While mergers may make good business sense, the short- and long-term effects can have a negative impact on your customer base.
During a merger, shifting job priorities and new product lines and operational duties make it difficult for employees to stay focused on customers. After the initial chaos, inertia often spreads through the bank. That's when customer runoff can quickly escalate. In this environment, building a unified, performance-based culture is essential to retaining customers and creating long-term competitive success. Here's how to do it.
Make customers the priority.
No bank has traveled the merger path without customer fallout, but some have done it far better than others. What successfully merged organizations have in common is a culture that helps employees understand what the bank is trying to achieve and perform in ways that deliver real value to customers.
"After you've made sure that Mrs. Smith's and Mrs. Jones' accounts are not mixed up, then you need to focus on keeping them both as customers," one consultant says. "Customers are the priority. Build on those relationships, and deliver on your promise faster than the competition."
Stay focused on the customer management practices. During Amerifirst's merger with Ohio Bank of Findlay, Amerifirst's CEO said, "Any merger is a distraction. We were changing our name, changing our systems, and it was very difficult to maintain concentration."
Amerifirst's performance culture was based on management activities practiced consistently by managers at every level. "Having the management practices in place before the merger really helped," a regional manager says. "They're the key reason we're continuing to do a great job." The culture enabled employees to stay focused on customers, boosting cross sales, referrals, and loans throughout the merger.
Provide great solutions.
The main worry that will keep a CEO awake at night after a merger is knowing the bank has promised great things and wondering how in the world to deliver them. Promising great financial solutions from lots of new products is just one example.
Training sounds like the logical first step, but the most successful organizations actually start at the bottom line and work backwards. They ask, "What are we trying to do as a business? Therefore, what elements should our performance culture include that will enable people to perform to those goals?"
The answer is often a blend of training and activities such as coaching, practice, and on-the-job observation that will help employees quickly develop the proficiency to turn knowledge into expertise that directly benefits customers.
"After a merger, banks rely on their performance cultures to make sure employees at the line level continue to 'sell' the organization via excellent financial solutions," a consultant says. "People already expect increased benefits from the merger, and banks have to deliver if they expect to retain their customer base."
Keep your customer promises.
When Fulton Financial of Lancaster, Pa., grew from six to 11 affiliates, not only did the new acquisitions have different lending policies, they also continued to operate independently. In order to keep its loan promises to customers and shareholders, the bank created a unified credit performance culture that ensured every affiliate delivered a clear and consistent message to customers.
"We focused on performance-based credit tools and showed our affiliates that they really would boost credit quality," one manager said. "All of them bought into the new culture, even though, since they were independents, it wasn't mandated."
Deliver better value - faster.
By using performance systems to quickly develop people's ability to deliver the bank's promise to customers, banks are leveraging their mergers to create competitive synergy across the expanded organization.
Ottawa Savings Bank in Illinois more than doubled its assets when it acquired Ameribank. Recognizing its competitive opportunity, Ottawa quickly developed cohesive teams, common goals, and consistent decision-making. "With the new acquisition, we've just become even more competitive," a senior vice president said. "We're going to 'create the future' with an even stronger retail base."
Be better and more responsive than the competition.
Especially in a merger environment, employees' ability to learn and apply new skills in ways that deliver value to customers will make the difference. Like the salesperson who understands how meeting his or her sales goals directly impacts the business, every employee needs to understand how their actions affect the bottom line, which will help the business meet customer needs.
Above all, "better, more responsive than the competition" must be the rallying cry. The organization that is able to deliver its promise on the spot, day after day, over the teller line or at any other point of customer contact, faster than the competition and so effortlessly that background merger effort is transparent, will survive. The others will not. And that realization may be the most valuable merger lesson of all.
Mr. Falwell is president and chief executive officer of Omega Performance Corp., a financial services consulting firm in Charlotte, N.C.
|Note to Readers|
"Viewpoints" is a regular feature in American Banker, appearing every Friday. It serves as a forum for discussion and debate on a wide range of issues in the financial services industry, including management approaches and strategies, legislative and regulatory matters, and public policy in general.
or e-mail your submission to email@example.com.