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Beyond banking Featured

7:50am EDT October 28, 2005

After more than 20 years in the banking industry, Jim Lynch recognized there was an opportunity to personalize banking for business owners and entrepreneurs.

Lynch, president and CEO of Leaders Bank, founded the company in 2000 as an alternative to large, impersonal banking institutions. He prides himself on forming close relationships with his clients, something he felt had become obsolete in the banking world due to the large number of mergers and acquisitions.

In the five years the bank has been in business, it has grown to about $300 million in assets, with high customer satisfaction rates and low employee turnover. Lynch believes this success is a result of his employees, people who are experienced in the banking industry and who share his belief that customers and employees should be treated as leaders.

Lynch’s management style is grounded in the philosophy contained in the book, “First, Break All the Rules,” by Marcus Buckingham and Curt Coffman. While the common business management philosophy, is that you should treat everyone the same and try to overcome people’s weaknesses, Lynch believes everyone is different and should be treated accordingly.

And rather than trying to improve on people’s weaknesses, he believes you should put people in positions where their strengths will be utilized and their weaknesses supported by others.

Smart Business spoke with Lynch about his vision for Leaders Bank and how his unconventional management style benefits employees, customers and shareholders.

What was your vision when you started Leaders Bank?
I have been in the banking business for 27 years and always as a lender to the lower end of the middle market, defined as privately-held businesses under $50 million in sales volume.

As I saw all of the mergers and acquisitions occur, I noticed that two things were happening — a whole layer of bank employees were being displaced and a whole layer of customers were being displaced. The customers, in particular, were often privately-held businesses and entrepreneurs.

My idea was to start a bank that focused on privately-held businesses, their families and other entrepreneurs. I knew there was an opportunity there. I wanted to focus on that niche and hire experienced bankers who could respond quickly to customer needs and provide an alternative to the depersonalization created by the banking consolidation.

How do you sell your vision?
When you say ‘selling the vision,’ there are really three groups you need to sell to — prospective employees, prospective customers and shareholders.

I’ll start with prospective employees. These are people with banking experience who have become frustrated with the obstacles often found at larger institutions. They want to make a positive difference in a growing organization over the long term.

We provide our employees with an environment that is both challenging and very supportive. All original 10 employees are still here. A critical part of my daily responsibilities is to make sure that this is always a good place to work.

As for prospective customers, they often learn about our vision from satisfied clients and come in to find out about how we can help them. We talk with them to determine what level of service they need, and then we provide it.

We call it our ‘ease-of-doing-business-with-us’ quotient. That doesn’t mean we’ll always say yes, but we will always clearly articulate the parameters and try to arrive at a mutual understanding.

When we approached our five-year anniversary, we thought we were doing pretty well on behalf of our customers, but we thought it was time to ask them. We used (Walt Denny Inc.) to do a customer survey, and the results were very gratifying. Well over 95 percent of the customers surveyed who classified us as their primary banking relationship rated us very high in terms of overall satisfaction.

With our shareholders, we describe how we compete in the marketplace and convey our long-term vision in straightforward terms. I communicate with our shareholders on a regular basis, which includes providing our quarterly financial statements to them.

How has your Cultural Health Program contributed to your success?
I have been managing people in this business for a long time. Traditional management practices say that you should treat everyone the same, and during the employee appraisal process, you should not only focus on what they did well but also focus on their weaknesses and what can be done to improve their weaknesses.

I have always thought it’s better to focus on strengths and support people in areas where they are weak and put them in positions where they are strong.

There’s a set of rules that we have to follow, but everyone is different and everyone deserves different treatment. When I find an employee who is great with customer service, we make sure that person gets to work with customers. If that person has too much paperwork, we try to give that person support for that aspect.

If an executive is great at bringing in new business but hates sales reports, we put that person with someone who helps with the reports. By empowering them to accomplish what they do best, employees feel they are valued and that the quality of the work they do does makes a difference.

To discover individual strengths of our employees, each person participates in the Gallup Organization’s StrengthsFinder Profile. That was put together by utilizing information from the Gallup Organization, which was developed through a poll taken of experienced managers from throughout the world.

It came up with a set of behaviors that the best managers utilized. Every employee participates and has a private interview with our consultant to discuss their strengths and how to develop them in the workplace.

Research shows the best managers don’t treat everyone the same. They focus on strengths and not weaknesses. We need to put our employees in a position where they can utilize their strengths and let’s recognize what the weaknesses are and not work so hard to change them but to make sure that they are supported.

This approach nurtures personal job satisfaction, which translates to low turnover and high levels of employee and client satisfaction.

How did you achieve such rapid growth without any mergers or acquisitions?
We’ve hired the right people who are experienced and have done a good job of bringing in relationships in the marketplace. That’s No.1.

No. 2, we have been successful in raising the necessary amount of equity to support that growth.

Three, we have a very active board of directors that has helped guide us and generate business.

And four, we have a very active shareholders group that hasn’t just invested money with us but does business with us and actively refers business to us.

How to reach: Leaders Bank, (630) 572-5323 or http://www.leadersbank.com