Executive Summary

People As A Competitive Advantage

Pat Donovan
President of Norwest Twin Cities Banking

June 1998

Technology is having a profound effect on the way we serve our customers at Norwest. They are demanding faster access to their account information. They want more control over their financial lives. They also want more convenience and less paperwork.

Two years ago, we created a plan to consolidate our backroom operations to meet those demands – and also enable us to become more efficient. We combined our 16 check processing hubs into four under a plan called Operations 2000. Another 12 locations became centers of expertise, each one performing a single job –such as maintaining loan files – which had been performed by each of the 16 hubs. We installed new computer systems, new hardware – the works. One of the most important considerations during this time of tremendous change was the effect it would have on our team members.

Instead of cutting hundreds of jobs, taking huge re-structuring charges, and damaging team morale and service quality, we made a promise to our 5,400 people in our bank operations. We said we would "retain and retrain" as many of them as possible for new jobs in the consolidated centers or in other Norwest businesses. We spent millions of dollars to retrain them for jobs that met their skills, their interests and their experience. We took advantage of natural turn-over, promotions and job opportunities created by growth. Six Norwest teams developed Operations 2000 under the banner of our Best Practices process, which seeks ideas that save money, make money or improve customer service. Line managers and senior executives reviewed ideas those teams generated.

Why did we choose this route – a route that was more time consuming, labor intensive and, in the short term, more costly than the "easy way?" Very simply, we wanted to remain true to one of our most important corporate values – people are our competitive advantage. We could have centralized all of our operations into a few sites, but we wanted a better way to get the tools we need, manage costs, serve our customers better and minimize any negative effect on our team members and communities. Operations 2000 made our reconfiguration harder to explain and probably harder to execute, but that was a small price to pay for keeping as many of our talented team members as possible.

To keep the trust of our team members, there has to be mutual respect – even during painful times – and Operations 2000 was painful for some. But, if you trust your company to do the right thing, we think it leads to better performance and better customer service. Norwest is a service company. Service is our product. If our people care more than people we compete against, then we’ll transmit that energy to our customers and earn more business.

As change accelerates, as our businesses become more complex, we need to attract, develop and retain diverse team members – people of all colors, lifestyles and abilities. Our customers and stockholders benefit from this diversity and talent.

If you really intend to make people your competitive advantage, then everything you intend to do – or not do – has to start with how it will affect your people. If you’re going to differentiate yourself on service quality, then you can’t "cost cut" your way to greater market share.

You have to grow revenue, too, and you can’t grow with demoralized, uncommitted team members who don’t feel valued, recognized, rewarded and appreciated – or who don’t understand the role they play in the "value-chain" and how they contribute to the success and vision of the company.

One of the most common questions asked during the project was "Why now?" After all, Norwest is a top-performing financial institution. We believe the best time for a company to improve its efficiency is when it’s growing. That way, when jobs are eliminated, team members can transfer to other Norwest businesses that are growing. It also gave us time to consolidate over a shorter period of time, allowing us to test our plan along the way.

Another question – was this a sign that Norwest was abandoning its commitment to local decision making? Actually, it was just the opposite. Operations 2000 freed more time and resources for our bankers to go out and do what they do best: improve sales and service, increase time spent with customers, increase their community involvement and manage risk.

The results of Operations 2000:

• When it was all over, only 2.4 percent of those 5,400 operations people were not able to find jobs at Norwest sites of their choice.

• We retained people while improving our service. We’ve centralized our computer databases so that a Minneapolis customer vacationing in any of our 16 banking states can use almost any banking service almost as if the customer were still in his or her hometown.

• By establishing areas of expertise, we’ve gained tremendous economies of scale saving millions of dollars – and we’re on track for achieving our long-term goal of a 20 percent reduction in operations expenses.

Operations 2000 gave Norwest the opportunity to be the strong, innovative competitor that we’ll need to be to survive and prosper in the rapidly changing world of financial services.

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