Just four months after the Federal Reserve raised the target interest rate to above the rate of inflation, interest rates were hiked again. With three more rate hikes projected next year and more talk of a bear market mid-2019, the strong economic tailwinds that have made bank growth relatively easy seem to be subsiding. As we’ve seen before, in a rising rate environment, the volume of deals declines as demand declines. Read more
Jack Welch, the former CEO of GE, once said, “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”
It’s no secret there is a lot of change in the air for the banking industry from new regulations, a marketplace being squeezed by a bevy of online lenders, and the most recent Fed hikes (which I will address in subsequent blogs). Obviously, this is outside change. My observation is that even with recent changes, bankers are still playing the same game they’ve been playing for decades.
Many bankers and board of directors appear to be digging in their heels and doing business as usual. To their credit, many are successful and have adopted the attitude of, “If it ain’t broke, don’t fix it.” That can only work for just so long.
My fear is that the banking industry is distracted by its own performance, driven in large part by demand. I believe this is a mistake ––one that could be costly on a number of levels. Read more
The intention behind the coaching is what distinguishes micro-managing from developmental coaching.
The intention of micro-managing is often driven either by an intention to catch an employee doing something wrong or discredit them and then be able to provide negative feedback, or to solidify a manager’s role, value (at least in their own eyes) and importance to a team or project. The subconscious intent of micro-managing is punitive! That’s a very important distinction.
Developmental coaching is entirely different because it’s collaborative and designed to give an employee more competence and confidence. In short, developmental coaching is designed to build employees up! Developmental coaching starts with an invitation to an employee which could sound like this, “I noticed how you were processing the ABC forms and I’d like to offer you a couple ideas that might save time and make your life a little easier, are you open to coaching? Now let’s be clear, as a manager, you could also say “I noticed how you were processing the ABC forms and I’d like you to do them this way instead.” The latter communication is very direct, which is not necessarily a problem depending on the tone of the communication. But, it’s certainly not collaborative in nature. In addition to strengthening an employee’s skills and knowledge, developmental coaching provides an opportunity to build and deepen your relationship with your employees which creates more trust and commitment. All of which is positive. The only possible downside is that developmental coaching requires a bit more time than a more direct approach of telling an employee how to correctly do something. But the added time is well worth the investment.
Whenever an organization feels the need to adapt, change or innovate, it must first create the right environment necessary for employees to feel comfortable and secure while they make the appropriate behavioral changes during the transition.
This and subsequent articles will focus on some of the most critical recommendations and “enlightened leadership qualities” necessary to help your team, department, and bank become more nimble and adaptive.
Enlightened Leaders Focus On Creating The Right Environment
Enlightened leaders know employees will be uneasy going through any change, be it a small internal process change or a large initiative such as a change of your core processor or implementing a new CRM.
During any change effort, employees get very primal in their needs and often quite insecure. Employees want to know “What does this mean to me?” and “Is my job secure?” Enlightened leaders know this and take specific steps to help nurture employees through the very predictable fear that is naturally associated with any change.
The following are a few simple, but impactful actions leaders can take to help create an empowering environment where change can happen in a timely and effective manner:
- Acknowledge the obvious: Executives and managers help defuse employee tension around change when they talk about it openly and often, especially in the early stages of the change process. By talking about the change and the impact change can have on an organization, department or team, you are validating the feelings of employees while being empathetic. This helps managers build trust and most importantly, begins to create an environment where employees feel comfortable coming to their manager to discuss their concerns and worries.
- Lead by example: As a manager, your employees must see you change your behavior. It has to be noticeable. Furthermore, it’s not just enough for your employees to see you changing, they must also hear you talk about the impact these changes are having on you. When a manager changes their behavior and then discusses it openly with their employees, this shows employees that while change is uncomfortable, their job security isn’t on the line.
