Investing in ideas Featured

8:00pm EDT August 26, 2008

It’s no secret that the downturn in the automotive industry has meant a downturn for the economy in Michigan. When the Big Three automakers can’t make money, it’s usually difficult for most other businesses in the state to make money.

Jim Kreutzer is the regional managing director for Merrill Lynch in Detroit, and though he has the clout of one of the most well-known financial planning firms in the world on his side, it hasn’t absolved him of having to negotiate the murky waters of Michigan’s economy like every other business leader in the state.

So far, Kreutzer has been able keep growing in spite of the economy.

By focusing on growing areas in which Merrill Lynch has historically excelled, such as retirement planning, Kreutzer has been able to buck the negative trend, growing his portion of the company by approximately a 12 percent rate during the past three years.

“We’ve really committed to growing our presence in the state,” he says. “We’ve grown our sales force by about 5 percent per year over the last three years statewide. We’ve opened up some new offices in some of the growth markets while still staying committed to some of the more traditional areas of Michigan, such as downtown Detroit. There is still a lot happening in Michigan, it’s just happening in different ways than it did in the past.”

This is how Kreutzer has grown Merrill Lynch’s presence in Michigan — where Merrill Lynch had approximately $440 million in revenue last year — by tailoring his company’s services to his clients’ needs and by making sure his employees are always ready to rise to the demands of a growing company.

Start a learning process

To keep Merrill Lynch able to adapt and serve its clients in Michigan, Kreutzer first has to put everyone on the same page with regard to goals and the company mission. That’s accomplished through frequent communication, performed in person as often as possible.

“It happens in a variety of ways,” Kreutzer says. “We do hold training events, we have different types of partner meetings where we help people understand what the initiatives will be for the upcoming period.

“We also communicate electronically and via newsletter. We really try to use all means because people learn differently and people react differently to different kinds of mediums. But my preference is face to face and in more of a dialogue setting than simply giving a speech.”

During face-to-face dialogue with groups of Merrill Lynch employees, Kreutzer and his senior leaders attempt to drill down to what truly motivates people to serve clients. Some financial advisers want to focus on a specific aspect of financial planning, such as retirement planning or asset management. Once specific areas of interest have been identified, the senior leaders segment the work force to best leverage advisers’ skills and interests.

“We will segment them via their level of business experience and bring them together for recognition as well as training events and really allow them to have dialogue with us and with each other,” he says. “Because we are a large organization, it has really been a benefit to bring people from Lansing to work with people from Dearborn in the same workshop.”

The workshop approach has been extremely useful for Kreutzer as he has attempted to ready Merrill Lynch to respond to a heightened need for retirement services, as more baby boomers approach retirement age in the coming years.

Recently, the retirement services specialists in Michigan were divided into 21 teams. Each team was assigned to an educational workshop where it worked with a peer who had more experience in providing retirement services.

“That (peer) gave the teams the ability to ask specific questions on how to do something,” Kreutzer says. “When we’re trying to transfer skill sets, we’ll use small groups and peer-to-peer training as well as our national resources, which will come in from New York and also train them on some of the capabilities of the firm.”

While it’s cost-effective to bring many employees to a central location for meetings and training, it’s not always practical. Kreutzer says that when you are trying to relay a message to employees spread across a wide geographical area, it is sometimes better if you can simply take your act on the road, communicating it on your employees’ turf and on their terms.

“We’ll also do meetings in every office so those who couldn’t travel get the same message, albeit in a different way,” he says. “We try to communicate where they sit as opposed to making them travel. It’s better to communicate in their environment, where they might be more comfortable to share some of their thoughts and experiences.”

Ask great questions

Employee feedback is one of the most important ingredients in successful growth. In order to get a reading on the pulse of the markets you serve, you need to solicit and process input from the front-line people who deal directly with your customers.

As Kreutzer conducts meetings and travels across Michigan, it provides him with not just an opportunity to educate, but for Merrill Lynch’s eyes and ears in the field to provide him with insight.

