Transportation Co. was about to go under. Most banks went along with the lead bank from New York on approving the credit, because they assumed this giant knew what it was doing.

Everything seemed fine, except to one lowly assistant vice president at the lead bank. His analysis indicated trouble ahead, but when he confronted Penn Central's chief financial officer, he was berated for questioning the railroad's numbers.

Fearing for his job, the banker did nothing, but he told his story after the railroad went under. Then the bank instituted a new policy: whenever a junior officer faces difficulty in working with a client, he must return with a senior officer to back up his position.

Compare this with the story a friend who worked at Salomon Brothers once told me.

A western state's pension fund was selling some of its bonds. My friend looked at the prices and said, "I'll take them all."

"You can't," the sellers said. "That's millions of dollars."

My friend took out his business card and threw it on the table. "See? It says 'Managing Director.' I have the authority to commit the entire capital of my company, which are many multiples of what you want. I'll take it all." And he did.

The difference here is, of course, empowerment. The assistant vice president had a job to do, but he didn't have the authority to do it. Had he known that his bank would back him up, he would have persevered.

Titles don't mean what they used to mean. To make vice president used to take at least twenty years. Just to get that first title of assistant cashier was a three- to five-year process. Now titles are exaggerated to make customers feel that they are important enough to have a high-ranking executive serve them.

But that ruse only works until the first important question is asked and the vice president has to call headquarters to get an answer.

In some banks, applicants for a major business loan first meet with the CEO for several minutes, then are turned over to the lending officer. But by starting at the top, the applicants know that the lending officer has power, because the CEO would not turn them over to just anyone.

Another way to empower: Treat your staff with the respect an empowered individual should get.

When James Smith was comptroller of the currency, he had his examiners and deputies fly first class instead of coach. He felt that if the examiner gets off the back of the plane while bankers ride in front, it would put the regulator at a disadvantage in image and self-worth.

Another friend of mine, Charlie Agem, knew that when he was the auditor for Chase Manhattan Corp. he could stand up to officers several steps ahead of him in title, authority, and salary. Without this power, he could not have been effective.

"Don't send an altar boy to see the pope," he would say.

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