- Be vulnerable: The more transparent and real you can be as a manager about your own struggles and insecurities associated with change, the better. Many changes in our lives, whether personal or professional, require us to go from a state of proficiency to a state of being a humble learner. The fear is that being less than proficient in our jobs puts our jobs and our livelihood at risk because we’re being judged. And if employees feel their livelihood is at risk, they likely will be highly resistant to change their behavior. Having the courage as a leader and manager to be vulnerable is counter to the notion that good leaders are tough leaders.
The truth is that today’s fluid business landscape demands leaders be much more insightful and have a deeper understanding around what employees are really going through as you make change at your bank.
I will be sharing more leadership “gems” specific to how to become a 21st-century enlightened leader.
Look forward to a series of articles on enlightened leadership for organizational evolution. This first one will introduce change and inspire leadership. Change starts with you.
Simply said, organizations don’t change. Executives and employees are the ones who change, and as a result, organizations evolve. All too often, executives and employees become comfortable in their habitual ways of doing things and rigid in their thought processes. However, as the pace of change continues to quicken, having an organization that can adapt, flex and evolve is essential to remaining successful. At every level of a bank, supervisors, managers and executives must become a catalyst for the necessary changes and develop their abilities to inspire employees to want to change. To do this, you must be willing to be the first in your department to change.
Know What You’re Dealing With
When it comes to effective organizational change, think of a bell curve. Imagine that the receptivity of employees to change in your bank were to be placed on the curve. If there were 100 employees in your bank, here’s generally how your organization and employee population would break down:
- 15% of your employees would be open and enthusiastic about a new direction or a new system.
- 15% of your employees would be negative and resistant to change while preferring to keep doing things as they always had.
- 70% of your employees representing that fat middle portion of the bell curve would neither be enthusiastically open nor negatively resistant to change. They’re lukewarm about it and most likely trying to figure out “what does this mean to me?”. This 70% would be somewhere between “cautiously optimistic” and “somewhat concerned” about the new direction.
As a manager, it is important to assess and “read” your team prior to, and during, a change initiative.. Getting employees bought-in and receptive to change is a crucial, difficult and a fluid job. At different times, employees can become more positive or more negative. This will largely depend on what they’re being asked to do and how difficult or easy the change is for them. Employees often need to be managed and coached differently in order for them to feel comfortable changing their behavior.
In October’s blog, we’ll be discussing how enlightened leaders create an environment that’s conducive for change to occur.
Hopefully my last blog on the difference between leadership and management piqued your interest. If it didn’t, it should have. Why do I say this?
Think about the executive management team of your bank. What are the ages of your executives? In many banks today, the executive management team averages 60 plus years of age. Now think of your regional managers, what are their ages? Again, the average age is likely 50 to 55 years of age. This could easily turn into a discussion on the critical need for banks to invest more energy into developing tomorrow’s leaders as part of their succession planning efforts. But it won’t! In fact, I will be discussing this subject in future blogs so stay tuned!
Leadership vs. Management Further Distinguished
What is the difference between management and leadership? This is the question I started with in my last blog. The subject is so vast, it bears continuing to explore and learn the differences so supervisors, managers and executives can consciously behave in optimal ways in any situation. Idealistic I know, but certainly worth striving for. The biggest difference between managers and leaders is the way they motivate and focus employees.
Simply said, leadership is a passion, management is a profession. While management is a title and a “job,” any employee in your bank can distinguish themselves as a leader regardless of their title, responsibilities or seniority. Some of the best leaders I’ve met from over 25 years of senior level consulting don’t have the title. But they do have the passion and the behaviors!
In A Very Traditional Sense…
Managers Have Subordinates
By definition, managers have subordinates, leaders have followers. The relationship between a manager and their subordinates is a traditional “hierarchy”. Unless their title is given as a mark of seniority, a manager’s power over others is through formal authority.
Leaders Have Followers
Leaders do not have subordinates as managers do, they have followers and devotees. True leaders have an ability to connect with both the hearts and minds of employees. They understand a good employee will give you their mind, but to become a great employee, you have to find a way to connect with, and engage, the heart of an employee. Effective leaders invest the time to develop authentic, meaningful relationships with employees. The conversations these leaders have, transcend traditional work related subjects. Creating an environment where employees feel safe to be real goes a long way to engaging the heart and converting employees into followers.
