Robert Paterson's Weblog

Credit Unions as an alternative to Banks - John Lahey

I wonder if the Credit Unions are going to give banks a real challenge now? For many years, many Credit Unions tried to be banks.

But a number of them have gone back to basics - to deepen their understanding of the relationship with their owners.

It is with some joy that I hear today that an old colleague and friend, John Lahey has been appointed CEO of the Alterna Group. John is quite the best executive I have ever worked with and it bodes well that Alterna looked to him. Here is the ROB's take:

John Lahey spent his career promoting big banks. Now, he's out to turn their weaknesses against them.

The Alterna Group, which includes one of Canada's oldest and largest credit unions, Alterna Savings, is expected to announce today that Mr. Lahey will become its next chief executive officer, effective July 9. Mr. Lahey, who worked for the Canadian Imperial Bank of Commerce for close to a quarter of a century before becoming CEO of FirstOntario Credit Union, will split his time between the Toronto and Ottawa offices of Alterna, which has more than 150,000 members in Ontario.

By the time he left CIBC six years ago, he had been responsible for 1,350 domestic branches and was well versed in the challenges of retail and small business banking. Now Mr. Lahey is working on strategies to help credit unions compete against his former employer and the other mammoth banks that dominate Canada's financial service sector.

"One of the challenges with the banks, because they're so large, their offers are often mass-market offers," Mr. Lahey said in a recent interview. "It's like Henry Ford: you can have any colour you want as long as it's black. Because they're large, and because their volumes are so horrendous, they standardize everything. I think the huge advantage that credit unions have is to personalize what they do."

If anyone can do this - it will be John

CIBC and Banks - Lesson from the Marines - Dr Jonathan Shay

The recent class action suit against CIBC by one of their star tellers about overtime is I believe only superficially about pay. I argued in my prior post that it is really about how oppressed and voiceless the staff feel in an operational culture that treats staff and clients as atomistic and replaceable individual objects.

I said that I would use the Marine Corps to refute this approach to organization. I will be quoting from an important paper written by Jonathan Shay - talking about the idea of "Cohesion" in the USMC. I attach his paper at the end of this post. His thoughts are very close to mine that I have talked before about in my series on what is a "Human organization.". See the follow on for more on Dr Shay - a great story in itself.

Staff at CIBC are treated as individuals who do not need to be fitted into a social unit where they feel safe and appreciated. They are lead by spreadsheet jockeys who do not share their risks, who may know less than them and who rely on their official status for power. They have an existence of unending routine where the goals are not linked to growing something over time but merely to a set of numbers.

I don't mean to just pick out CIBC - most organizations are like this now. It's just at CIBC that the price for this approach is going to be paid.

This is the machine model. Like all machine models, as it scales so does the friction leading to a point where the organization has to seize up - the point of diminishing returns.

This mechanistic idea is behind much of the weakness of the current US Military model.

In an Army version of this belief [voiced to me (Shay) at a Research and Development Corporation (RAND) personnel seminar] an Army colonel said, “I had a tank company in Germany, and you get a new guy, you want to put him in a tank knowing he’s been trained at Ft. Knox on this same tank.  You put him in there and he’ll fight the tank, because he knows what to do.”

This is the late 19th century theory of Management Science known as Taylorism.  It had enormous cultural prestige at the beginning of the 20th century when Secretary of War Elihu Root imported it into the War Department, formerly a corporation lawyer for the Pennsylvania Railroad.  In the course of the 20th century, this theory has become deeply entrenched in the common sense and the institutional policies and procedures of the American forces.  By mid-century it led ultimately to policies and practices of manning units individual by individual, and providing rotation and rest and relaxation (R&R) by individual.  Taken as a whole, this body of practices is known as the individual replacement system.  For many Americans on active duty, this is so familiar and seems so natural that it is as invisible as water is to a fish.  An Army officer once looked me in the eye and said, “It’s not possible to do it any other way.”

Almost since its inception in the first quarter of the last century, and especially after every war, American battle leaders in all services have contested the individual replacement system as a very bad fit to what’s needed for fighting other human beings.