“The feedback I get from the people I work with shapes and forms the direction I go and the message I bring,” he says. “You have to do it every day. An issue for me is to be accessible and active in participating in the financial advisers’ practices. Many times, it’s sitting down with our teams, many times, it’s sitting down with financial advisers and their clients, to help them understand what is going on and help and prepare our region for the opportunities that are approaching.”

Kreutzer says dialogue with employees boils down to one directive: Ask great questions.

“I think one of our greatest roles in leadership is to ask great questions,” he says. “Leadership isn’t about having all the answers; it’s about asking great questions and discovering the possibilities with your team, not exclusive of the team. That builds an awful lot of confidence and desire to be great when you see people in leadership

working alongside you passionately.”

The definition of a great question to Kreutzer is one that gets employees to think in new ways and come up with new, potential solutions for clients.

“Many times with clients, they’ve been doing things the same way for a number of years, and with the types of innovations that come about in our industry, they just haven’t had the opportunity for someone to ask the question, ‘Why do you do it that way?’” he says. “The same can be said for financial advisers. Asking great questions gives financial advisers a chance to analyze what they’re doing and have more conviction about the solutions they are implementing.

“Part of our job is to introduce various ways to accomplish different goals, to challenge our thinking and analyze what we’re doing so we have more conviction about that being the right solution.”

Guard against inertia

Kreutzer wants to see employees who are enabled to come up with new ideas, because he believes that one idea from a single employee can change a company.

If you challenge your employees to think of new ways to accomplish the same tasks, it’s not necessarily reinventing the wheel. Kreutzer says that any new perspective from a person in the field can be a valuable perspective.

“I’ll use the example of client service,” he says. “It has been done in many different ways, but many times, the client is getting many of the same types of service they’ve gotten for the last 10 years. There have been so many innovations and changes in the means of communication and means of expectation for a client, there are a lot of questions I’d ask of someone who was servicing a relationship the same way they had been for the last 10 years.”

Merrill Lynch holds advisory council meetings with every level of management throughout the firm nationwide. The meetings are designed to formulate those types of questions and share them with the rest of the company.

“Every division has (an advisory council) representation who takes ideas and then brings them up to the very top of the firm,” Kreutzer says. “There is advisory council management within each region, which bubble up ideas for improvements on a regional basis for things we can control. They can communicate up in many ways, be it e-mail or phone or visits to New York, and they hold meetings quarterly. The minutes of those meetings are shared with every employee so they can see what the ideas from the field are. It’s a very effective communication process for new ideas.”

Kreutzer says offering challenges and stimulating new ways of thinking helps breed an entrepreneurial mindset in a company. But once you have your employees thinking that way, you have to stay in front of them to continue soliciting and receiving their ideas. As many large companies do, Merrill Lynch’s leaders hold a number of town-hall-style meetings. As with the group training meetings, it’s an opportunity for employees to interact with each other and with management.

“Financial advisers are some of the most creative people when it comes to finding new ways to serve clients, and they bring their ideas individually to people like myself,” Kreutzer says. “I can point to two or three things that changed our firm dramatically, and it was generated from one person who had an idea and it just bubbled up, and now it’s accepted practice throughout the firm.

“An example is the way in which we market to prospective clients through a pitch book. [That] was generated from the field. We needed a consistent, professionally done and informative piece to hand to clients to educate them not only about Merrill Lynch but also about the team and individual doing it on a local basis.”

You have to be willing to build your client and customer service philosophy from the front lines on up. Kreutzer says that is the only way you will be able to build a business truly centered on the people you serve. If you can’t respond quickly to the needs of the people you serve, your business will have a hard time surviving long term. That is especially true in a state with a tumultuous economy like Michigan.

“Without an understanding of what the client’s main concerns and main goals are and then their secondary goals, if you try to implement solutions that don’t fit their needs, it’s not going to be successful,” he says. “Our job is to understand clients’ needs. When you understand the goals of the client, you do a great job helping them achieve those goals.”

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