In his novel "The Naked and the Dead" Norman Mailer wrote:
"It was a law of life, so harsh yet so just, that either we grow or it becomes harder and harder to stand still."
Certainly we see this in banking. Bankers are judged-and judge themselves-by how big their banks have become in the latest reporting period. The fight to be the biggest in town is as old as bank competition itself.
Ego isn't the only reason.
Many bankers believe growth will bring economies of scale. That doesn't always happen, but it is a strong motive to acquire and diversify. Also, growth can set a positive tone for a bank. The public expects new ideas from growing institutions. Without the challenges of growth, minds can become dull and work a drudgery.
But growth also has its costs.
Sometimes a bank grows itself right out of business. Many have taken on services that they could not handle, or that drained profits.
And well-run banks sometimes turn sloppy after acquisitions, with results as serious as failure. There were plenty of examples of this a decade ago.
One sign that a bank might be in trouble is lending or doing other kinds of business beyond the territory it knows. Securities analysts have good reason to worry that a bank expanding its territory may sacrifice solid returns on assets and capital.
But how can a bank resist the siren call of growth and while keeping employees excited about coming to work in the morning?
One way is to develop a culture that encourages personal growth without one person's promotion coming at the expense of someone else's opportunity.
Move people from department to department over time, so someone who has stopped growing in one area can restart in another. (This helps the bank, too. Experience gained in one area can often improve operations in another.)
Set new goals for people who are not changing jobs. Recognize success in rising to new challenges.
Show appreciation for contributions to the community. Ambitious employees can often find satisfaction in Chamber of Commerce or service club work or in helping out at hospitals or educational institutions.
In ways like this you can create a vibrant environment without the difficulties that forced growth often brings. Mr. Nadler, an American Banker contributing editor, is a professor of finance at Rutgers University Graduate School of Management.