Dollars and sense Featured

8:00pm EDT October 24, 2006
 Not long ago, Paul Murphy had a shopping center developer walk through the door at Amegy Bank of Texas seeking a real estate loan.

“We proposed on the loan, another bank made a proposal, and the requirement was that the shopping center had 80 percent pre-leasing,” he says. “Well, the bar gets to 78 percent pre-leasing, they have one lease that’s out to be signed, and the other bank says, ‘No.’ They weren’t going to go until they got to 80 percent.

“So they come to us and tell us, ‘We’re almost there. We need to close on the land today.’ We said ‘Fine. We’re ready to close. You’re not stressing us that much. If the other store’s lease doesn’t come in, we’re still doing business.’”

It’s a story that illustrates one of CEO Murphy’s philosophies on doing business: Bending the rules and going against policy isn’t always a bad thing. It can, in fact, be a good thing if it proves to your customers that you are willing to go the extra mile for them.

Murphy, who has been with the bank since its inception in the early 1990s, has formed a business strategy focused on common sense before business policy, on reaching out to customers and on recruiting young, ambitious employees.

Those principles have helped Murphy grow Amegy from a small Houston bank with 100 employees to a fast-growing personal and commercial lender with 80 branches throughout Texas, 2,000 employees systemwide and $374 million in annual net income.

The extra mile
To Murphy, there is a big difference between needlessly sticking your neck out and going above and beyond the call of duty.

The first foolishly puts your company at risk. The second, when done properly, helps build customer loyalty like few things can.

“One of my favorite quotes I love repeating around here is, ‘Exceptions to policies aren’t inherently bad,’” he says. “It’s more important to be common sense-oriented than to recite the policy.”

The measuring stick Murphy uses is financial risk. If an opportunity will win over a customer without endangering the financial security of the bank, he says there is no reason not to make a loan or transaction.

Murphy’s philosophy sometimes goes against the grain of an industry that is heavily regulated and policy-driven. But he says you should not be afraid to bend a policy, within the bounds of the law, if the end result can benefit both the business and the customer.

“In our business, you’re supposed to do what the policy says,” Murphy says. “I fight that by telling our bankers that, while of course I am respectful of the regulations, and we all need to understand them, our customers and their needs are also very important.”

There might be a number of similarities among their needs, but chances are, most of your customers won’t fit neatly into the given categories your company has set up.

“Every company has some exception, some twist,” he says. “It doesn’t make them a bad company. That’s why I want our bankers to have common sense and be responsive.”

Murphy says responsiveness doesn’t just pertain to big customers. Too often, businesses get caught up in frying the biggest fish they can find. But a steady stream of small customers is also valuable to your bottom line.

It’s why Murphy wants his bankers to return calls from smaller customers with the same promptness as they would for a large commercial customer.

“Another thing I say over and over is, ‘For same-day service, call Amegy by 8 p.m.,’” he says. “It’s a bit of a brag, but it’s an attitude. Every customer should have first-call resolution of a problem. Some banks promise good service to large customers, but if you’re a small customer, you’re going to be shuffled off to a 1-800 number, and good luck. But you never know who is going to become a major relationship for your business.

“I want to do a good job for everybody. I don’t want to segment and serve only part of the population.”

Emphasizing employees
Murphy says employees who interface with customers are the face of any business, and if they have fulfilling jobs and a sense of self-worth, their satisfaction will soon spread to the customers.

“How your staff feels is eventually how your clients will feel,” he says.

One of the biggest keys to satisfied employees is communication. It is something Murphy says he learned more than 10 years ago, when Amegy was a fledgling local bank.

“We did a survey of employees, and we were probably at about 100 at the time,” he says. “One of the biggest things that came back was, ‘We want more communication.’

So I started meeting with employees semiannually. We were doing barbecues and all sorts of things to get together, and it just became clear to me that there is this thirst for information from all of our staff.”

Employees want to know what is going on in a business. They want to know what is going on in the executive offices, and having a formal structure for communicating with employees can be vital to a company’s success.