The trouble is that they have never fully embraced its alternative - situating people in tight cohesive stable small units and having a leadership that leads from the front.

What can small stable units do that individuals cannot?

General Donn Starry, United States Army (USA), retired, considered by many to be the father of the Abrams Tank, is fond of telling a story about superb tank gunnery he witnessed in Israel.  He says he asked, “So how many rounds do you fire every year to get to shoot like that?” expecting the Israeli tanker to answer in the hundreds.  He reports his own amazement when the answer came back, “Oh, maybe six or eight.”  And then noting General Starry’s astonishment, his informant said, “but remember that we’ve been together in this tank and the ones before it for fifteen years!” 

As any coach knows, a team of experts, will often lose to a real team.

A real team also has great situational awareness. They don't lose any energy wondering what the other guy is doing not do they fear taking risks as they know they will be supported.

OBSERVATION: Members of cohesive units are able to take in the environment and focus on the enemy, because they know that others in the unit are covering their backs.  No cognitive or motivational resources are wasted in worries about the incompetence, selfishness, or lack of commitment of peers.  Leaders (and this applies equally to field grade and company grade officers) experience a similar freeing up of resources when they know their bosses trust and support them.  They can focus outward on the enemy, rather than focus inward on pleasing the boss, on looking good, or on institutional structures, politics, and procedures. 

ORIENTATION: Because solidarity suppresses fear of the enemy, Marines are able to think.  We must root out the folk culture that assumes that the lowest ranks not only can’t think but shouldn’t.  Intelligent observation and thoughtful interpretation of the things seen, heard, and smelled must be cherished at every rank.  Every rifleman should be as skillful a tactician for the fifty meters directly in front of him as his battalion Commanding Officer (CO) should be for the 5,000 meters ahead of him.  When cohesion is absent, mistrust of peers, of subordinates, of superiors clouds the mind with fear at every echelon even when the enemy is not especially dangerous.  Properly supported leaders are able to think, plan, and organize (based on mission and what the enemy is doing) far better than leaders living in a “zero defects,” climate of document-it-all-to-prove-you’re-not-to-blame-because-you-were-following-orders-or-the-school-solution.  Supported leaders don’t bleed energy and attention into ***-covering (expletive deleted); they are not tyrannized by school solutions; they don’t waste their energy trying to discover imperceptible clues to what would please the boss.

DECISION:  Empowering the echelon on the ground in direct contact with the situation entrusts them to make decisions in accordance with the commander’s intent – there is no “waiting for orders.”  A “strategic corporal” who is not sure of his people – because he hardly knows them and has no history with them of coming through hard things together – is far less likely to take initiative and make decisions based on commander’s intent.  He is far more likely to buck the decision up the chain of command.

ACTION: Decisions stick when they are owned by cohesive units: no foot-dragging, sabotage, or Lone Rangerism.  Execution carries full commitment by all because of their real training experiences together. Confident execution.

Because cohesion is a condition of mutual trust and confidence based on concrete familiarity, it frees cognitive and motivational resources for every step in the OODA cycle, improving their quality, and speeding them up.  This is true for every echelon from Marine fire team to Marine Expeditionary Force (MEF) commander.

Putting the individual into a stable small social unit has the power to shift your organizational gear way beyond the machine.

The other critical ingredient - real leadership - not the white hard hat, not the manager in the corner with a spreadsheet. We are talking Centurions, Royal Navy Frigate Captains, Fire Chief leaders here. People whose experience and actions build trust. Shay asks the USMC if the young marine officers meet this criteria:

Knows his stuff – Do TBS and IOC prepare the young lieutenant to be a life-long learner of the art of ground warfare? ready to learn from their NCOs? ready to learn from experimentation? ready to seek out mentoring wherever they can find it?  Or do they create the illusion that the checklist school solution is the final and complete answer?

Knows his people – Do we give our young lieutenants enough time with their platoons to get to know their people? Enough time to develop a warm heart for their subordinates and to protect them? 

Knows that his boss is dedicated to his success, and will not abandon him – Do our officer evaluation practices elevate fault-finding above mentoring, teaching, and supporting? 

Does CIBC or the Banks your organization pass this test?

