With the pressure to grow revenue while maintaining costs, business banking leaders must rely on frontline managers to increase the productivity of their entire RM sales force. Coaching is one way banks can impact the productivity of their frontline staff while maintaining costs. However, most banks are operating under an ineffective coaching framework that assumes:

• All RMs should be coached to serve all customer types.  
• All customer interactions have equal impact on RM performance.

As part of our upcoming TowerGroup Financial Services Conference, we’re excited to outline a new coaching framework that simplifies what managers must do to deliver highly effective coaching to their RMs.

Our coaching framework challenges banks’ conventional approach to coaching in two ways:

Tailors coaching to specific customer types. We’ve found that what RMs must do or how they should act depends on the customer audience.  For example, an RMs who serves a company’s chief financial officer must be well-equipped to explain the banks’ credit standards and processes, whereas an RM interacting with a small business owner is more successful when they’re fully versed on how new products can help the business.

Focuses coaching on the specific customer interactions that boost RM goal achievement and productivity. Not all customer interactions have the same impact on RM performance. For instance, a cross sale conversation impacts a middle market RM’s performance far more than a meeting with a prospect, and a prospect meeting is far more impactful for a small business RM than a periodic review.  Therefore, a broad-based approach to coaching that focuses on all aspects of the RM job to find opportunities for improvement is both inefficient and ineffective. Managers can effectively improve RM productivity by focusing their attention on the specific customer moments that matter most.

Join us in Boston May 23 – May 25 for a presentation and discussion on this new coaching framework.

Faced with mounting pressure to hit higher goals, too often business banking executives’ first move is to hire more relationship managers to immediately boost sales production. But adding more RMs to your sales force will not boost sales growth fast enough to meet or exceed near term production goals. It takes new RMs a considerable amount of time to get acclimated to working for a new bank and the return on investment can take months to materialize.

We’ve found that frequent, high-quality coaching boosts individual RM sales production in the short and long term, yet most sales managers are too busy with their management and sales responsibilities to help RMs who need the supplemental support.

So, before you hire your next RM, why not hire a dedicated coach instead?

McKinley Bank (pseudonym) confronted this challenge head on by hiring regional coaching managers who spend over 70% of their time working closely with RMs providing one-on-one, needs-targeted, and group coaching to improve RM productivity. This role is unique in that the coaching managers are separate from and peers to the banks’ sales managers. Both sales and coaching managers work together to target RMs who needed support the most.

Board members learn how dedicated coaching improved McKinley RMs’ productivity; resulting in a 33% increase in the number of credit applications submitted.

According to a recent Board survey, improving the effectiveness of sales managers and coaches is a top 2012 priority for more than half of business bank leaders from around the world.

This focus on coaching makes sense. Today’s RMs need more help to navigate changed customer preferences and a volatile economic environment.

But like always, there are two primary obstacles that hamper banks’ efforts to deliver effective coaching:

1. It’s not a priority for front-line managers.
2. Even when managers do prioritize coaching, they often lack a blueprint to understand what “good” coaching looks like and the steps they need to take to become more effective coaches.

A bank that we profiled under the pseudonym of Pericles has developed a coaching accreditation program that tackles these two challenges head-on.

Pericles defines four distinct levels of coaching ability  from ineffective to highly proficient, assigns each manager to a level, and regularly evaluates all managers to ensure that they maintain and/or improve their coaching ability.

Four factors help explain the program’s success:

1. An Unrelenting Focus on Coaching: Pericles keeps coaching top of mind for all staff. Managers’ coaching rankings are published throughout the bank, and managers who are initially assessed at the lowest coaching level are re-evaluated each and every month until they achieve the next highest level.
2. Past Performance Does Not Guarantee Future Success: No manager is exempt from the coaching accreditation program. Even the best sales managers, as defined by tenure and sales performance, are evaluated and assigned to a coaching level. What’s more, Pericles re-assesses managers’ coaching ability every six months, and managers can always be downgraded to a lower status if they allow their coaching skills to slide.
3. Clear Articulation of What “Good” Looks Like: Pericles defines each type of coaching activity and the behaviors that managers should exhibit during that activity. These metrics give managers a clear sense of their strengths and weaknesses as a coach and how they can improve.
4. A Monetary Incentive: And finally, Pericles ties a portion of managers’ compensation to their coaching level. It’s a constant and powerful reminder that coaching remains a top-level priority for the bank.

Board members, visit our website to learn more about Pericles’ coaching program and how you can launch a similar initiative at your bank.

The News: A recent article in the Financial Times noted the  surge in lending by banks such as HSBC and Standard Chartered to Asian businesses across the first six months of 2011.  Specifically it mentions, HSBC’s loan book increasing by 40% in Hong Kong year-to-date, and by a third in the rest of Asia Pacific across the same time period. Standard Chartered provided 20%-30% more loans in each of these two regions compared with the year before.

Although such numbers tower over what European and North American banks are experiencing, experts express concern over the sustainability of this growth and potentially large losses for banks in the long run.

Our View: Assessing the credit worthiness of business owners and borrowers is a tradition every commercial bank has soaked into its processes and practices.  Sticking to prescribed lending rules and regulations is something every banker is now held more strictly accountable for than before.  But Banks need to do more by way of continuously updating the knowledge of its RMs to assess and validate the quality of customers – especially a customer who changes with the economic times and related head winds.

How We Can Help: See how one bank ensures its RMs are paying close attention to customer red flags in lending relationships through an on-going process of sales and credit coaching.  In addition, the Board’s most recent publication on RM tools provides data driven tips for Commercial Bankers on identifying customers who are most likely to buy from the bank as well as borrowing customers who represent a risk to it.

As banks continue to cut RM credit training programs and tenured RMs retire, business banking leaders find they must rely on a shrinking pool of talented RMs who can both serve customers and protect the interests of the bank. However, most sales managers are so busy with their other responsibilities that they do not have enough time to help RMs who need supplemental support.

See how one bank creates the role of dedicated coaching manager to support less skilled RMs and guide them through the sales and credit process.

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 BBB’s analysis of its 2010 RM Survey data shows an inverse relationship between Engagement and Effort.  Typically the most engaged RMs are putting in less effort into their jobs – which is not necessarily alarming but in this case its concerning as the most engaged RMs are not top performers. 

During next week’s webinar, entitled “Unlocking RM Engagement” we look forward to sharing our findings which reveal the burden of credit and administrative processes on RM performance.  In a world of stricter centralized risk management processes, the average RM is reducing their sales activities to limit their time spent on paper work. 

 Join us on June 20th at 10am EST to review the Board’s RM engagement findings and discuss key solutions to support RM performance.