Senior managements of today's financial institutions can't afford not to investigate putting their lending and credit staffs through a diagnostic assessment.

These assessments most definitely offer benefits, both tangible and intangible.

For example, if the process leads bankers to acquire additional skills and to become better at their jobs, the bank will benefit financially.

Because diagnostic assessments allow management to more closely focus on training needs, banks can spend their training dollars more wisely.

Professional Development

Assessments also help to motivate employees by providing them with a more focused training effort. This fosters professional development and gives staff members a feeling of greater worth and appreciation.

Diagnostic assessments are also beneficial when banks use them to gauge the effectiveness of their training programs.

The results may indicate that their programs need adjustment. Or the message may be that the programs are outstanding, a finding that can reinforce the training department's budget requests.

Moreover, diagnostic assessments can assist banks in targeting training.

For example, a banker may need only to strengthen a relatively small portion of financial analysis skills to improve significantly on the job, rather than an entire course on the topic.

Certainly cost-effective training should result from this process.

There are several important factors that financial institutions should consider before implementing this technique.

First, senior management should ask itself why it wants to use a diagnostic assessment. Will it truly be to assess the training needs of the staff, or will it be a camouflaged way to out-place people?

If the answer is the latter, the bank should contact its best attorney. If it's the former - as it should be - senior management needs to properly position the assessment.

Natural Suspicions

If a bank has had a recent "right-sizing" or if consolidations and reorganizations are occurring, senior management is going to have a difficult time convincing staff members that the sole intent of the diagnostic assessment is to assess their training needs.

Management must work very hard to allay the natural fears of - a test! No matter how well they communicate the intent, bank employees will equate a series of assessment questions about their profession - given in a test-like format - to a test.

Senior management must support the idea, then must carefully and painstakingly communicate the objective, which is to target training needs more closely.

Honesty is always the best policy. Senior management must tell staffers that the diagnostic assessment will allow the bank to focus more closely on training - that it will help employees improve their skills while helping the bank improve its financial position.

Senior managers should set an example by taking the test themselves. Seeing the chief credit officer or senior manager answering the questions along with other staff members provides a great role model for an organization. It sends a signal that "we're all in this together."

Banks should have all appropriate professionals sit for the diagnostic assessment, preferably at the same time or within a week or two of each other.

This minimizes information exchange and anxiety. Participants should be well prepared and well informed about the assessment.

Whether a bank decides to purchase the assessment from an outside provider or create one itself, the advance materials for participants should provide basic information about the assessment.

These include the length of the assessment, where it will be held, what kinds of questions they should be prepared to answer, whether they'll need calculators, and whether they need to study.

The bank's training director or another responsible manager should consider having a question-and-answer meeting with everyone who is scheduled to take the assessment.

An Important Distinction

Line managers must be coached that they cannot use the results of the diagnostic assessment for personnel performance ratings.

If these managers have conducted performance reviews properly, they already will have some suggestions for enhancing individuals' professional development needs.

Therefore, the fewer managers who receive score results, the better the employees' reaction, and the more the assessment will truly be a training or development tool.

In larger banks, training directors should be the only ones who see the actual results of assessment.

In smaller banks, the chief credit officer or president will probably receive the results. In this case, it is crucial that they remain objective and disregard assessment results at performance review time. Everyone involved needs to constantly remember that a diagnostic assessment is a development tool.

The Timing Issue

Be sure to allot adequate time between the announcement of the assessment and the actual administration date. A month is probably reasonable.

Inevitably there will be some tension, regardless of your attempts to reduce anxiety. Therefore, do not allow too much time between the announcement and assessment dates.

Financial institutions must be prepared to spend money on the training that the diagnostic assessment reveals is needed. To go through the effort and not conduct training promptly is not only wasteful, but will lead to a deterioration of morale.

Mr. Shipley is director of the professional development division of Robert Morris Associates, the Philadelphia based association of bank loan and credit officers.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.