I think that there is more to the idea of Enterprise 2.0 than social software and hype. I think that there is one way that nature designed for humans to work together well. Just as there is one design for a wolf pack. One design for an oak forest. One design for a galaxy. We have just forgotten it and replaced it with a simplistic dogma.

Those who want real performance will start to explore this lost knowledge. If you are interested in how to make your organization perform - I have more on my page at reboot9. There I put forward the truths of this ancient and still visible natural system for humans.

Download cohesion.doc

Banks - The Limits of the Efficiency Model - Class Action Suit by Star Teller

A star teller with many years of experience and in the lead role at main branch is the initiator of a class action suit against CIBC for unpaid overtime.

What is really going on? Is it really a matter of pay or is there a deeper issue? I think that it is a sign that CIBC and the banks are reaching the limits of running banks like a machine and that it is now time to think about how by looking at the model of a truly "Human Work Place" they could heal this wound and also get the performance that they desire

TORONTO (CP) - In what's being called a potentially precedent-setting case in Canada, a bank teller has taken on one of the country's biggest financial institutions with a class-action lawsuit that alleges CIBC fails to pay overtime to its customer service staff.

Dara Fresco said Tuesday that she's owed some $50,000 for the two-and-a-half to 15 hours a week of additional work she says she's been required to perform as a teller and personal banker since 1998.

The 34-year-old Toronto woman, who has worked at more than a dozen CIBC branches, points out that's a lot more than her current annual salary of $30,715.

I've been working for the bank for almost 10 years and I figured enough is enough already. I wanted to get paid for the overtime," Fresco said at a news conference Tuesday, just hours after the lawsuit was filed in Ontario Superior Court.

The $600-million class-action suit is expected to cover an estimated 10,000 current and former non-management, non-unionized CIBC employees across Canada, many of whom are women.

"What is unfair is that my colleagues and I are rarely being paid for the overtime that we are working, and that's just not right," Fresco alleged.

"I decided to seek out legal advice to see, mainly, if this was allowed and to find out what my options were ... because it isn't fair to work and not be paid for your time."

I don't think that this issue is really about pay. I worked for CIBC for many years and for the last 5 was SVP for HR. This issue is about managerial culture and the relationship between the staff and the bank's  senior leadership

In the decades that I was at Wood Gundy and then at CIBC, we knew that sales were key but we knew that the key to sales was relationship. But in the last 10 years only one thing now counts - sales. Everyone now has a set of targets, ever expanding, that they have to make. CIBC retail has become a machine. The client is there to be farmed. The business, the clients and the staff have all become commodities.

As CIBC has become a machine, the people who feel the most alienated are paradoxically the stars. Every milestone passed leads to another hurdle. Life just becomes a treadmill.  Key staff feel like Sisyphus, who as a curse was forced by the Greek Gods to roll a boulder up a hill - every day. Their reward for achievement - another boulder. The claim is that they get paid for success - but the amounts are paltry compared to investment bankers.

They feel unappreciated. They feel that they are treated like things. They feel that no one cares about the clients either. They are not people anymore they are leads or they have yield. It's all about the numbers.

I come to my point - in medical malpractice - the key to being sued is not the malpractice but the nature of the relationship.

Many malpractice suits are brought not because of mal-practice nor even because of complaints about the quality of medical care but as an expression of anger about some aspect of patient-doctor relationships and communications.

The theory presented is that under the stress of anxiety and physical illness, some patients regress to childhood needs; physicians are not generally trained to fill such needs. Thus, these patients, angry because of this, express their anger in malpractice suits. This theory has been taught to physicians and medical students as part of a physician continuing medical education (CME) seminar on Loss Prevention/Risk Management through demonstration of active-listening techniques to seminar participants.

Physicians who understand and can respond appropriately to the emotional needs of their patients are less likely to be sued. This may also translate into a more fulfilled practice of medicine by those physicians who are most aware of the importance of a positive relationship. (My emphasis)

My advice to my old place CIBC is to look beyond the obvious and look to your culture.

There is more performance and less friction available in a more human model. I will write more about this in the next few days. I will be using examples from a very tough organization - the US Marine Corps!