There are unusual early morning goings-on these days at community banks in the college town of Springfield, Mo. Before doors open at branches of UMB Bank, employees gather in a "sales huddle" and listen to managers dole out a mix of praise and exhortation. "It's all about pumping up the troops," says Gil Trout, who runs 25 branches in southeastern Missouri. The huddles seem to make a difference. Trout's branches upped their total retail customers so far this year to 3,800 from 3,500.
That may not seem like a lot in the grand scheme of things, but it's part of a sea change that has swept over UMB Financial Corp. (). The 92-year-old Kansas City-based bank, with branches in seven midwestern states, had become indolent early in the decade, so new management was brought in to shake things up. Key to this transformation project: electronic management scorecards. They help track the performance of a company, set business-unit goals, stimulate new ideas, and motivate managers and employees to do better. The idea for using huddles came out of a discussion among Trout and his branch managers early this year. Under pressure to meet the quantitative benchmarks of the scorecards, they decided to try the face-to-face huddles, which had been developed earlier by the headquarters staff. "It's becoming part of our culture," says President Peter J. deSilva, who came to the bank from Fidelity Investments in Boston 22 months ago. "It's driving behavior, and ultimately, behavior drives performance."
UMB is on the leading edge of one of the hottest trends in technology. CEOs are rapidly adopting electronic scorecards and similar programs to help them better understand and run their companies. Scorecards are sophisticated systems typically used by people at many levels in the company. Viewed through a Web browser, scorecards gather statistics from different databases about inventory, sales, and customer trends. "With these tools, CEOs are able to make better decisions on a more timely basis," says Forrester Research () analyst Keith Gile.
UMB's recent financial results have made believers out of some old-school bankers. "I was skeptical at first," says Trout, a 17-year veteran. But when UMB announced earnings on Oct. 25, it seemed as if the company had been taking pep pills. Net income increased 34.7%, to $16.2 million, and loan-interest income was up 37.7%.
The most important move UMB made was tying compensation to scorecard results. In the past the bank paid people based primarily on seniority and cost-of-living adjustments. Now a substantial part of compensation for managers depends on how they perform against scorecard goals. The board of directors reviews results with top executives quarterly, and about 45 second-tier managers get reviewed monthly by the people above them. "If you don't review people and hold them accountable, you won't achieve anything," says deSilva.
One of the key metrics UMB tracks in its scorecard is the average number of its products each retail customer uses. That figure was 2.68 at the beginning of the year, compared with the industry average of 4. The bank's solution was to create bundles of products -- such as checking, bill payment, credit card, and overdraft protection -- and market them at a discount. It also retrained its customer-service staff. In 10 months the average number of products used per customer has risen to 2.8.
Experts say scorecards should include forward-looking stats instead of just historical data such as quarterly earnings. One example at UMB: the number of customer calls that commercial loan officers make in a month. "I urge my clients to make sure they're analyzing the right data," says John Potter, a principal at management consulting firm John Potter Global.
Once UMB has the scorecard process down cold, it plans to deploy a similar technology called dashboards. This Web tool has dials, like a car dashboard, that rise to yellow or red when something goes awry, such as sales falling behind expectations. At that point, UMB employees taking part in sales huddles won't have to find out from their bosses whether they've got something to cheer about. They'll already know.
By Steve Hamm