Managers Use a Dictatorial Management Style
Managers have a position of authority vested in them by the bank, and their subordinates work for them and largely do as they are told. Human nature being what it is, most of us will do just enough to get the reward. But we won’t do a whole lot more. Employees will give a good manager a “solid day’s work” but at 5:02PM in the afternoon, they are out the door! This management style is authoritarian or dictatorial in nature in that the manager tells or directs the subordinate what to do, and the subordinate does this because they have been promised a reward (at minimum their salary) for doing so. A dictatorial management style doesn’t mean that a manager is rude, arrogant and disrespectful. It simply refers to where the authority lies and how decisions get made.
Leaders Use a Democratic Leadership Style
Telling people what to do does not inspire them. Often, it can have quite the opposite effect. Leaders understand the power of creating an appealing vision where employees play an integral role in the creation of that vision and the decision making process. Facilitating processes that create a far more engaged and passionate work force is a primary leadership goal. A leader focuses on where a team, department or organization needs to go and strives to allow employees maximum say so and decision making authority throughout the process. That’s where employee buy-in and engagement come from.
The Focus of a Manager
Managers are paid to get things done (they are subordinates too), often within tight time constraints. Thus, they naturally pass on this work focus to their subordinates. Managers know (or should know) that employee discipline often mirrors manager discipline. Scary thought, right? To run an efficient and effective team or department that gets things done on time with a high degree of quality and very few mistakes is an art that most managers can improve on. At least 75% of employee, team or departmental mistakes are linked to managerial and process shortcomings. Successful managers rely on organizational structures, defined processes and a high degree of oversight to boost productivity.
The Focus of a Leader
Leaders on the other hand boost productivity through inspiration and investment…emotional investment. Leaders are paid to develop, coach and mentor employees. Leaders understand that their employees are one of the few things that differentiate their bank from their competitors. For this reason, they are not afraid to invest time and financial resources to grow the capacity of their employees. Leaders understand that to be a world class organization, you have to develop world class employees. For a bank filled with mostly C-Players and B-Players, financial performance and growth will be stymied. Leaders know that employee growth is a strong contributor to bank growth and accordingly insure their bank leverages both internal and external resources to develop employees.
Managers Seek Reliability
“Running smoothly” is confirmation of a high functioning team or department for a manager. It’s not enough to have the right players on the bus today; effective managers strive to make sure the right players are in the right seats on the bus. Deviation from the standard is frowned on because let’s face it, if it’s not broken why fix it? For an industry like banking, this kind of mindset and skill set is extremely valuable for the predictability and consistency needed when dealing with customer’s finances and to adhere to strict regulatory standards.
Leaders Seek Ideas and Innovation
Like the farmer who cultivates the soil and fertilizes their crops, today’s leaders need to be effective at cultivating the minds of employees in order to grow ideas. The mind of employee is the fertile soil a leader needs to spawn innovative new ideas that lead to process improvement and improved service delivery. Leaders know that innovation will never be birthed from a closed mind. They work hard to create an environment where employees are encouraged to think about how to streamline or optimize some aspect of the business. In short, they strive to cultivate open-mindedness in their departments. The lowest level employees are often the ones that have good ideas and perspectives on how to improve things in large part because they spend so much time interacting with customers. Leaders know that a meaningful idea that could improve the business can come from any employee at any level on the bank and that is why they are willing to make the emotional investment in employees at every level in the bank.In summary
This table summarizes the above ideas (and more) and gives a sense of the differences between being a leader and being a manager. This is, of course, an illustrative characterization. There is a whole spectrum between either ends of these scales and it is the effective manager/leader that is able to flow within this range in an effort to maximize their effectiveness.
It could be said that leadership is a passion and management is a profession. Leadership is about growth, humility and accomplishing lofty goals through shared vision, shared passions, shared decision-making and shared efforts. Management is about effectiveness, efficiency and quality outputs. To be clear, both are essential and equally necessary if a bank is going to grow and evolve with the times.
