Entries in the Category "MGMT251"
Wrapping Things Up
I may still have an entry or two left in me related to the topic at hand, but I feel that it is as good a time as any to have a random entry not directly related to my topic of management strategies in the commercial banking industry. The semester is winding down and so is this project, but I think my blogging career may not be on the outs just yet. I have had many ideas for entries lately, but due to time constraints, I have been reluctant to devote much time to off-topic entries. Plus, while my professor is still visiting this site and assessing me on it, I am reluctant to delve into matters completely unrelated to the class. So, this is a compromise entry with the following semi-related areas of discussion:
I have been regularly checking the stats on the site to see how my efforts at boosting the readership have gone, which I will outline in the required paper for the assignment. Among the listed stats is a listing of the visitors' domains and countries, which, interestingly enough, to me at least, includes six visits from Hungary. I was born in Hungary so this caught my eye. I am not sure if this is pure coincidence or if someone back home is keeping an eye on me. Either way, this is my chance to acknowledge this occurence, freak or otherwise.
In other news, this blog was originally meant as a way to do some research in the field which I was considering entering upon graduation and may still do so. I was hoping that a summer internship in banking would be the first step toward the job after graudation, but the banking internship did not come through. However, I was lucky enough to secure an internship with Sirva Relocation for the summer having to do with accounting, so I am completely satisfied with the unexpected turn of events. Whether the banking industry is in my future is fairly irrelevant. The blog forced me to do research on the industry, which is useful whether or not I end up with a related job. Overall, I am pretty pleased with the experience and think that it has at least given me enough practice with blogging to turn it into a habit. That could end up being a bad habit, but for now, I look at it as an excuse to write my thoughts down and maybe vent every once in a while.
Speaking of which, I will now attempt to tie this into a class-related topic. A few weeks ago, we talked about stress, time and career management. Currently, all of these topics loom large in my life, considering it is that time of the semester when weeks (and months) of procrastination are catching up to me and others like me. I do not think I am in that bad of shape, but from here on in, it is going to be a struggle to finish the semester. The strange thing is, I have been busy all semester. I have never really felt as though I have been blowing things off, but the seven classes with their group projects and tests and papers are really taking their toll on me.
Hopefully another topic for 251 related discussion comes to mind, but if not, than this is it and hope you learned something. Look for some non-banking related topics in the future.
An Even Faster Digital World
As my previous entry outlined, digitalization has had a profound impact on the banking industry. However, the constant improvements in technology indicate that there is a constant possibility for more efficient service. That is exactly what GemStone is hoping to capitalize on with its GemFire product, which, they contend, improves upon prior technology by offering real-time data. The product allows for "large amounts of data to be held in memory, ready for low-latency retrieval and analysis by multiple programs." Apparently, the program allows for each application to retrieve data "as if it were in one centralized location," and then brings up the data in the appropriate format. While I will not pretend to completely understand how this technology works, the benefits are clear. In the banking industry, GemFire allows for faster decision-making by integrating data from a variety of applications into one database. The results are faster decisions made regarding loans, better understanding of individual customers, faster access to data used in all departments, the ability to target customers based on real-time information, fraud detection at point of transaction, and many others. The digital world is one in which there are constant technological improvements that can have a substantial effect on the operations of a business. GemStone is one of the companies providing other businesses with the technology to constantly improve, making the digital world full of more change than ever before.
The link for the source of this information is available here:
GemStone
The Problem with Paper
I came across an issue in bank management that affects essentially every other industry as well that I had not thought of before this article: the costs of handling paper in the office. Here are some surprising figures:
"The average company spends between 7-14% of its total costs on document processing in a paper environment."
"An estimated 7.4% of staff time is spent searching for documents."
"The average company spends 280 hours annually per employee looking for lost documents."
Also, there are the costs of storing paper in the office, estimated at $30 per square foot, as well as the price of paper when a company uses thousands of sheets annually. These costs quickly add up to become a substantial portion of a company's costs.
Therefore, electronic storage has become a major factor in every industry. While this trend began decades ago, it took this article to point out the financial rewards of utilizing technology for this purpose.
This process of converting paper into a digital format falls under the umbrella term of Enterprise Content Management (ECM), which consists of the "imaging, document management, records management, archiving/repositories, and web content management." In the banking industry, initially this technology was used primarily for converting images of checks. However, as the technology has improved, banks can now utilize these capabilities for all of their documents. These documents include signature cards, account application forms, account statements, loan applications, employee records, etc.
