As the nation's thrifts overhaul their strategies, they are also revamping their approaches to management.
Thrift executives who once managed by the seats of their pants are now embracing thoroughly modern, scientific techniques.
They are crowding into conference rooms for quantitative simulation exercises. They are flocking to strategic planning sessions. They are scrutinizing their hiring standards to make sure they have the right kind of people for their increasingly complex businesses. And they are calling in armies of consultants and facilitators.
"In these highly competitive, turbulent times, we need to get down and dirty and look at the specifics of our businesses," said Melinda Billings, chief financial officer with Northern Savings and Loan, a $302 million- asset thrift in Elyria, Ohio.
The new focus on management comes as many thrifts are seeking to expand beyond the traditional businesses of taking deposits and making mortgages. Many are trying to cast themselves as full-fledged consumer and small- business banks.
"There is a recognition that this is an industry in significant transformation," said Paul Schosberg, president of America's Community Bankers, the main trade group for thrifts.
The challenges for thrift executives were in full view this month when about 200 gathered in New York for the trade group's winter management conference. With the industry enjoying record profits, conference participants had a lot to celebrate.
But thrift executives clearly are not resting easy.
Like their counterparts in commercial banking, they are challenged with the constant need to upgrade technology while wrestling with the year-2000 problem. And they are beginning to prepare for an economy that is not expected to be as strong in the coming years as it has been through most of the 1990s-a decade that has witnessed the comeback of this once scandal- plagued industry.
"If we come out of that environment in the next year or two, the mask will fall off organizations whose performance has been driven not by their strategies and their conscious attention, but by the economy," said M.H. Potter, the chief operating officer of ACB Partners, the research arm of America's Community Bankers.
Entering businesses, meanwhile, raises new managerial issues, such as "hiring new types of talent," Mr. Schosberg said. It also means competing with commercial banks for the first time.
Harry Doherty, chairman and chief executive of Staten Island Savings Bank, a $3.4 billion-asset institution, said his company's move into commercial banking-largely through the acquisition of a smaller bank - has brought him face-to-face with customers who are far tougher and discriminating than the average mortgage borrower.
"The small-business man doesn't want something two weeks from now," he said. "We are working to be more reactive to these kinds of customers."
For a growing number of institutions, improving the quality of management means turning to consultants for help in formulating plans.
Lee Beard, chief executive of First Federal Bank, a $520 million asset thrift in Hazleton, Pa., said that since 1994 her company has tapped no fewer than three consultant firms to help map strategies.
"Before that, the planning process was my predecessor deciding on the drive home what needed to be done," she said.
Ms. Beard has employed facilitators to help both management and the board set a variety of goals for the company. The company also needed help in crafting a companywide reward system and in converting from a mutual to a stockholder-owned company.
Suzanne Donner, a senior manager with KPMG Peat Marwick, the consulting firm now working with First Federal Bank, said companies like hers provide the greatest value by simply "bringing an outsider's perspective."
She tells the story of one client, a successful mortgage lender, that blamed its declining market share on the rising number of competitors in its home county. The consultant made the thrift understand that the competitors were offering better products and customer service.
"We also pointed out pockets of opportunity in their home county that they didn't know existed," she said.
But companies aren't stopping with strategic planning. An increasing number are turning to consultants that specialize in applying diagnostic tools to a company's financial statements.
USBA Holdings, Atlanta, is one such company. During the America's Community Bankers conference, Steve Cotton, a managing director with the firm, led thrift executives through an exercise to show them that conventional financial analysis often doesn't go deep enough.
One mistake many thrifts make is not gauging themselves against the right peer group. Today, for example, a commercially oriented thrift needs to compare itself against commercial banks, not just other thrifts, many of which are still heavily mortgage-based.
"A simplified approach will always get you in trouble," he said.