Sizing Up Synovus’ Cult of Personality

Phillip Aldridge won his place in Synovus Financial lore in 1995. The Columbus, GA-based company was growing rapidly, devoting lots of energy and talk to technology improvements. At one of CEO Jimmy Blanchard’s Tuesday morning meetings—sessions where Blanchard himself has been known to cut a vein and spill his own personal feelings on the floor—Aldridge, now a financial consultant, posed a seemingly innocuous question: “All the talk was ‘automation, technology,’” he recalls. “I asked, ‘Has the company lost sight of its commitment to people?’”

No doubt employees of other companies ask such questions—quietly, so as not to be laughed out of the room or worse. Few would hazard challenging the CEO in a public forum. But Synovus’s culture has long placed a premium on people and communication, and to Blanchard, Aldridge’s statement amounted to a cold, but welcomed, slap in the face. Within days, top executives began work on institutionalizing many of the people-oriented things that had been accomplished by sheer force of will when Synovus was smaller. “It was a question that shook the company,” Blanchard says. “And he was right. We had become so absorbed by rapid growth that our focus on people no longer had the reach and legs that it once did.”

Today, Aldridge says, Synovus is a “happier, more effective” place. It offers Ivy League-class training on how to measure up to a list of “leadership expectations” that guide the company’s interactions with employees and customers. Coaching and mentoring are part of daily life; employee evaluations have become year-round, interactive exercises. Child care centers and tuition reimbursement programs are catching on throughout the enterprise, while the company’s record of never having a mass layoff persists. A “chief people officer” oversees the entire affair. The payoff: Fortune magazine has named Synovus one of the 10 best employers in America five years running.

It’s but one part of a corporate culture, nurtured and tweaked over more than three decades by Blanchard, 61, that seeks out the intersection between caring and high performance, preaches leadership and values listening, sharing and trust more than most companies. “Our culture is rooted in the notion that people are valuable,” Blanchard says. “They’re entitled to dignity and respect and appreciation.”

At Synovus, the Golden Rule, (do unto others ....) and “Servant Leadership”—the notion that the boss is there to serve the organization and its people, not the other way around—are bedrock principles. The company’s operations are centered around a well-defined set of expectations, graphically bisected by an ordered “value chain,” that focuses first on people and culture, and places performance near the end of the list. Various committees and meetings constantly refine and reinforce the message. The latest addition, a “Customer Covenant” adopted last year and carried on small cards in employees’ wallets, codifies the company’s goal of serving all clients “with the highest levels of sincerity, fairness, courtesy, respect and gratitude.” All of this is wrapped up neatly in what officials like to call a “culture of the heart.”

Critics say that devoting too much effort to such “soft” factors can detract attention from more important matters, such as making money; Blanchard asserts that nothing is more important—or morally “right”—especially in a commodity business where relationships rein supreme. Others see all the talk about people as a slick marketing ploy; Blanchard says its roots reach deep into the organization. “There are people who will brush off the Golden Rule,” he says, chuckling incredulously in a southern baritone. “They’ll laugh and say, ‘He who has the gold rules.’”

Thus far, shareholders have done most of the laughing. Over the past decade, Synovus has consistently outperformed the industry in earnings, loan and deposit growth. In 2002, the $20 billion-asset company boasted a return on equity of 19.69 percent and a return on assets of 2.10. Chris Marinac, an analyst for SunTrust Robinson Humphrey, says the emphasis on people and leadership helps differentiate Synovus in a crowded marketplace. “The culture empowers employees to do things the client wants, not simply ram products down customers’ throats,” he explains. As a result, Synovus typically garners higher loan margins than most rivals. “If you have that kind of relationship, you can usually price for it.”

The question is, can it last in the face of adversity? In the first quarter, net income jumped just 8.7 percent over the previous year, its lowest increase in a decade, due largely to a sharp drop in commercial loan margins. In response, Blanchard launched an aggressive share buyback program, and was forced to backtrack from a vow to boost earnings by 15 percent annually. The new guidance: 4 percent to 8 percent growth for the rest of 2003.

This may be the ultimate test for the Synovus culture. Charles Wendel, president of Financial Institutions Consulting, says it’s easy for companies emphasize people aspects during good times. “If you’re doing poorly, it’s much more difficult, because businesses are meant to make money for shareholders, not be nice places to work.” Already, Blanchard says, some employees are worried about what a more austere environment will mean to them. “We have people wondering if we’re going to set aside our cultural principles for the sake of expediency,” he says.

Blanchard won’t rule out layoffs. For all the nice talk, Synovus is fiercely competitive. The company employs a supercommunity banking structure, with 40 separately chartered affiliate banks, ranked against each other on performance and other metrics. “We don’t have a namby-pamby, it’s-alright-if-we-don’t-do-well atmosphere around here, and we don’t have any rule against firing poor performers,” he says. But he also asserts that the cultural work of recent years has fostered the teamwork required to endure tough economic times.

Corporate cultures are at once amorphous and pervasive. Every company has one, defined by the myriad little things that go on within the organization, the lore, people and events that are celebrated, the terminology that’s used. Just because something works for one organization doesn’t mean that others should try to duplicate it. Wendel notes that Synovus’s culture, with its bible-belt undertones, might not fly elsewhere. What’s clear is that crafting a strong culture takes effort. For Synovus, it’s become something of a religion, with Blanchard serving as the chief preacher.