The lowered expenses as well as improved efficiency with faster searching are the primary benefits of the technology. The efficiency benefits employees, who do not have to waste time filing through cabinets, and customers, who do not have to wait for employees to do so. Therefore, customer service is ultimately improved. Along with the cost ramifications, digital documents improve security in the sense that they cannot be stolen or damaged physically, although there is the new danger of hackers. Nonetheless, the move from paper to digital in the banking industry and others has had a significant impact on the way business is done. The source of this information is available at the following link:
Continental DataGraphics
Jessica Simpson and Jessica Alba
...have nothing to do with this blog.
Now, on to more important matters.
While the United States has always been along the cutting edge of innovation in the banking industry and others, not all countries have had the same history. India, for instance, has seen a boom in demand for modernization in order to assimilate its business environment with the rest of the world. For this reason, the National Institute of Bank Management (NIBM) in India provides services to improve the banking industry in their country. The services include research, training, and consultancy. The research is meant "to address the existing or emerging issues of the banking system" in order to "assist in policy formulation as well as policy evaluation at the individual bank level as well as at the system level." The 150 annual training programs provide management training that "are customized to the needs of banks and financial institutions in India as well as in developing countries." Finally, the consulting aspect of the institute provides direct benefits to banks and financial institutions.
The institute's role as a think-tank makes it a central factor in the direction of the Indian banking industry. Bringing India into the world economy requires institutions such as NIBM to update and launch their respective industries into being compatible with the rest of the world.
Nondeposit Investment Products
In order to safeguard against the dangers of money laundering, the Bank Secrecy Act/Anti-Money Laundering (BSA/AML) InfoBase has outlined procedures for bank management to undergo. Complying with the BSA/AML puts responsibility on the bank to follow the appropriate procedures. In particular, these procedures relate to how to be aware of red flags when dealing with nondeposit investment products (NDIP), specifically securities, bonds, and fixed or variable annuities. The manner in which these products are sold in a bank through networking is by co-branding, dual-employee arrangements, or third-party arrangements. Co-branding involves the co-sponsorship of another company that offers these financial services; this complicates the matter of who is responsible for compliance with BSA/AML. Next, dual-employee arrangements involve a shared employee between a bank and financial service provider. Next, the third-party arrangement involves a financial services provider selling the NDIPs from the bank's lobby. While these arrangements involve varying degrees of banking responsibility for BSA/AML compliance, these fall on the bank when they directly sell the NDIPs.
To ensure the proper handling of NDIPs, the InfoBase has determined that risk can be determined through a number of factors. These include the type of NDIP and its size, the frequency of purchases, how unusual the purchase is, and the countries involved. The last is an important factor due to offshore accounts being used for money laundering. Management must be aware of the these possible red flags and determine if there is a higher risk involved with certain transactions. If so, the bank's managers must exercise due diligence in monitoring and verifying these transactions.
The source for the information presented here is available at the following link:
Federal Financial Institutions Examination Council
Management Training
While initial training for incoming employees is an obvious must for any company, or at least should be, one must also consider ongoing training throughout an employees tenure at a company. At Ohio Savings Bank, based here in Cleveland, Required Management Training (RMT) "is required for all managers and supervisors--executives included--totaling 430 people." The program has been utilized by Ohio Savings Bank since January 2005. The program's participants must complete three courses through Ohio Savings/AmTrust University each year. There are a variety of course options for managers in order to stimulate their human relations skills. The options include "Dealing with Difficult People," "Business Ethics," and my personal favorite, "Peer Today, Boss Tomorrow." Clearly, Ohio Savings Bank has determined that all of its employees could benefit from such training. Having met the company's CEO, Peter Goldberg, I can say that the company focuses on improving leadership from the very top. Mr. Goldberg emphasized feedback and coaching as his strengths and that is the primary benefit of the program. Through practice and training, Ohio Savings Bank is able to ensure that its leaders have the power to be the type of leaders of which the company is in search.
The source for this article is available at the following link:
Business and Management Practices
"Dress Down or Up?"
One of the in-class presentations by students this week in MGMT 251 was regarding informality in the workplace, by Matt Reagle. In particular, it is the notion of the changing nature of dress in the workplace that is relevant. I discovered an article from the American Bankers Association Banking Journal that discussed the shift in dress over the past few decades. Interestingly, this has not been a pure shift from formal to informal, as one might assume. The articles indicates that during the dot-com era informal and casual wear became the norm, which spread through many industries, including the banking industry. However, when the dot-com bubble burst, there was a shift back to more formal, business attire. The article states that in 2001 51% of companies had a casual dress code policy every day, while that number fell to only 41% of companies in 2005.
