One of my friends, the chief executive officer of a modest-sized corporation, has several accounts in his local bank, including a number of large certificates of deposit.

When he ordered new checks, they arrived quickly, but the next month his statement included a $62 charge for the checks. He was outraged because he keeps so much of his money there and, as a former bank CEO, knows that he is a profitable customer.

He called his account executive, who offered to take him out to lunch or dinner but said he could not reverse the charge.

My friend moved his account to another branch of the same bank. As he opened his first CDs there, he asked an officer to reverse the $62 charge. "No problem," the officer said, and it was done.

He called the first officer to find out why he could not reverse the charge when the second one had no problem doing it. The response went something like: "My branch manager is a terror, and she does not like to reverse any charges. My happy future here depends on pleasing her. I hope you understand."

My friend did not understand, nor do I. Is it the function of a bank's staff to please the customers or to please the manager? If a contact officer has so little empowerment that he cannot reverse a charge for a major customer, think of how little else that he can do to help the bank attract and keep profitable business.

Staff empowerment separates the good community bank from its large rivals with cookie-cutter policies.

A traveling officer of a major New York bank once told me that, though he has lots of responsibilities, the one thing that gets him credit with his superiors is opening a correspondent account. When the chance to open one arises, he drops everything else and concentrates on that. "Though my other accounts may suffer, this is what my manager wants and what gets me ahead," he said.

Again, the judgment of the traveling banker, and the bank's profitability, have become secondary to the goal of his superiors.

But empowerment is a two-edged sword. I remember spending a day some years ago with Earl Butz when he was Secretary of Agriculture. My most vivid memory of that day was when he told me his biggest worry did not concern exports and imports of farm products.

"My biggest problem arises when an inspector in our department has a fight with his wife and needs to get even," he said. "So the next day he takes it out on some poor packing plant where he finds one insect and then closes the operation down for the day. The company loses a day's income just because he has to show his power."

I asked a mortgage lending officer who had switched from a major bank - which had absorbed his local bank - to another community bank what the biggest difference was in his day-to-day work.

"At the large bank the goal was meeting targets for size and profitability," he said. "All else was secondary. At my new bank, serving the customer is the key. I may be working on the management's targets, but if a customer has a request, I am told to drop everything else and meet his needs."

Though he said this policy may be good for the bank's bottom line, he wondered whether it would be better to set his own priorities since he knew the situation.

Mr. Nadler, an American Banker contributing editor, is professor of finance at Rutgers University Graduate School of Management.

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