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Cooperative banks—Empower people and organization

"It´s true for cooperatives too: the future belongs to the network organization."

Thomas Stegmüller, Partner, zeb

Challenges

It is easier said than done to rebuild historically grown bank structures in such a way that they live and breathe true customer centricity. However, changing customer needs and new life situations as well as organizational developments are making this step unavoidable. 
Digitalization is only one driver and we should not forget that other social developments such as individualization and the growing urban-rural divide are also affecting the business of regional banks. 
To be successful in this world long term and in the face of new competitors, you have to be fast and adaptable—in short: agile. Traditional line organizations are not. The future belongs to network structures. Building and integrating these kinds of structures entails new demands for leadership and corporate culture. 

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Insights

“New work” is wrongly considered a buzzword and goes far beyond “mobile office” and “unlimited vacation”. New work implies above all a cultural change of the entire organization of a cooperative bank to systematically focus on customers and their needs. 
For the change to have any effect, it is essential that managers become credible role models. This is not about imposing the new work methods from the top down, but rather the changing role of the manager in modern organizations. Their role increasingly involves organizing the conditions to act as a coach and “facilitator”, promoting flexible structures and personal responsibility and making employees aware of the new challenges—“bringing them to life”, so to speak. In short: agile companies do not come about by chance, but require systematic empowerment and transformation—and this begins with managers and employees.
This makes it possible to create a close customer relationship and enthusiasm—without sacrificing the standards required for cost efficiency. We at zeb reassure our customers with the message that agile cooperative banking works—indeed, we have already successfully proven it.

Solutions

Transforming banks into agile organizations

Agility is the ability to act quickly, flexibly and in a customer-centric manner. The world—not just the financial sector—is changing radically and often in unpredictable ways. In order to keep up, agility is not only an option for companies, but vital for their survival. Agility is far more than a buzzword: agile companies are demonstrably more successful. In traditional industries such as finance, this change is one of the greatest challenges, if not the greatest, facing management and employees.

There are three common ways to implement agility in organizational structures. The first one uses “innovation labs” or “digital labs” in which agile pioneers are given free rein to try out different approaches. While this is exciting for them, it does not include the rest of the organization as a whole. 
Model two can be referred to as a “parallel operating system” and attempts to make a particular core area of the bank—often an IT-related area—agile by a given date. If this area grows and gradually takes over more functions, the non-agile rest of the bank will eventually disappear. Here, too, a clash of both worlds is inevitable.

Our recommendation to achieve truly sustainable change is therefore the third way: “agile, but careful”. The guiding principle is to give all employees (co-) responsibility. The aim is to systematically replace established views of people and leadership practices and to enable everyone to accept new processes and methods. Individual agile pilot teams can act as role models, while lighthouse formats  such as “agile boot camps” are suitable for the initial rollout. However, the goal is always to empower the organization as a whole.

Training advisors and managers

Whether the path to agility leads to success depends on managers above all else. It is therefore important to develop a common understanding of agility with them at the beginning and to define individual objectives. In our experience, as a foundation for agile leadership, managers should become less controlling and more trusting. Today’s managers are mainly needed as coaches: the more consistently they empower their teams and employees and the more independently these are allowed to act, the more successful the managers themselves will be—which in turn applies to the organization as a whole. 

This also demands a rethink in terms of communication. In hierarchical organizations, information also serves as a means of power and is often withheld for that reason. In agile companies, on the other hand, information is a “lubricant ” to be applied generously within the entire system.

Managers and senior customer advisors need to have a sufficient degree of independence: they should see themselves as local entrepreneurs within their bank—which in fact goes hand in hand with the cooperative mindset. This redefinition of roles and entrepreneurial freedom could help, for example, when negotiating lending terms.

There is still a lot of room for improvement in developing managers: according to our recent “Agile Readiness Study ”, only a quarter of bank employees perceive their supervisor as a coach and mentor who actively supports their personal development.

Promoting an agile mindset among employees

Agility is multidimensional, and change must be applied to all dimensions. That means, for example, that 
●    if the management wants it, but the employees do not, change will not succeed 
●    agile management methods have little or no effect on employees if the structures remain hierarchical 
●    flexible project teams can only be successful if the work environment and IT architecture are also modified 

To structure the challenges and translate them into recommendations for action, we have developed a “diamond of agility” based on our consulting experience. Aside from the purpose or the reason why, it is the people in the organization, who are central to this. However, they are clearly not involved enough in the change process and convinced of its necessity.

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Our recent Agile Readiness Study found that only about 25% of the bank employees surveyed by us responded that colleagues from their companies initiate and drive change processes independently. Moreover, only 15% agree with the statement that people in their company have a very high willingness to change.

From numerous successful projects in the industry, our zeb consultants know what it takes and what formats are needed to support and challenge employees in the change process without overburdening them.

Intensive coaching and training is required at all levels. We at zeb have proven formats and tool sets for important training fields such as advisory quality and the use of digital media such as tablets in customer contact.