In conclusion, the many studies conducted on employee engagement (See Gallop) prove that there is a quantifiable and undeniable economic benefit to a company that is able to engage both the mind and heart of their employees. Clearly both effective management and effective leadership are needed to maximize employee productivity.
As you can tell, I have a passion for this subject. If you would like to discuss some management and leadership situation in your bank, please give me a call. My personal cell number is 760-445-4980.
Here’s to your management and leadership success!
In my next series of blogs, we will be focusing on a subject near and dear to my heart…leadership!
Much of our time as a company is focused on working with, developing and coaching leaders in banks. For some executives, we’re working on succession issues and preparing them for their next promotion. For others, they’ve already been promoted into a new leadership position and we’re helping them develop the mindset and skillsets to be effective in their new role. Other times, we’re working with CEOs and Presidents helping them take their leadership skills to the next level.
Leadership” has been such a commonly used term in business for well over three decades. Team leader, branch leader, department leader, and project leader are titles given to executives, managers and supervisors who at best understand only conceptually what leadership is. Even more confusing is the difference between management and leadership.
Here’s the distinction: Management is an assignment. Leadership is a choice!
Leadership and management must go hand in hand. They are not the same thing. But they are necessarily linked, and complementary. Any effort to separate the two is likely to cause more problems than it solves.
Still, much ink has been spent delineating the differences. The manager’s job is to plan, organize and coordinate. The leader’s job is to inspire and motivate. In his 1989 book “On Becoming a Leader,” Warren Bennis composed a list of the differences:
- The manager administers; the leader innovates.
- The manager is a copy; the leader is an original.
- The manager maintains; the leader develops.
- The manager focuses on systems and structure; the leader focuses on people.
- The manager relies on control; the leader inspires trust.
- The manager has a short-range view; the leader has a long-range perspective.
- The manager asks how and when; the leader asks what and why.
- The manager has his or her eye always on the bottom line; the leader’s eye is on the horizon.
- The manager imitates; the leader originates.
- The manager accepts the status quo; the leader challenges it.
- The manager is the classic good soldier; the leader is his or her own person.
- The manager does things right; the leader does the right thing.
A very powerful question to consider is what percentage of your week is spent managing and what percentage is spent leading? And are these the correct percentages?
Adapted From “The Wall Street Guide For Management”
Perhaps there was a time when the calling of the manager and that of the leader could be separated. A foreman in an industrial-era factory probably didn’t have to give much thought to what he was producing or to the people who were producing it. His or her job was to follow orders, organize the work, assign the right people to the necessary tasks, coordinate the results, and ensure the job got done as ordered. The focus was on efficiency.
But in the new economy, where value comes increasingly from the knowledge of people, and where workers are no longer undifferentiated cogs in an industrial machine, management and leadership are not easily separated. People look to their managers, not just to assign them a task, but to define for them a purpose. And managers must organize workers, not just to maximize efficiency, but to nurture skills, develop talent and inspire results.
The late management guru Peter Drucker was one of the first to recognize this truth, as he was to recognize so many other management truths. He identified the emergence of the “knowledge worker,” and the profound differences that would cause in the way business was organized.
With the rise of the knowledge worker, “one does not ‘manage’ people,” Mr. Drucker wrote. “The task is to lead people. And the goal is to make productive the specific strengths and knowledge of every individual.”
Over the next several blogs, we’ll be taking a more in depth look at leadership and the differences between leadership and management.
Keep an eye out!
MEET RAY ADLER, AUTHOR OF THE EVOLUTIONARY BANKER
Instead of simply telling his bank clients they must change to survive and prosper, Ray Adler, Founder and CEO of BTI Growth Advisors, breaks the mold by teaching them how to change. With more than 25 years of senior-level consulting experience, Ray helps regional, business and community banks identify and implement the right strategic changes they need to evolve, hone and grow to the next level.