Defining Levels of Work in a Bank

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From the Ask Tom mailbag –

Question:
You spoke to the Vistage group I attend. I recently transitioned to a new role as the CEO of a lending institution. We are, in essence, structured as a traditional savings and loan, but we only serve a specific target market.

I do not see a model in your book that directly breaks down the strata levels for “banking” organizations. I’m in the midst of a major re-structure, and your info has always been very helpful to me in these situations.

Response:
I am not an expert on banking, so if anyone has specific insights, pile on. The methodology below works for any industry.

  1. Set your strategy. Review your current strategy documents, including Vision, Mission and Business Model. Those are likely already defined for your organization.
  2. Define the functions necessary for your organization to operate. Your core function (that which drives revenue) will be surrounded by necessary support functions. My assumption is that your core function is closing loans to specific institutions in the target market you serve. Your ability to book performing loans drives your revenue.
    • Book performing loans in target market (core function)
    • Marketing, traditional and digital media marketing, including social media (support function)
    • Sales, in the guise of customer service at your branch locations (support function).
    • Operations, including all physical transaction activity like deposits, checking, loan payments (support function)
    • Back office operations, including electronic transaction activity, online banking, debit cards, credit cards (support function)
    • Facility operations, including building, building maintenance, leases and real estate (support function)
    • Security, including physical security, electronic security, and custodial oversight of cash and bank instruments (support function)
    • Regulatory (support function)
    • Legal (support function)
  3. Define the level of work in each function, which is likely the basis for your question. Looking at your core function, booking performing loans in your target market.
    • Loans will likely require leads from the marketing department, driven to a branch location or to a telephone loan department.
    • The lead probably lands on a desk at S-II level of work, someone to do the initial diagnostic workup and complete the necessary paperwork. Much of this work is systematized and gathered on template forms.
    • The loan package is then likely reviewed by a role at S-III level of work to make an initial determination and recommendation to a loan committee. If the loan is missing fundamental elements of collateral or “ability to pay,” this role will likely investigate to determine what is necessary to make the loan conform.
    • The loan will then move to a loan committee, comprised of S-III and S-IV roles. There will likely be specialists at S-III to vet the required elements of the loan. The S-IV roles will look at criteria to determine if the loan integrates into the bank’s portfolio. There may also be an S-IV role to ensure the loan will meet regulatory audit.
    • The institution will also likely field an S-V role, a business unit president, to make sure the enterprise is supported by all the functions necessary to drive the core function.

    Let’s look quickly at one of the supporting functions, physical operations.

    • Teller functions and customer service functions are now automated to the point where this role is mid S-I.
    • Each teller or customer service person has a supervisor or manager who ensures that services are delivered accurately and that cash and instruments foot (and cross-foot) at the end of each shift. The supervisor schedules the number of tellers and customer service personnel on shift depending on historical and forecast activity.
    • Each branch likely has a branch manager at low S-III to manage the overall physical operation. In a small branch, this role might by high S-II, and in a very large branch, this role might be high S-III or S-IV.

    Define the level of work for all the other support functions.

  4. Define the specific roles required in each level of work. The definition of level of work in the previous step goes hand in hand with this step.
  5. Establish the necessary managerial relationships in each function
  6. Establish the necessary cross-functional relationships between each function
  7. Assign and evaluate personnel filling each role.

These are the big steps. If you have questions, please let me know.

How to be Seen as the Leader

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Martin made it. A new promotion. VP. He looked calm, collected.

“So, what’s up?” I asked. “Are you as calm as you look?”

Martin looked back and chuckled. “How did you know?”

“So, what’s up?” I repeated.

“I am now the manager of people who, just yesterday, were my peers. Overnight, things are different. I am not sure how my old team will respond to me.”

“How do you want them to respond?”

“I want to be seen as their leader,” Martin thought out loud. “I mean, I am afraid that I will provide direction and no one will follow. Then what?”

“You mean, you might tell them what to do, but the team might have other ideas?” I proposed.

“Exactly.”

“Think about it. Don’t they already know what to do?” I pressed.

“Well, yes, most of the time. But sometimes, they run into a difficult problem or a tough decision,” Martin stopped.

“And, they need your help?” I finished.

“Yes.”

“They need your help, so you tell them what to do?” I pressed again.

“Yes, but it’s the same circle. What if I tell them what to do and they don’t follow.”

“Martin, your role, as a manager, is to bring value to the decision making and problem solving of your team. The most effective managers are not those who tell people what to do, but those who ask the most effective questions.”

Is it a Full Time Managerial Relationship or Part Time Cross Functional?

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From the Ask Tom mailbag –

Thumbnail from last Tuesday’s post Which Manager is Accountable?

There are three roles in play.

  • Product Manager
  • Marketing Manager

and

  • Marketing Services

The question is, which, of the two managers listed, should be the manager of the Marketing Services role? There are four questions that must be answered before making this decision. So far, we’ve looked at three questions.

Today, the last question.

  • Is the work assigned to the Marketing Services role by the Product Manager full time or part time, and is the duration of that work forever, or in defined projects that start and stop?

