Silos may be fine on Iowa farms, but a $1.7 billion Des Moines banking company has decided they simply will not do on its organization chart.
Brenton Banks threw its old chart out the window this year to create a single sales force. Now brokers are also selling trust products, and trust officers are selling brokerage products. And everyone has a financial services rank, from tellers at FS1 to trust lawyers at FS10.
"The brokerage and trust departments were 'silos.' They didn't visit with each other, they didn't work with each other. In fact, it was as if they were with other companies," said Robert L. DeMeulenaere, chief executive officer of Brenton Banks Inc.
"We really need to build our financial services area, and we feel we had to do something dramatic because we want to grow" rapidly, he said.
The effort has been spearheaded by Betsy Piper/Bach, a veteran broker who worked at Dain Bosworth Inc. for years. Mr. DeMeulenaere calls her "an agent of change."
The evolution began after Ms. Piper/Bach joined Brenton in July 1995. When she arrived, 14 banks carried the Brenton name, but each was operated independently. Each bank's checking accounts had different terms and fees, she said.
That changed in 1995 when all were reorganized into a single banking organization, combining back-room functions and streamlining operations, Mr. DeMeulenaere said. That was the first step toward building a better sales culture, he added.
With an extensive brokerage background, Ms. Piper/Bach liked Brenton's broad product lineup, which could rival that of many brokerage houses. It operated much as a brokerage business does, without the cultural sales barriers that haunt many banks offering investment products. It was just a brokerage firm housed in a bank, she said.
At the same time, it lacked a strong referral culture, and employees kept their customers to themselves, limiting cross-sales. "They didn't want to share business," she said.
This attitude was so intense, Mr. DeMeulenaere and Ms. Piper/Bach said, that ordinary incentives did not break the gridlock. So they examined creative ways to change.
Ms. Piper/Bach, who is president of Brenton Investments, said the first consultant the company hired was procedurally oriented, identifying issues to examine but with few ideas for dealing with them. Visits to other banks found "silos" there, too, but no one had taken the sort of major steps to open them that Brenton wanted.
To break down the sales barriers, the single-sales-force concept was piloted with a few employees last fall.
"If we were going to have everyone work together for the same purpose, then we needed just one bottom line," Ms. Piper/Bach said. "To do that, the goal the sales force must hit is $2.7 million in pretax net income." The company will not break down who hit what goals based on the old organizational chart, she said.
Under the plan, each Monday, bankers and brokers meet to discuss what they will be doing that week. On Wednesdays they meet again and bring in their best client names. After that, joint sales calls are made that cross boundaries, she said.
When the plan was announced, the sales force was not amused. "When we first introduced it, we said there'd be a personal banker selling annuities in every single market. We had fireworks," Ms. Piper/Bach said.
"In fact, we thought some would leave," she added.
Brokers had real concerns that they would lose commissions to bankers expanding into their turf, she said. The bank rejiggered the plan to give brokers a slice of bank product sales as well. While the bank hopes that this will keep individual commission levels strong, Ms. Piper/Bach acknowledged she is not sure it will.
"I would say everybody is holding their breath," she said. In six months, she expects to have a read on compensation relative to past levels.
At the first Monday meeting held last fall, Ms. Piper/Bach said, the tension in the air was electric.
Mike Tracy, a Brenton broker for six years who is an FS9 under the new system, agreed. But that tension has eased. And overall, Mr. Tracy said, he is optimistic that the changes, together with some tuning, will prove out.
But he is still concerned that a proven system in which brokers were already productive salespeople is at some risk. "I think it was working pretty well," he said. "I think it could work better, but my concern is that the new system will throw a monkey wrench in it."
He said the idea of a lender selling annuities bothers him in any but the smallest market. And he noted that it took him years to build a client base. That was a full-time job, and he is not sure it will be easy for an FS5 (Series 6 or 7 broker who also can sell bank products) to move to FS9.
"Can someone wearing the hat of a banker rise to be a big producer on the brokerage side?" Mr. Tracy asked.
He also suggested that compliance issues might become more difficult as specialists broaden into more areas. Asked about compliance, Mr. DeMeulenaere agreed it was a concern. In fact, he said, it is a concern of the Federal Deposit Insurance Corp.
"We asked them if they'd have an open mind and not just say no," he said. The banking company promised to work with the FDIC every step of the way while developing the new system, he said.
To bolster compliance, a trust lawyer was brought to the central office to reinforce and coordinate compliance efforts, he said.
Mr. DeMeulenaere said diversifying the product lines sold by individual bank employees will better serve the customer while "fostering the concept of one mission."
Realistically, he said, however, "we will never become a bank with one sales force because there are specialties."
Mr. Tracy, for instance, said that as an FS9 his specific duties have not changed as drastically as those of the mid-level sales force. These people must learn about a new range of products to sell. "It does add arrows to their quiver," he said.
In retraining the sales staff, Ms. Piper/Bach said, Cohen Brown Management Group of Beverly Hills proved invaluable.
To understand the commitment of the bank, which has its own line of proprietary mutual funds, to its investment products, it is only necessary to listen to employees' voice mail.
Mr. Tracy tells callers to ask about Roth IRA offerings, Ms. Piper/Bach tells callers to ask her about 401(k) products, and even the CEO is pitching specific products. He would like people calling him to ask about stock offerings.
"The bank is more sales-oriented," Mr. Tracy said of his six years at Brenton Banks. "They're much more proactive about developing leads and cross-selling."