While the regulatory environment and competition from both big banks and nonbanks pose challenges to all community banks these days, Main Street financial institutions also need to suck it up and take a look in the mirror if they're going to survive.

Too many community banks are self-sabotaging by doing what I call "majoring in the minors." They are focusing on non-value-adding activities and time-wasting tasks instead of directing their attention to the more important big picture: innovating in a rapidly changing banking environment. Thinking small is absolutely a death trap to community banks. Time and again, I have seen banks consumed by the small stuff lose profitability or worse.

Case in point, the CEO of a struggling bank I worked with a few years ago thought there was a material expense reduction — and potential contributor to the bank's turnaround — in having the banking staff clean the bathrooms to save on janitorial costs. In a similar situation, a bank president was spending valuable time enforcing a policy to keep the bathroom lights turned off, even when much bigger issues were looming. Both banks are not around today.

Senior executives are now in a constant fight to keep banking relevant while also carrying out their standard responsibilities of overseeing a balance sheet and staff. They have to stay two steps ahead of customer demands, competition from other banks and encroachment by fintech disruptors. But they can't meet these crucial objectives by putting things that matter the least ahead of the action items that matter the most.

Sure, being frugal about spending in an environment with thin margins is important, but it should never be prioritized over chasing after more customers, more deposits, more commercial and consumer loans, more noninterest income and ultimately more profits. Once all of these initiatives are put at the top of the agenda, the cents saved on bathroom electricity will likely seem like a waste of time.

Having a bank where every staff member is endlessly pursuing what is most important, as described above, ultimately comes down to creating a performance-based culture. This means that staff at all levels live and breathe accountability for results, and it is a surefire way to take a bank from average to exceptional. Unfortunately, during my 35-plus years working in the banking industry, I have too often seen common pitfalls where banks prevent themselves from achieving the type of performance culture needed to produce excellence.

Restructuring or organizing a department around personalities, rather than ensuring the right people with the right skills are in the right positions, is one major characteristic of a self-sabotaging bank. The same banks are also notorious for creating marginally relevant tasks, or busy work, for staff members with excess time capacity. And they waste time holding meeting after meeting to deal with every minor issue and update.

Self-sabotaging banks are known for carrying out a whole host of processes that executives see as "needed for risk management or regulatory compliance." Yet, according to industry best practices, those processes are in fact excessive. Another common behavior of these banks is turning a blind eye year after year to underperforming staff because they are hoping for a miraculous, improbable improvement. But perhaps the biggest indicator that bankers are sabotaging an institution is they fail to react to the delivery model for financial services changing before their eyes.

Community banks are at a fork in the road. They can continue straight, which I argue is self-sabotaging. Or they could bear right, and start down a new path where every decision is made by asking the question, "Does this drive high performance?"

New hires must be scrutinized: "Will this addition to the staff contribute to or hinder high performance?" Perhaps that next meeting you're off to is time-wasting, or maybe it is essential to high performance. Is a new initiative just a way to keep staff busy, or is it crucial to high performance? While all of this may seem like common sense, it certainly isn't common practice.

Banks that create and nurture the performance culture will undoubtedly reap benefits that include improved customer service and profitability, and the option to stay independent in an industry that is consolidating due to necessity. Executives: I urge you to accept the fact that the industry is changing, and so you must too.

High performance is the reward for those who are willing to change, and it will not require scrubbing the toilets.

L. T. "Tom" Hall is president and CEO of Resurgent Performance, a bank performance advisory firm.