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(The name of the bank and certain situations are disguised due to a confidentiality agreement. The actual client approved this case study.)
In an industry that has lost many thousands of jobs in the past few years, "reorganizing" is usually a euphemism for laying off workers. But Churchill National Bank (CNB) in the U.K. found a better way to competitiveness.
When Steve Powell took over as Managing Director, his mission was to "significantly change the performance of the Bank and prepare it for the new future." A hierarchical, cumbersome organization, it certainly needed change. Although CNB was full of bright, hardworking people, their efforts weren't producing results, and disappointments were mounting. Processes had become empty rituals; strategy information and consulting studies were voluminous but disconnected from reality; and the operating plan had become simply a budgeting exercise with little attention paid to growth, markets, productivity, or quality. Employees stayed in the same jobs too long while regulators seemed to run the bank.
Powell, eager to take charge in his new role and make a difference immediately, engaged Moravec and Associates as a management consulting resource to effect a top-to-bottom transformation-without risking the business. The first step was to gather the top ten managers for a four-day program to thrash out a new organizational strategy. Moravec and Associates provided the Business and Organization Renewal framework to structure the analysis, discussion, and decision making. With Powell overseeing the content and agenda, a consultant facilitated the meetings and kept communications on track.
The group quickly reached new levels of openness and successfully bridged business and interpersonal differences. They redefined the product-line structure in terms of 12 key management processes, such as Customer Solutions (formerly Customer Relations) and Product Development. Each participant in the 10-day session then involved his or her colleagues and direct reports and incorporated their input. Moravec and Associates' Align - Accelerate - Transformation methodology was deployed to enable the new Managing Director to quickly get every employee on board.
The bank's "stovepipe" structure became more horizontal. Management levels decreased from nine management levels to three while pay grades went down from 24 to just four, "The old structure was particularly inappropriate for a business where all the core values are based on integration and building multiple relationships with customers," says Elaine Sutherland, Director of Customer Solutions. The renewal included an overhaul of the bank's woefully inadequate MIS system.
Results? In less than three years, CNB has defied current trends by actually increasing headquarters staff-by nearly 25 percent. The bank has expanded from serving only England to opening branches in Wales, Scotland, and Northern Ireland. By focusing on integrated solutions, it centralized such economy-of-scale activities as loan processing while moving others, such as insurance underwriting, to its 426 branches. Middle managers are briefed biweekly on the status of the dozen renewal initiatives that continue, and they have learned facilitation skills.
Despite the increase in staff, operating profits per employee increased 35 percent from 1999 to 2002, and cost-to-income ratios fell from 59 percent to 35 percent. Time to process a loan is down from 21 days to 3 days and heading lower. Employees are enjoying more flexible roles and are seeing themselves as innovative winners.
What's more Powell expects the bank to end the year with record revenues. "Business is terrific this year", he says.