Synovus’s growth and decentralized structure make evangelizing the vision more difficult. Each banking affiliate has its own board, management, operating strategy and profit-and-loss statement. During the past decade, the company has bought more than 20 banks. Targets are scoped for cultural fit before any deal is made, but still keep their own personalities. They also are expected to foot the bill for many of the cultural initiatives out of their own P&Ls, sometimes carrying the appearance of an unfunded mandate. Meanwhile, 81 percent-owned processing subsidiary Total Systems Services, which generates 29 percent of revenues, adds a high-octane tech attitude which clashes with conservative banker styles.

Stephanie Alford, Synovus’s chief people officer, says centralized cultural rules helps keep the company on track. “When you have 11,000 employees, it’s important to have one sheet of music to sing from,” she says. Getting everyone to sing in tune is another matter, says Harry Stump, a senior vice president at Bank of Pensacola, FL. When his bank was acquired in 2001, Stump was skeptical. “I’ve been in banking for 30 years, and I’ve heard a lot of talk about caring for people and doing the right thing,” he says. Today, he’s a convert. “There’s a very strong intent here to walk the talk.” But as a member of a 20-member “cultural trust committee” that meets regularly with Blanchard and other executives to provide feedback on various initiatives, Stump says not everyone is a believer. “Most people buy into the concept and play by the rules, some think it’s less-relevant.”

Among them is Hunter Atkins, chairman and CEO of the Bank of Nashville, which Synovus bought last July. Atkins says the autonomy afforded by the supercommunity structure is liberating. “Their message is, ‘We’re going to fight like heck over the revenue targets, but how you hit them is up to you,’” Atkins says. He’s less impressed by the culture stuff, and is still inclined to seek out his own guidance. “What [Synovus] says about leadership offers some worthwhile takeaways. But is Jimmy Blanchard’s way the only way to go? No.”

Blanchard would likely wince at such words, not because of any perceived slight, but because they highlight his role. A modest man who in 1971 took the CEO job of what was then Columbus Bank & Trust, he works hard to defeat the idea that Synovus’s culture is built around any one person’s vision. But there’s little denying the central role he plays, nor that he accepts it. “Jimmy personifies the company,” says Anat Bird, CEO of SCB Forums, a consulting firm that has worked with Synovus. “He believes intensely in the value of unlocking the human potential in people.”

That belief is on display every Tuesday at 8 a.m., when roughly 500 employees gather to hear top executives expound mostly on leadership topics. Many who can’t attend the sermons personally listen in live, via conference calls, or later on cassette tapes. In April, several sessions focused on “making others successful, and the kinds of relationships we, as leaders, should have with other people in the organization,” recalls Vice Chairman Elizabeth “Lee Lee” James. As the pastor, Blanchard “is up there, opening himself up, sharing of himself so completely. … He’s very vulnerable and sincere. I always feel like he’s talking to me personally.”

Blanchard views sharing his deepest personal thoughts—he recently talked at length about how his wife makes him a better person—as a form of leadership-by-example. A leader at Synovus must be able to “stand up in front of a roomful of people and show what you’re made of. A private, keep-it-to-yourself person won’t make it here.

“People think I’m superhuman, because I can stand up there and speak. But I had to go through a very difficult forced-march to not be self-protective,” he adds. “It helps our people grow when they learn that you don’t have to be superhuman to be a good leader, that you just need to have good motives and some passion.”

Those motives are encapsulated in the company’s “leadership expectations,” which promote a set of core values, good communications, managing the business and helping fellow employees be successful. A companion to those expectations is a “value chain,” which prioritizes six areas—people, culture, strategy, action, performance and value—in that order. This structure defines day-to-day life in the company, serving as the backbone for training programs and defining how Synovus management solves problems. “When most organizations run into trouble, they go to the end, and ask, ‘How am I going to get my stock up?’” Blanchard says. “We go to the beginning, and ask, ‘What do we need to do with respect to people? How can we improve teamwork?’”

All this attention to employee well-being has consequences. In 1999, Synovus was ranked No. 1 on the Fortune list. Afterward, “every little thing we did that wasn’t totally positive or pleasant was received with less enthusiasm,” Blanchard recalls. “It was one of the best things that ever happened to the company, but expectations were raised.” There also was a sense that too much effort was being devoted to employees, at the expense of customers. In response, the company adopted its “Customer Covenant,” loosely modeled on the human resources experience, which put a long-standing commitment to needs-based selling into words.

At a recent price of $20, Synovus shares trade at about 16 times Marinac’s 2003 EPS estimate of $1.27, but well off their highs of the past year. While credit quality and reserves are both strong, he says, the Street has marked down the company’s shares, due to concerns that decentralization has led it to “overlook” commercial loan concentrations. Marinac thinks the company should standardize more of its products and strengthen central oversight over lending. “There’s some low-hanging fruit, which would keep the decentralized decision-making intact, but could probably save some costs and improve controls.”

Blanchard doesn’t seem inclined to change much. He’s confident that the company’s structure and cultural fine-tuning have left it capable of withstanding any short-term economic trouble. Synovus, he says, is like a race car operating on a track “filled with mudslicks and potholes—external factors we can’t do much about. …We like the car we’ve got. When the track dries out and speeds increase, it will go as fast as anyone’s.”