If the work is only part time or the work is in defined projects that start and stop, then the relationship between the Product Manager and the Marketing Services role is a classic cross-functional (service getting) relationship.

If the work assigned by the Product Manager to the Marketing Services role is full time, then it might be more appropriate for the relationship to be a managerial relationship. The Marketing Manager would then likely be in a cross-functional (advisor) relationship to the Product Manager.

So, the question posed last Tuesday sounded simple, but there are a number of questions to consider when designing the managerial and cross-functional relationships in your company.

Which Manager is Accountable for the Output?

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From the Ask Tom mailbag –

Thumbnail from Tuesday’s post Which Manager is Accountable?

There are three roles in play.

  • Product Manager
  • Marketing Manager

and

  • Marketing Services

The question is, which, of the two managers listed, should be the manager of the Marketing Services role? There are four questions that must be answered before making this decision. So far, we’ve looked at two questions.

Today, the next question.

  • Which manager is accountable for the output (quantity, quality, within timeframe, using allocated resources) of the Marketing Services role?

Make no mistake, in the relationship between the Product Manager and the Marketing Services role, the Product Manager will, appropriately, be making task assignments to the Marketing Services role. But the question is, which manager is accountable for the output?
When the Product Manager appropriately makes task assignments to the Marketing Services role, we have to examine the four pieces of the task assignment – QQTR

  • What is the quantity of the output?
  • What is the quality standard of the output?
  • What is the time span (deadline, evaluation period) of the output?
  • What are the allocated resources related to the output?

The specific answers to these questions will help us determine whether the relationship between the Product Manager and the Marketing Services role will be a managerial relationship or a cross-functional relationship.

Here is the critical question? If there is underperformance on the part of the Marketing Services role, does the Product Manager correct and coach, or does the Product Manager ask the Marketing Manager for a different Marketing Services person?

If the Product Manager is expected to coach, then the relationship is more like a managerial relationship. If the Product Manager asks the Marketing Manager to send someone different, then the relationship is more like a cross-functional (service getting) relationship.

Monday, we will look at the last question.

  • Is the work assigned to the Marketing Services role by the Product Manager full time or part time, and is the duration of that work forever, or in defined projects that start and stop?

Can the Manager Bring Value?

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From the Ask Tom mailbag –

Thumbnail from Tuesday’s post Which Manager is Accountable?

There are three roles in play.

  • Product Manager
  • Marketing Manager

and

  • Marketing Services

The question is, which, of the two managers listed, should be the manager of the Marketing Services role? There are four questions that must be answered before making this decision. Yesterday, we looked at the first question.

Today, the next question.

  • Which manager is in the best position to bring value to the decisions made and problems solved by the Marketing Services role?

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The Marketing Services role can likely handle routine problems and decisions, it’s the tough decisions that have to be made and the tough problems that have to be solved, where the right manager makes a difference. To make that decision, we have to anticipate those decisions and problems and determine which manager will bring the most value. The answer to that question is not the only factor in our selection, but it will help us understand whether the relationship between the Product Manager and the Marketing services role will be

Tomorrow, we will look at the third question in this decision. Which manager is accountable for the output (quantity, quality, within timeframe, using allocated resources) of the Marketing Services role?

One Stratum Separation

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From the Ask Tom mailbag –

Thumbnail from yesterday’s post Which Manager is Accountable?

There are three roles in play.

  • Product Manager
  • Marketing Manager

and

  • Marketing Services

The question is, which, of the two managers listed, should be the manager of the Marketing Services role? There are four questions that must be answered before making this decision. Today, the first question –

  • What is the level of work in each role described?

To be an effective manager, there must be one stratum separation between the manager and the team member. So, a role at S-III can be an effective manager to a role at S-II. A role at S-IV may have difficulty being an effective manager for a role at S-II, because their goals and objectives look at dramatically different time frames. An S-II role cannot be an effective manager for another S-II role because, given a difficult problem to solve, they both solve problems the same way. Given a difficult decision to make, they both make decisions the same way.

And, role titles can often be misleading. While the word “manager” often points me to an S-III role, there are many S-II roles that also use the word “manager.” To design the appropriate managerial relationship or the appropriate cross-functional relationship, we first have to determine the level of work in each role.

Tomorrow, we will look at the second question. Which manager is in the best position to bring value to the decisions made and problems solved by the Marketing Services role?

Which Manager is Accountable?

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From the Ask Tom mailbag –

Question:
What is your feeling about a manager only managing one person?

Here is the scenario. We have a Product Manager accountable for new product development research and portfolio creation. Suggestion was to have a Marketing Services person, accountable for the creation of marketing collateral and advertising campaigns, report to the Product Manager. This Marketing Services person would be the only report that the Product Manager would be supervising.

My fear is that the Product Manager, also accountable for major business development activities centering on future business and product development, will be engaged in production type work involving market assessments and research for new product development. The Marketing Services role will be of little help in this work.

The Marketing Services person is accountable for today’s activities rather than future. In some ways it would seem distracting for the Product Manager to supervise the Marketing Services role.

Personally I think the Marketing Services role should report to the Marketing Manager, who is better suited. The Marketing Manager would then have seven direct reports. Better use of resources.

