After a recent speech before the Community Bankers of New Jersey, I was asked what large banks can learn from community banks to make them more effective competitors.

My answer: the value of empowering your employees.

This is the key behind any effective, enthusiastic work force. People must feel that they have the authority to make decisions that stick.

I have seen empowerment work many times in winning friends.

Once, my plane to Newark was diverted to Kennedy Airport in bad weather. I told the agent at JFK that I needed to get back to Newark.

Without hesitation he wrote out a slip and said to give it to any cab of such and such company.

That was it-he didn't need to check with anyone before authorizing this $90 expenditure.

One Sunday an ATM transaction of mine went awry. I had asked for $500, but the machine pumped out only $400. The bills were stuck together, indicating a malfunction.

I called the "800" number. A human answered the phone and said the $100 difference would be back in my account by Tuesday. It was.

A colleague had trouble using his ATM card in Budapest. He called the bank twice to correct the situation.

When he got back he went to his bank branch. He told the manager that the bank should pay for the calls.

She immediately filled out a form and told him to give it to a teller, who would reimburse him. Her empowered decision impressed my colleague-and me.

(When I first told this story in these pages I got a call from the bank requesting the name of the branch manager. I thought it was to reward her, but some friends who work in banking felt it was more likely to fire or reprimand her.)

I had just bought 1,000 blank checks from my bank when I got a letter saying that it was changing my account number, and that I would need to buy new ones.

"But I have 984 old ones left that I just bought," I complained.

"Don't worry," a customer service represented assured me. "You will get a starter pack of 25 new checks, and you have a full month to use the 984 old ones you have left."

I screamed. But instead of saying, "I'm sorry, that's our policy," as so often happens, she responded, "O.K., in your case, the starter pack will have 984 checks in it."

Her power to solve the problem stopped me from closing an account I had maintained for 25 years.

Now, there may be organizations at which employee empowerment is not awfully practical. I recently read an article that said symphony musicians are some of America's unhappiest people. Despite high salaries, they are frustrated. They must go where they are told, wear what they are told, bow, toot, or bang as they are told, and show no initiative whatsoever.

An orchestra may need this uniformity. A bank does not.

How do you know whether your people feel empowered or not? Listen. When the CEO says "I"-as in "I have a loan-to-deposit ratio of such and such"- that's dangerous. When he or she says "we," that's a lot better.

When employees talk about the bank as "we," all is right in the world. But if they refer to the bank and its policies as "they"-watch out. Mr. Nadler, an American Banker contributing editor, is a professor of finance at Rutgers University Graduate School of Management.

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