Banking used to be easy. But what once was a simple business where money came in at one rate, was lent out at another, and where not much changed from year to year, is now engulfed in change.
Just consider the scope and impact of changes in competition, mergers and acquisitions, regulation, customer needs and perceptions, and the makeup and demands of the work force, and you can see that change in today's business environment is dramatic and wide ranging, and it's a struggle.
If you want to be in business tomorrow, you have to realize change is the most dominant and constant reality you face, and you have to be prepared to adapt quickly and use change to your advantage.
Any bank trying to deal with change must confront two basic issues.
One relates to human concerns, such as attitudes, communication, teamwork, empowerment, and morale. This is the soft side of change.
The other deals with business matters such as profitability, cost control, building revenue, fewer errors, faster cycle time, lower efficiency ratios, and the like. This is the hard side of change.
Most banks have a cultural bias toward one side or the other, and therefore emphasize one over the other. Few companies totally ignore either, but many have trouble finding a change process that creates the right mix of both. And for changes to be successful, an organization must pay attention to, and implement carefully, both sides of change.
When a bank overemphasizes the hard side, its people are turned off because they feel disenfranchised, or ' out of the loop'. When it pays too much attention to the soft side, change efforts are just as likely to fall short.
- it gives you a warm feeling, but no one notices anything different.
Reengineering and TotalQuality Management are surely among the most overused and misunderstood terms in the history of modern business. For many bankers, the concept of reengineering conflicts directly with the principles of total-quality management, or TQM.
The latter is often viewed as a process focusing on training, empowerment, and teamwork, while reengineering, especially given some of the recent publicity, is seen by many as little more than a euphemism for cutting jobs. It's easy to understand why TQM and reengineering often seem to be separate and distinct change agents, requiring the choice of doing one or the other, but not both. In reality, the two can complement each other nicely. In fact, in most cases, one should not be done without the other.
TQM as it is being applied by most companies contains some of the most effective tools for handling the soft side of change. Team building, communication, reward and recognition, training, employee involvement, and empowerment are all key to bringing about the soft side of change. And TQM's strong emphasis on serving the customer can be a rallying point that brings together and helps to bond people in the organization.
The most common complaint against TQM is that it takes too long, if ever, to see any real significant change or accomplishment. Conventional wisdom has it that TQM requires at least three to five years to realize measurable bottom-line results.
Reegineering, on the other hand, addresses the hard side of change, and does it quickly. Done fight, it creates dramatic changes in the ways banks do business. No more tweaking this system or fine-tuning that process. Reengineenng means turning things upside down and inside out. It means redesigning branch, lending, operations, and other core business and service-delivery processes to achieve quantum improvements to quality, service productivity, and cost effectiveness. Reengineering fills the "takes-too-long-for-results" void because it can produce important change in the first three to six months.
For reengineering to truly show long-term, lasting results, many of the TQM elements have to be part of the process.
Teamwork, communication, employee involvement, and empowerment are actually important pieces in reengineering because no matter how well designed the process, it takes committed people to make it work.
Bringing change to any banking organization is a challenge. But by building on the synergy between TQM and reengmeering, you can make the way a little smoother.
Here are 10 elements that should be part of any process you use to combine TQM with reengineering as a vehicle for change.
1. Clear goals. Know exactly what you expect to accomplish, and why. As elementary as this sounds, many well-intentioned efforts are begun without anyone really knowing why. Gain consensus among key people, and communicate goals and rationale to the rest of the organization.
2. Customer focus. Start with the customer. What does he or she really want? See your business from the customer's eyes. Most banks are structured vertically, along functional lines. But the customer doesn't care what your organizational chart looks like. He only cares that he may be bounced from one department to another before he can get an answer to even the simplest question. Look at the organization horizontally. That's the way the customer experiences It. Look at process, not function, and start with the processes that most directly impact your most important customers.
3. Leadership. This has to come from somewhere in the organization, but contrary to popular belief, it does not have to start at the top. Much significant change, whether social, political, or business change, has begun at the grassroots or the middle levels. Eventually senior management has to buy in, but it does not have to be on board 100% at the beginning.
4. Awareness and education. Training is essential to building an understanding. of the issues, and giving people skills they need to drive change. But many banks make training the focal point of their change process, and in these cases, do little else, so not much ever really changes.
5. Sponsors, supporters, and zealots. In every bank, you can find some members who are believers from the start. Seek them out and get them involved early and often. They can help to sell your concept and objectives to the rest of the organization.
6. Symbolism. Don't be swayed by cynics who laugh at slogans, signs, posters, buttons, etc.; they are valid and highly effective agents of change. But be sure your campaign is more than merely symbolic or it will lose credibility.
7. Involvement and empowerment. Give people a way to be involved in real constructive improvements. Just being on a team isn't enough. There must be real and significant accomplishment. Expect them to do this and hold them accountable for results. This helps build a sense of ownership in the change, and makes people feel and act like entrepreneurs.
8. Measures of success and failure. People need to see their hard work is creating progress. And like it or not, the day will come when someone will have to justify the existence of effort. The hard-side results like turnaround time, error rates, producutivity, and cost are fairly easy to measure, but be sure you do it. It's easy to take them for granted. Even the soft side is not as hardyto measure as you might think. Surveys and focus groups are good ways to see if and how teamwork, morale, and attitudes change.
9. Reward and recognition. Highlight the successes of those who accomplish the objectives you are seeking. Don't skimp here - make it first-class. Keep it as positive as possible, but know also that negative reinforcement can be a valid and effective tool.
10. The right people. Recognize that in spite of your best efforts, some people will never change. Identify them and make the changes necessary. One of the worst mistakes companies make is holding on too long to people who will not or can not adopt to change and the new realities it brings.
While the terms reengineering and total quality may spark skepticism and even cynicism among bankers because of overuse and misuse, the tenets of both will continue to be popular because they provide a road map of sorts for effecting. change in a way that brings together both the hard and soft sides of change.
Reengineering addresses the hard side issues and improves "the way we do business" by using process-improvement tools to increase customer satisfaction, bank profitability, and stock price.
TQM can help teamwork communication and empowerment become integral elements in gaining consensus to change.
As accomplishments occur and they are recognized, celebrated, and rewarded, the organization will see service improve, costs decrease, attitudes change, and morale increase.
As difficult as change is, if a bank harnesses the creative energy of its people to achieve quantum improvements to key measures of effectiveness, and combines that with a commitment to continuously improve the new processes, it has a powerful competitive tool.
Merging TQM and reengineenng into an integrated approach can accomplish early, dramatic results, while ensuring the new process stays fresh and effective in the long run.
In the final analysis, a successful change effort must have a measurable impact on the bottom line. Banks must find the lowcost solution so customers get service or products faster, with fewer mistakes, and in better condition.
But for those things to happen, people in the organization must be involved. they must communicate, and they must work together as a team. That's why both sides of change are so necessary for any real lasting impact to occur.