The banking industry had long held to the more, formal business attire due to the nature of the business. However, as other industries shifted to more casual wear, so too did the banking industry feel the need to shift to casual wear to attract a younger generation, who were more inclined to want to dress casually. Nonetheless, banks want to maintain a professional image and, therefore, must tread a fine line between employee comfort and apporpriate apparel for the workplace. Another interesting point in the article included the fact that the weather in the south lends itself well to dressing casually. Also, the idea of setting policy is important, as confusion can arise when there is no specified code for what is appropriate dress and clothing decisions are left up to the employees. Instead, appropriate dress for formal and casual days should be specified in written policy. Also, some banks provide polo shirts for casual days so as to not require employees to make an additional investment to fit the dress code. The source of this information is available at the following link:
LexisNexis article
Technologically-Competent Leadership
CEOs and top managers often advance to their positions from their respective divisions within the company. In banking, it is logical to assume that it is often accountants, actuaries, and others who are experts in the financial aspects of the banking industry to be the top leaders. However, as I discovered in an article from "The Financial Times," some experts believe that there needs to be a greater emphasis placed on having technologically-savvy managers and leaders due to the high-tech nature of the banking industry. As the industry has shifted to become heavily dependent on technology in the day to day operations of banks, so too has the ideal leader shifted from being a purely financial expert to one who also has the technological skills to integrate their financial expertise with the realities of the modern-day bank. As the article indicates, the Chief Information Officer is not sufficient for a bank. There needs to be other leaders who are passionate about technology and can translate that into an understanding of the role technology plays in the financial success of the company. The CIO is more concerned with the everyday technical aspects of how the equipment is functioning. There is a need for a technologically-competent leader among the highest positions in the company to "instil a passion for technology's potential within every executive." Holding on to the successful leaders from years past may not be enough to maintain one's success in the current environment of the banking world.
The article that is the source of this information is available at:
source: lexisnexis
Unions against Bank Mergers
To some outside observers, labor unions seem to not be directly effective in improving the working environments of their members. However, unions often do have the best intentions and work toward providing their members with benefits that are truly useful to them. In the case of the Philippines, the National Union of Bank Employees (NUBE), a coalition of sixteen bank unions, have come together to fight bank mergers and acquisitions due to the impact this has on the subsequent companies. Mergers and acquisitions lead to job losses as the companies streamline departments or simply eradicate others. Obviously, the continued threat of such mergers worries bank employees. However, they are mostly powerless to fight this trend on an individual basis. Therefore, unions provide power and bargaining strength on behalf of employees who fear the ramifications of mergers. In this case, NUBE is fighting to have greater "consultation between the bank and its employees." NUBE simply wants to increase communication between the banks' decision-makers and the unions and the employees that they represent. If effective, NUBE will have ensured a better sense of job security among its members. The link to to the source of this information is available here:
globalpolicy.org
Labor Unions
Labor unions have played a signficant role in the U.S. work force during the last century. However, unions have lost much of their clout since the economy began shifting away from manufacturing industries, typical union strongholds, and for other reasons, as well.
The banking industry clearly does not represent a union stronghold. According to the U.S. Department of Labor's Bureau of Labor Statistics, only 2% of the workers in the banking industry are members of unions. Compared to the national figure of 13.5%, as described in Gary Dessler's "A Framework for Human Resource Management," unions have little presence in the banking industry. However, that does not mean that they do not have an impact. For instance, according to the Federal Deposit Insurance Corporation's Banking Review, "the manner and amount of executive compensation is a growing public concern," and labor unions "have become very active in maintaining public interest in this issue." The outrageous salaries paid to executives are easily identified by the public and, therefore, make an easier target for change. The FDIC notes the success that a coalition of labor unions had "in getting a resolution included on the proxies of 40 large companies this year-a resolution that, if adopted, would limit CEO pay to $1 million in salary, $1 million in bonuses, and $1 million in stock and stock options." Clearly, even with gradual decline in union membership over the latter half of the last century, unions are still able to influence and work on behalf of their members.
Banking Safety
This week in Management 251, the topic has been health and safety. Based on what we discussed in class, the banking industry would not seem to be a particularly interesting vehicle for discussing these issues. However, the very nature of the banking industry creates safety concerns from external sources, which was not an aspect of safety that we particularly focused upon in class. While we did discuss dangerous jobs, in the sense of those were accidents are possible due to long work hours, we did not mention safety concerns arising from outside sources. While these are not as easily predictable and, therefore, cannot be easily prepared for, precautions still must be made in a banking environment. Obviously, banks are targets for robberies and, therefore, create a possibility for a dangerous encounter. This is not the type of situation that proper management and policy can prevent, but with appropriate management and policy, the danger can be lessened. That is why such things as employee cooperation under these circumstances as well as silent alarms have been implemented. These decrease the chances of a violence occurring at the bank. Nonetheless, this is clearly an area of concern in the banking industry that is, presumably, addressed openly and with clear policy implementation. This is the sort of management practice that could be the difference between life and death, so open and honest discussion of this issue is crucial in this work environment.
