Changing gears

Banks are constantly changing something implementing a new regulation, converting to new technology and offering new services and products. But sometimes the soft side of change, the intangible human side, is the toughest. After all, banks don't adapt to change; their people do. If your bank suffers

The average bank manager charged with transforming a department, branch or even the whole bank or holding company would most likely start with the usual checklist: weed-out inefficient people and processes, cut pay and incentives and consolidate duties to cut labor costs. Generally, we do this while telling the employees, "Don't worry, nothing will change." But it does.

If you've been in banking for a while you've most likely experienced change of this type. If you were in banking in the 1980s or even early 90s, you've experienced one or more changes of this nature. However, in order to really change your organization and for that change to stick, I believe you must start with a very different approach.

Bankers will always analyze the financial situation. It's in our blood. It's what we do. However, the human side of change is often overlooked in our analytical, data-driven world of banking. It's this soft, intangible human element that is often the cause of the pain associated with change.

These idiosyncrasies of human behavior and emotion must be addressed through a persuasion campaign that starts long before the plan is set in motion. Its purpose is to create a continuously receptive environment for change. More people are willing to change when they understand and accept the reasons. This process is described by David Garvin and Michael Roberto in the Harvard Business Review article, "Change through Persuasion."

First gear

Setting the stage

The first part of the persuasion campaign offers the very clear reason for change (where the change will take the bank) and why it is needed (the comparative advantage to going to this new place). These two messages must be communicated to all parties that are impacted. Compelling reasons must be given to illustrate your point for doing things differently. You must also set the tone of the whole transition, clearly setting out what actions can be expected.

Throughout this phase and the entire process, a leader must be careful to emulate and exemplify core values in word and deed. Employees will model attitudes and behavior based upon what they see and hear.

Second gear

Creating the frame

In this phase the framework for change is clearly set out. During this time you will reinforce what is about to happen - the purpose and expected impact. A good leader will also anticipate and respond to any concerns from those carrying out the plan. Create feedback possibilities and make modifications to your plan, as needed, based on employee suggestions. By reiterating the point that the plan is largely based on employee proposals and feedback you create "buy-in" to the objectives of the plan.

Third gear

Managing the mood

During this time and after actually rolling out the plan and beginning to implement it, much care must be taken by a good leader to keep in mind the emotions of those involved. Although feelings may change from day to day or at a given point in time, one must carefully manage the environment for change through constant communication.

For example, if a reduction in work force is required, it should not be ignored. Instead, the loss should be sincerely acknowledged. At the same time you must keep the focus on the task at hand, recognizing and rewarding accomplishments and most certainly disallowing complacency.

Fourth gear

Reinforcing good habits

In this phase, which I believe is almost a continual work in progress, the objective is to not only change ways of thinking, but to change behaviors as well. The leader must provide opportunities for employees to carry out the desired behavior while always providing support. For example, provide opportunities for your people to make decisions on their own. They should then be rated not so much on the decision, but on the process taken to get there.

If this reinforcement is neglected, the workforce may easily backslide into the old habitual and negative routines. During this time, it is quite important to require accountability for one's actions as well because a precedent is being set for all future change programs.

Transforming the culture

It all boils down to this: the bank's culture must be aligned for change. In this environment employees are committed to making change happen and carrying it out, instead of having unsubstantiated worries about it. They take responsibility for their contributions to the transformation. It is also very important that there is a sense of trust among all parties. When these characteristics exist, along with a commitment to core values, oftentimes the other performance markers will take care of themselves: profitability increases and morale improves.

All this said, it is apparent that persuasion can be a much-needed tool for a bank leader. It may be the most powerful tool we never thought we would use. Remember, "Persuasion promotes understanding; understanding breeds acceptance; acceptance leads to action."