While some business leaders said the recession officially ended in June 2009, Tom McGraw would hardly agree.
“I think that those folks probably got into the Kool-Aid,” says McGraw, CEO of First National Bank of Northern California since 2002.
In 2009, the organization had a break-even year. And in the last three years, he watched as 345 banks went under.
“I think some of these banks that failed essentially were so paralyzed by the sheer volume of problems that they had that they just didn’t do anything,” McGraw says. “Then there were others who said, ‘Well, this thing is going to pass. It’s going to get better.’ For those people, denial was not just a river in Egypt. It was a way of managing things, and unfortunately, I think it led to their demise.”
Instead of being paralyzed by fear or in denial, McGraw thought that during the recession it was more important than ever for the bank to make the challenges facing customers and employees the top priority.
“By no means are we perfect, but I think we take a much more active approach when we have problems instead of trying to wait for them to resolve themselves,” he says.
Whether it’s with a customer or employee, McGraw wants to learn about people’s problems sooner rather than later so he can take swift action to address them. Personally, he’s found that having an open-door policy with customers and employees, especially in tough times, gives him the advantage of staying highly attuned to people’s needs.
On the bank’s home page, for example, McGraw lists his direct phone number and e-mail address so that customers always have someone to reach with any issue.
“I say, ‘Well, OK, if you’ve lost complete faith in us, then maybe that’s the right thing to do, but if you want to share with me what your challenge or problem or issue is, perhaps there is something I can do to try and turn it around,” he says.
Right away, McGraw also brought in all of the bank’s creditors who were struggling to help them find workarounds moving forward, such as switching to interest only payments.
“There were some where we had to take losses, but when those happened, we took them promptly,” he says. “We got them off the books as soon as we could rather than just holding onto them and hoping and praying that things were going to get better.”
For a CEO, this transparency and willingness to help also goes a long way in earning people’s trust and loyalty. More than 70 of the bank’s 180 employees have been with the bank for 10 years or longer.
“I think the access to management, our visits, our open-door policy — it really keeps a connection with what is happening within the system,” McGraw says.
By staying connected, you also know what people value and what keeps them inspired when times are tough. The company’s bank-funded employee profit-sharing plan has traditionally been a key factor in the company’s uniquely high retention rate. So while McGraw and his executive management team took no raises and bonuses in 2009, they were adamant about keeping the profit-sharing program.
“What we said is, ‘Look we’re in this together,’” he says. “‘If we can salvage a year and make some money, then we are all going to benefit from it. If we don’t, then we’re all going to have to feel the pain a little bit.’”
Through furthering a culture that ensures people are always a priority, McGraw has led FNBNC to survive a recession that many of its peers have not.
“You have to lead by example,” he says. “If you are going to ask people to take a little bit of a hit, I think that you have to, as well.
“Families stick together. They work through their problems. They’re not perfect, but they depend upon one another … and that’s the metaphor we like to use that holds for both our employees and for our retail customers.”
How to reach: First National Bank of Northern California, (650) 875-4865 or www.fnbnorcal.com
When CEO Tom McGraw spots someone in his company who isn’t executing well or isn’t happy, he makes sure he finds out why. To keep complacency at bay, it’s important to recognize people’s motives in their roles so you can figure out which employees may want to do more, which are unhappy and which really are content where they are.
“Sometimes you want to try to promote people,” McGraw says. “You want to push them. You want to see how far they can go. While that’s good in concept, the reality is that if they don’t want to go, you are going to set them up for failure.
“We have some tellers who have been here for 25 years. …That’s a very important job. They have the most contact with our customers, but that’s all they want to do. And then you take them and you put them in an operation supervisor position and they fail miserably. Well, they didn’t want to be there.”
As a leader, you need to be attuned to what people’s expectations are for their career, what their aspirations are, and then try to match those with positions in the company.
“So you’ve got people with various aspirations,” McGraw says. “If you can line up those aspirations and those skills with the position, the chances of success are much greater.”