Personal Banking Experience
Over winter break during one of my visits to my local bank, I noticed the behavior of the employees working there, and it was not what I had anticipated it would be. All of the employees were talking to one another and joking around even while somewhat engaged with a customer. The manager walked around and smiled and interacted with customers while making jokes with his employees. The atmosphere was light-hearted and jovial, which seemed appropriate for the situation. It was mid-afternoon on a weekday at a small bank in my small hometown, so business was light. I enjoyed seeing this vision of a pleasant work environment in which employees are treated well and are on good terms with their boss. If I am in a position of some authority in my job in the future, I hope to be able to interact with my employees and peers in a similar manner, even if not quite as light-hearted as this exchange was. The atmosphere at work, or in any environment, can make or break the situation for many people, and working in an environment that alleviates stress, when appropriate, would definately be favorable.
Dealing with Change
Today's discussion on organizational change is extremely pertinent to the commercial banking sector. In recent years, there has been widespread change in the banking industry as a whole. Consolodation has been rampant as companies look to increase market share to stay competitive. Also, deregulation has enabled many banks to be able to offer services and products that in the past they had been unable to provide. Also, technology has played a huge role in the changes in the industry as automation and internet banking have become vital parts of banking today. All of these changes have surely affected the way managers currently deal with employees and customers, as well as altering these relationships during the times of change.
As mentioned in class, the restraining forces of habit, fear of the unknown, desire for security, loss of power and control, and organizational structure and culture slowed the progress of change. Involving employees in the process of change and ensuring their participation is necessary to facilitate the transition and smooth over as much resistance as possible. The need for a smooth transition during this time in the banking industry was crucial for the ongoing success of the company, as these trends were not temporary and ignorable. The widespread changes taking place needed widespread internal change to match the forces in the industry. Managing this change successfully is crucial for the survival of a company in the middle of industry-wide changes.
P.E.E.R.
Today's presentation by Shawn White regarding Managing as a Peer brought up a number of interesting points. Viewing managers as equals to subordinates has many of the benefits that Shawn pointed out in his presentation. Motivation, earning respect, increasing communication channels, and gaining superior knowledge are all positively affected by this leadership style. However, the potential for managers utilizing this strategy to lose power or control over their employees is a very real danger. The managers could be in a situation that they are walked on by their employees who no longer view them as a boss.
In relation to the commercial banking sector, this strategy could potentially have its place. In a smaller bank, like the ones I am familiar with at home, a manager who is able to prove to his employees that he is working with them for the good of the bank may be able to motivate and get more out of his workers than one who purely views his employees as subordinates, and consequently, treats them so. A working environment that is lower in stress and number of customers dealt with on a daily basis would be more conducive to a more informal employee-manager relationship such as that outlined by the P.E.E.R. approach. A larger, more stressful work environment in which a more hierarchical structure with an authoritarian boss is more appropriate may not be as suitable for the P.E.E.R. approach.
Commercial Bank Management at CELP
The first interesting program I found in relation to management in commercial banking is the Commercial Bank Management Program offered under the China Executive Leadership Program (CELP) at the University of Illinois at Urbana-Champaign (UIUC). The CELP on the whole is a program utilized by senior managers from China as an educational program. The program has been in place since 1993 and includes lectures, seminars, and on-site visits.
The Commercial Bank Management Program, in particular, is meant to introduce Chinese bank managers to U.S. and international commercial banking practices and concepts through visits to such companies as Boeing, Bank of America, Citibank, and Morgan Stanley.
The interesting aspect of this program is that it exists here in the U.S. for Chinese managers. Clearly, there is a need for commercial bank-specific instruction, and the industry appears further divided as the program is meant for U.S. and international-specific instruction. It is not only commercial bank management, but helps the Chinese managers participating in the program learn about the commercial banking scene on the international level. This international scope indicates the need for a broad perspective on management in the business world and in our studies.
First Blog for Management 251
I have had trouble getting back into the blogging habit, as it is not something that comes naturally to me. I have never had a journal or blog that was not required by my class, but I decided to take up this option not only for a new experience but something to potentially utilize as a learning device, as well.
My topic for this semester's blog project is management strategies in commercial banking. This topic is potentially meaningful to me, and the readers, due to the broader issues that it points out. For instance, the notion that each industry and market has the need for specific management strategies, or marketing or operations for that matter, was something that had not occurred to me and had not been brought up in previous classes. While it was obviously naive of me to think that there was not a particular need for industry-specific strategies, this blog provides me an opportunity to investigate such strategies. This is also worthwhile because of the fact that banking and finance is my concentration within the business management major.
Over the course of the semester I hope to develop a sound understanding of the management strategies relevant to commercial banking. Also, I am supposed to increase readership over the course of the semester, but how that will happen I have yet to determine. Hopefully something will come to mind.