At Amegy, the semiannual gatherings and barbecues eventually evolved into an organized system including daily e-mails from Murphy’s office and a periodic newsletter.

“As we grew, we recognized the need to formalize it and really give some thought to the strategy behind each piece, the content and the frequency,” he says.

Now, when Amegy communicates with its employees in person, it takes a basketball arena like the Toyota Center to hold them. Amegy will conduct an employee convention at the center this month.

It will provide an opportunity for Murphy and other company leaders to brief all employees on the company’s plan.

“We’ll go through it with everybody in the whole company, here is our 2007 plan,” he says. “It will look familiar to a lot of people, and the new employees will just soak it up. It’s been a while since we’ve done a roundup like this.”

Murphy says you also have to be able to forgive an employee who makes an honest mistake. Employees will inevitably make mistakes, and if they are to maintain confidence in the company, they need to know the company is behind them.

Murphy says he goes out of his way to let his employees, especially his bank tellers, know that if they make an honest mistake, it won’t necessarily be the end of their job.

“The job of a bank teller is one of the hardest in the United States,” he says. “We are asking them to smile, be responsive, know the customer’s name, ask them for a referral. Yet, about one in 300 customers who walks through the door will be trying to pass a counterfeit check or somehow beat the bank out of something.

“That’s why we offer them lots of support in terms of technology and commitment from management, and if they make a mistake, we’re accepting of that. These tellers make a lot of decisions every day, and we don’t want them living in fear that one mistake could cost them their job.”

Fountain of youth
When it comes to human resources issues, Murphy says he has a rule of thumb he keeps in mind: “People are more capable than one might first think.”

It’s a major reason why Murphy doesn’t judge Amegy’s employees based on age. If a 20-something employee has shown a willingness to learn and the ability to master what he or she is being taught, Murphy might have no problem putting that person in a position of authority or responsibility.

“A young person is able to make bigger contributions, to come in and take more responsibility, than meets the eye,” he says.

Experience still counts at Amegy, but it isn’t the driving factor that determines who moves up first.

If anything, Murphy says he seeks out capable young workers because they will be able to grow with the company. Employees who haven’t been in the business long are like clean slates. They are not set in the traditional ways of the industry, and are more willing to adapt along with the company.

Murphy says that as a CEO, he is attracted to the energy and enthusiasm that young workers bring.

“We get these young men and women and put them in the field,” he says. “They come in and they’re so excited. They can’t wait to get here in the morning and they stay late in the evening. They perform; we see it over and over on a daily basis. It’s a big building block for us in the future.”

Murphy says many banks have eschewed their in-house graduate training programs in favor of third-party contractors, but at Amegy, he prefers a more hands-on approach.

Amegy recruits about 25 college graduates straight out of school each year and trains them in an in-house program geared toward making sure they aren’t just schooled in the ways of the banking industry but in the ways of Amegy.

“It develops incredible loyalty with our young bankers,” he says. “They realize we’re making a strong commitment to them. They benefit from the training, they come up in our culture and they begin to understand my belief that exceptions to rules aren’t inherently bad.”

Murphy says he believes strongly in the potential of young workers due in large part to the observations of Texas banking mogul Benton F. Love, who died earlier this year.

Murphy said he remembered Love, who headed Texas Commerce Bank, recalling what young people did to lead the war effort during World War II.

“He was a lieutenant in the Air Force, and he remembered seeing 23-year-old pilots flying bombing missions in World War II,” Murphy said. “He said that if they could fly fighter planes, they should do a great job as bankers.”

Murphy places a premium on attracting the best young employees because keeping and attracting top talent is vital to the future of the business.

“One of our key challenges is this kind of war for talent,” he says. “Attracting, motivating and retaining top talent is a key for any business. The top talent is going to be attracted to a place where they can be confident of doing a good job and doing the best for their clients.

“Really, a lot of it starts with respect for talent and a commitment to doing right by them. It goes back to my belief that how your staff feels is eventually how your clients will feel.”

HOW TO REACH: Amegy Bank, www.amegybank.com