one of 18 industry groups.

These groups, which include investment bankers, mergers and acquisitions specialists, and sales and research people, meet weekly to discuss clients and strategy.

The new review process instituted by the two co-heads had gained currency early in the decade among nonbank companies such as Federal Express Corp. and General Electric Co.

Used for several years at Bowles Hollowell, the 360-degree approach is based on feedback from superiors, subordinates, and peers to create a more complete evaluation.

The approach is not new to First Union. A few other sections of the company, including senior managers of the capital markets division, have tried it.

In addition Mr. Cummings and Mr. Hauptfuhrer instituted what they call a "more subjective" incentive plan -- team-based compensation. The new pay structure and the 360-degree performance reviews can help motivate employees, analysts said, but they also have their drawbacks.

"Team-based pay works well when you really have people working as a team," said Diane Lerner, a senior consultant for the compensation specialist Watson Wyatt Worldwide. "But the company also needs to have the discipline to deal with poor performers in ways other than withholding a team-based bonus."

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