In December of 2007, the unthinkable happened. The booming American economy, built on America’s ever-growing housing markets, crashed. Millions lost jobs, homes, life savings, and most devastating of all, hope. This period became known as “The Great Recession,” the most severe financial meltdown since the Great Depression.
In the early 2000’s, First Exchange Bank was like most community banks across the nation, enjoying record profits from high loan demand and favorable interest rates. That all changed as the national financial meltdown started taking hold in early 2008 and we began to see the deterioration of banks in other states and consequently realized that life might be getting rough here at home.
The moment of truth for me didn’t come until my 50th birthday in 2009 when I visited a condo project in Maryland that we had financed. Units were not being sold, available financing for condo units was a thing of the past, and what just a few months before had been a shining star in our lending portfolio, now became a dark problem asset on our books.
In 2009 the Great Recession and the national housing bubble had landed abruptly at First Exchange Bank. Survival would not only take a monumental effort; it would require a complete rewrite of our business banking model. Our viability was a balancing act as we maintained customer, staff, and regulatory relations. Our customers were our lifeblood and they remained our primary focus. We simply could not change our bank in a manner which would alienate our customers. We identified specific customers that required continued cultivation, and we expanded our reach in search of new customer relationships. We recognized early on that in order to survive long term, we would need to emerge from the crisis a more customer-centric bank than ever before.
As we tackled the herculean challenges before us, we rallied behind leadership principles that have shaped our institution since our birth in the fires of the Great Depression. These principles have helped us to become one of North-Central West Virginia’s premier community banks and are modeled from the book “Mastering the Rockefeller Habits” by Vern Harnish.
In my first leadership article, we focused on creating organization alignment and developing a theme. In this article, we will focus on the leadership principles of establishing rhythms (habits) and developing Key Performance Indicators.
Leadership Principle #2 Establish Rhythms (Habits):
In his popular book, “Atomic Habits,” James Clear makes this statement: “You do not rise to the level of your goals. You fall to the level of your systems.”
As our team set about to make the sweeping and difficult changes required to survive the Great Recession, we recognized that we needed to develop small, regular habits and rhythms that, over time, would lead to great results across our organization.
Clear communication is paramount for a healthy organization, so a series of regular meetings (we called them “Huddles”) became one of our first routines. Our Huddles are structured to begin with short 5-15-minute daily meetings across all levels of our organization. Those meetings feed into slightly longer weekly, monthly and quarterly meetings, finally, our structure culminates with an annual planning retreat for senior leadership that encompasses a few days.
Our Huddles are designed to occur without fail at every level of our organization. The meetings have a set agenda of current challenges, successes and items of immediate need. They allow for fast and effective information flow from the bottom to the top of our organization and back. Our system is designed to improve the flow of information, remove bottlenecks, roadblocks, and enhance production.
Like any system, ours is not perfect, but we are continually working to improve it. Becoming disciplined in forming good habits has improved our organization in every significant metric. We did not change overnight, but with deliberate practice and a focus on the right habits, we have seen monumental improvement.
Habits have three primary elements: a cue, a routine, and a reward. Take a moment to evaluate some of your most simple habits and you will quickly spot this neurological “habit loop” that governs every habit we have.
While bad habits can almost miraculously get set in stone overnight, developing a good habit takes a bit more coaxing, commitment, deliberation, and time. Here are some of the tips that we have learned over the years on mastering the art of developing a good habit.
- Set a Clear Objective – Get specific about what habit you want to create
- Visualize Yourself with that Habit – Imagine you are the type of person who has that habit
- Repeat Your Habit Often – Repetition is key, so aim for consistency
- Start Out Small – Change does not happen overnight, so celebrate the small wins along the way
As the great author Mark Twain said: “Continuous improvement is better than delayed perfection.” Measure the success of your good habit by your continued focus to recommit after you recognize you missed an opportunity.
Leadership Principle #3 Set Key Performance Indicators (KPI’s):
“If you measure it, it will improve.” – Seth Godin
Once we had begun the discipline of developing good habits, we worked to identify areas that were most critical to our success and to monitor and measure these areas as one of our rhythms. We called these areas Key Performance Indicators or “KPIs.” These were the performance measurements we used to evaluate our teams’ success as we worked to achieve our goals.
We added the review, study, and evaluation of these KPIs to our regular habits, and we routinely discuss them with our staff during our huddles. Once we created the consistent and sustained focus on these KPIs, organizational alignment naturally followed.
As we discussed in the first leadership article, simplicity is a key element in ensuring alignment. We learned by experience that having just a few KPIs is better than many. So, while change is inevitable and organizational goals, objectives, and systems may need to be adjusted periodically, be cautious before changing or adding to well-thought-out KPI’s and strategies. In organizational alignment, less is often more.
Here are a few concepts from Mastering the Rockefeller Habits that are worth noting as you seek to develop good habits and identify the key metrics to quantify your organizations performance:
- Increase in complexity leads to stress, miscommunications, costly errors, poor customer service, and greater overall costs.
- The organization with too many priorities has no priorities.
- Manage the exception and do not let the exception manage you – avoid the temptation of designing internal reports, tests, controls, and processes around a rare exception.
In my experience, implementing the leadership principles of Establishing Rhythms and developing Key Performance Indicators has led to success across our organization, and in my personal life as well. I trust that these principles can also help you in your endeavors, whether business or personal.
Develop positive habits, and success will follow.
William Goettel, CPA
President & CEO, First Exchange Bank