Response:
This is a classic example of organizational design, that contemplates whether the structure between the roles should be a managerial relationship or a cross-functional relationship.

There are some fundamental questions that must be answered first?

  • What is the level of work in each role described?
  • Which manager is accountable for the output (quantity, quality, within timeframe, using allocated resources) of the Marketing Services role? You describe who reports to who. Wrong question. We all report to lots of people. The central question is which manager is accountable?
  • Which manager is in the best position to bring value to the difficult problems and difficult decisions made by the Marketing Services role?
  • Is the work assigned to the Marketing Services role by the Product Manager full time or part time, and is the duration of that work forever, or in defined projects that start and stop?

The answers to these questions will help determine the appropriate structure. We will take them one at a time over the next few days.

Too Expensive and Too Late to Train

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From the Ask Tom mailbag –

Question:
Our company has a critical issue around finding skilled workers. Our community is growing fast and we cannot find the skilled workers we need to meet the demand. We are trying to connect with our community college and state & local job staffers. I am calling on my former company, an economic development corporation to talk about a recruiting program to bring skilled workers to our market. What else?

Response:
In South Florida, this phenomenon appeared three years ago in SWOT analysis. Most of my construction related clients clearly identified – when the recovery happens, we are going to run short of qualified technicians and skilled labor.

Two things contributed. First, when the recession hit hard, many immigrant workers (both legal and illegal) simply went home (and stayed). Second, many in our work force discovered air conditioning. Construction trades often work outside in the elements and for about the same money, the fast food industry offered work inside under air conditioning.

This resurgence in the overall economy has bolstered two cottage industries – recruiting and training. There are, indeed, industry associations that focus on this dilemma. The leader is an organization called Associated Builders and Contractors (ABC). They have a strong national organization and local chapters in every major and many minor markets. They offer a range of training from basic OSHA certifications to vocational training in specific skilled labor trades.

It’s funny. When we identified this problem three years ago, everyone pushed back and said they weren’t equipped to train or they couldn’t spend the time to train. Training took too long, they needed workers now. But, if they had jumped in with training programs two years ago, there would be a stream of graduates in the market, now.

Others pushed back, saying they could not take the risk of training. They feared they would invest in a person’s training and then have them leave the company. What’s more expensive? Training someone and having them leave, or not training someone and having them stay?

Who Gets on the Team?

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“You will never be able to work on larger problems until your team becomes competent at the smaller problems,” I repeated. “You can never be promoted to a higher level role until you find someone to take responsibilities in your current role.”

“Yes, but who?” Drew replied.

“That’s for you to decide. In addition to making sure that production gets done, as a manager, one of your primary roles is to build the team.”

“You mean like team building?”

“More like a talent scout, except you get to observe all the time. Here are your levers.

  • Selection
  • Task assignment (what, by when, resources)
  • Assessment
  • Coaching
  • De-selection (if you made a mistake in the first step)

“Okay,” Drew hesitated.

“Start with selection. You can pick your friends. You can pick your nose. You can’t pick your friend’s nose, but you can pick who is on your team. That’s where it starts. If you do this job well, the rest is easy. You do this job poorly, the rest is miserable.”

“But, sometimes, I feel like I don’t get to pick who is on my team. They just sort of show up from HR,” Drew protested.

“Candidates may come in sideways. I know your hiring protocol. HR does a great job at trying to source candidates for your production team. I know your manager screens those candidates and several other people conduct interviews and give you their feedback. But, at the end of the day, you pick. As the hiring manager, you have, at a minimum, veto authority as to who is on the team.”

The Problem Isn’t Your Boss

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“You seem a bit frustrated,” I said.

“I am, I am,” Drew replied. “I think I do a pretty good job in my role as a supervisor. We have a complicated process with long lead items and seasonal demand. During season, we build to order. Off season, we build to stock. We have certain constraints in our process that slow us down and sometimes things stack up when we overproduce some of our sub-assemblies. All in all, I keep things together pretty well.”

“Then, why the frustration?”

“If I could spend the time analyzing the way the work flows through, look at some things that could be done at the same time, understand where the bottlenecks are, I think we could get more through the system.”

“So, why don’t you do that?”

Drew thought for a minute. “Every time I start flow-charting things out, I have to stop and take care of something gone wrong, something we are out of, a team member who didn’t show up for work. It’s always something.”

“What happens when something goes wrong?”

“I get yelled at. My boss tells me to stop thinking so hard and get back to work. The time I spend working on the system just increases my workload beyond what I can get done in a day,” Drew complained. “I am constantly reminded that my primary function is to make sure that orders ship. I just can’t convince my boss that if the company is to move forward, we need to spend time looking at the sequence of steps to make things run smoother.”

“If you keep getting dragged back into day to day problem solving, fighting the fires of the moment, what is the solution? Who else on your team could buffer some of those problems?”

“Nobody. I am the go-to guy. There isn’t anyone else, and there is only one of me.”

“So, the problem isn’t your boss, it’s you,” I said.

“What do you mean?”

“You will never be able to work on larger problems until your team becomes competent at the smaller problems. You can never be promoted to a higher level role until you find someone to take responsibilities in your current role.”