Finance: CEO Grundhoffer Hits the Road to Spread His Message to Bank’s Staff
Jerry Grundhoffer dropped in on San Diego last week, part of a multicity itinerary even he wasn’t sure of.
“After San Diego, I think I’m headed to Los Angeles and then Salt Lake City, but it might be Denver. I don’t have my schedule in front of me,” said Grundhoffer, CEO for U.S. Bank, the Minneapolis-based mega-bank that assimilated four local banks over the past two years.
Grundhoffer was here to visit with customers, but more importantly, to meet with employees and give them what amounts to a pep talk.
“The basic message is that we have to grow revenues faster than our expenses and take accountability for our customer service,” he said.
In recent years, U.S. Bank has been one of the fastest-growing in the nation. In February, Milwaukee-based Firstar Corp. merged with U.S. Bancorp, based in Minneapolis, to create the nation’s eighth-largest bank with more than $160 billion in assets and more than 2,200 offices. The bank’s territory covers 24 states, primarily in the Midwest and West.
To solidify the mega-merger and get a better handle on what’s happening, Grundhoffer says he now spends at least three-quarters of his time flying to various cities and meeting with his troops.
“It’s a very important time for our company, particularly now when we’re bringing together two companies, and we have a new CEO.”
In San Diego, U.S. Bank’s territory includes the remnants of four locally based institutions, encompassing 27 offices and some 300 employees. Starting in 1999, U.S. Bank purchased the Bank of Commerce, Western Bancorp, Peninsula Bank of San Diego and Scripps Bank.
Excluding Western, the other banks were all in excess of $500 million, well-run, profitable and had sterling reputations for their customer service.
Today, U.S. Bank has about $1.5 billion in deposits in the county, making it sixth-largest in the market.
Although the bank’s growth has benefited from an aggressive merger strategy, Grundhoffer helped propel Firstar expansion through a sales incentive program that applies to practically every employee.
Because the bank depends so much on selling products, every employee is expected to help drive sales and set individual goals, which are reviewed on a quarterly basis.
Those who meet and exceed their goals are rewarded with bonuses and stock options. Those who don’t are shown the door.
“We have high expectations of our people, and we do ask all employees to sell,” Grundhoffer said. “If they are proud of the company, then they should sell the company.”
The culture extends down even to back-office or lower level personnel who are supposed to carry business cards and look for chances to pitch their company to friends, relatives and others who are doing business with the competition.
Those employees who meet their goals and achieve are given bonuses. In addition, as the bank’s overall financial performances improves, every employee is rewarded with the payout of stock options.
Grundhoffer declined to get into specifics on what happens to those who fail to reach their goals, saying there are at least 150 different incentive programs in the bank depending on one’s job. Yet those employees who can’t make their goals probably will not be with the bank very long, he said.
“We hold people accountable, and they should be accountable for their results. It’s like any business.”
But growing just for the sake of getting larger isn’t what it’s all about, Grundhoffer said.
“I want to see U.S. Bank recognized as the best bank in America, and we’re coming close to doing that.”
Robert Horsman, president and CEO of San Diego National Bank, said incentive programs are nothing new to banking, but he hadn’t heard of U.S. Bank’s far-reaching program involving even back-office employees.
“He seems to have gone to another level as far as driving customers to his bank,” Horsman said.
The problem with incentive programs is they sometimes don’t breed true team cooperation. Staffers unable to collect a bonus because another staffer signed up a particular customer are sometimes less inclined to help them, he said.
Grundhoffer, the former CEO for Security Pacific National Bank, which was purchased by Bank of America in 1992, has survived in an ever-consolidating industry that has dramatically changed the financial landscape in this nation.
He agreed that while many banks, particularly medium-sized ones with at least $1 billion, are disappearing, there has been an increase in the number of smaller lenders. He doesn’t see that segment disappearing anytime soon.
