Decision Quality Blog

I had a fascinating conversation with best-selling author and observer of life, Malcolm Gladwell not long ago during which I asked him about what was next for him. It’s his thunder, and I don’t want to steal it, but the gist of it is he’s concerned that the collective “we” are doing a lousy job when it comes to grooming talent to ensure a bright future. The problem shows up in a bad mix of three themes.

Broken Education System. This topic is so big and hairy it’s hard to know where to start. According to Malcolm, there is a 10 percentile point difference between good and bad teachers. Meaning, at the end of one year, a good teacher can move a student five points up, and a bad teacher has exactly the opposite effect. Scary.

Broken Immigration. Lost in the hysteria about porous borders, “illegal immigrants,” fences, and all the rest is the fact that we make it very, very difficult for skilled people to work in this country, much less emigrate. We offer all sorts of ways to come here via marriage, family, and preferences for the country of origin of powerful politicians. But if you’re a hyper-smart guy or gal from somewhere over there, you’re pretty much out of luck.

Broken Apprenticeships. Historically, the path to a profession was through apprenticeship. In more recent times, large organizations have filled that need via in-house training and development programs. It’s at least an open question how well companies are doing that anymore.

All of this leads Gladwell to wonder, where will the talent come from in the future?

I had reason to ruminate on this same question having just spent a few days doing decision quality training with some “high-potential” young leaders at one of my bank clients.

It would be unfair to suggest that large banks don’t train and develop people and that senior executives in these banks don’t worry about talent. Having said that, I think there are plenty of opportunities and needs.

1. There continues to exist an unproductive schizophrenia about training and development in many of the companies I traffic in and with. The argument against is, “We’ll wind up training them and then they’ll just go down the street and someone else will get the benefit.” It’s a classic case of linking ideas together that don’t go. True, it’s a reasonable strategy to poach talent from your competition (leaving aside the open debate whether or not people who succeed in one place will be as successful in another). But that sort of simplistic syllogism steps over the more obvious issues like: “Why do you suppose they choose to leave?” “What is it that the other guy is offering that’s so much more attractive than what you offer?”

The truth is, we’re talking about banks here, not Silicon Valley start-ups. Leaving Big Bank A to work for Nearly as Big Bank B is not a dramatic leap on the same order as leaving Google to work for a start-up. It’s more like trading your Chevy in for a Ford.

So thought one is this: If that’s why you’re not developing your people, may I humbly suggest you’re looking at this upside down.

2. It’s true that training and development is a pricey undertaking. It’s not just procuring or developing content. It’s time away from the job; it’s coaching overhead; it’s ramp up time. Retail banking is a game of inches, minutes, and basis points. So every iota of productivity counts. The thinking goes that a day out of the field equals ten core products not sold (or something like that).

As before, this line of thinking seems at least short-sighted. It’s correct on a day-by-day basis, but misses the benefit of decreased time to higher productivity, higher sales effectiveness and efficiency, and longer time on the job (and all the benefits that go with it). We’ve done extensive financial modeling on the trade-offs between higher turnover and the resulting hiring, onboarding, and training costs vs. paying a bit more and developing people in place and it’s not even close. In a big retail distribution network, the difference in something like NOI is hundreds of millions of dollars.

3.  Having spent time in a wide variety of enterprises, I would say that I’m impressed with the quality of talent I see in retail distribution jobs. I realize that’s a very broad statement, but viewed from a slight distance, I find it true. I think there are bigger discrepancies when you look in IT for example, where banks compete with much sexier companies and offers for the very best talent. 

This leads me to two observations.

a) Every large financial institution I have dealt with over the past decade has spoken with pride about their commitment to people and how they view people as a source of competitive advantage. Keep believing that and keep making those investments, but don’t kid yourself in thinking that there are step-change differences between your people and those employed by your direct competitors. Yes, your best 100 may be better than their best 100, but your 10,000 aren’t better than their 10,000.

b) Unless you’re constantly creating new lines of business, opening DeNovos at a furious rate, developing new routes to market, or making big acquisitions, you have a hidden problem which is this: your best people are either at, or about to arrive at, a career dead-end.

This last point I think is the most troublesome as there’s an easy financial answer. But what about all that good young talent that’s stuck in a Market Manager or District Manager job with no where to go because his or her boss is 42 and similarly stuck?

Back in the mythical “good ole days,” people didn’t seem to worry as much about upward mobility. In the years immediately following the last good war, the domestic economy was booming and large companies were expanding their job base. It’s different today, and the generation now entering the work force is even less interested in patiently waiting than any group before. And I see it getting worse, not better.

DeNovos. The industry is deep into a DeNovo bubble that simply has to burst. So count this out as a path to advancement. Call it a “sell.”

New lines of business / new routes to market. During the nineties, banks were hot beds of innovation when it came to new products and distribution specialization. Lots of the star leaders of today made their bones building out brand new small business, instore, mortgage, merchant services, treasury management, and licensed banker programs (to name a few). Over in the back shop, careers were made in creating and growing remote channels: contact centers, online, e-commerce, ATMs, etc. And of course the propeller heads have had a field day securitizing everything in site. So lots of opportunities to grow something from scratch, create lots of new jobs, and polish your star. Today, those are all mature business forms and I honestly don’t see the next one. In fact, many of these former hot beds of innovation have grown stale and sclerotic. Call this one a “hold.”

Acquisition. True, this is a net job destroyer, but if you’re on the buying side, an acquisition is a fabulous way to give your up-and-comers a shot at the brass ring through the tried and true formula of buy-fire-re-org-promote. Call this a “buy” with a caveat. While retail banking will continue to consolidate, probably forever, it’s certainly no the reason why you do this sort of thing. In fact, in businesses other than banking, it’s often done as a way to ACQUIRE talent, not as a way to make room for the people you already have.

Job Reinvention. I’ve been in a number of conversations lately where people have wondered aloud about two linked ideas: Where are the Commercial Bankers (or many other jobs) of the future going to come from; We need to reinvent a bunch of our job families. I pick on commercial banking, but I think it’s true about many of the specialized sales forces. I can think of several banks where the top producers today are exactly the same people who were the top producers ten years ago. That’s good if you look at this through the lens of retention; it’s appalling on almost any other front. Go over to a big technology shop and this is far less the case. Yes, there is no replacement for life experience and industry connections. But I do think there is a screaming need to think radical thoughts when it comes to many of the job families.

So back to the beginning. I’m with Malcolm Gladwell on the general topic of talent: I think we have a long-term systemic challenge that offers no easy solution. Like our national and local infrastructure, we’re underinvested with no obvious pool of free dollars to spend on it.

At the enterprise level, I would encourage even more thought and action around talent development. Right beside that I would encourage more attention to the corporate analogue to the point about good teachers / bad teachers and the difference in performance that creates. There are lots of people putting up good numbers that are wearing out people and skating by on soft measure like team member engagement and customer engagement. Think about the long term cost they create. Finally, and I don’t have the answer to this one, give some thought to how to keep all those high-potentials working in your company. That’s the future. Losing them because of boredom or frustration doesn’t serve anyone.

Tags: MalcolmGladwell, talent, job reinvention, acquisition, mergers, DeNovos, District Manager, Immigration, Education, Aprenticeship