Set Your Relationship Managers Up for Success

Mitch: Hey, everyone. Welcome back to another episode of Lending Made Easy. Today's episode is all about one of the most important roles at a bank when it comes to commercial lending, the relationship manager. So I'm joined again by Bryan Peckinpaugh and David Catalano to discuss the relationship manager of the future and really understand how you can set your RM up to be successful, not just for themself, but also for your financial institution.

So first question of the day, David, Bryan, whoever wants to take this one. In 2024, what makes a great relationship manager and how can a bank or credit union really set their RMs up for success?

David: Well, I, I think that a relationship manager takes care of the relationships of the bank while at the same time, understanding that they are employed by the bank and have to watch out for the bank. So I think that the skills of a relationship manager are is very similar today as they've always been.

So the question I have is, you know, how do I make a relationship manager more efficient? How can they allow them to, to do their job more quickly, to serve their client more effectively, to not ask for the same thing as simple as not asking for the same thing twice, because you already know what you have, you know, using the tools that are available.

When we think about the people that work at Baker Hill, that are on the relationship manager side, they have tools. we give them tools to use to make their job easier, which enhances that customer experience. It's around the customer experience and RMS have typically always been good at creating great, customer experiences.

And, you know, I think, a good RM is the cover for a bad process. You know, Brian taught me that. So, It's a matter of getting them to see the tools that are available and adopt those toolsif they're not used to it. And if they are used to it, then just making sure they're, in other words, if they're used to technology and making sure they're aware of the tools that are available, within the institution.

I also think that institutions who don't have good tools won't retain strong RMs, especially if they've used good tools elsewhere. Bryan, what are your thoughts?

Bryan: Yeah, I agree with everything you said, David. And I would, I would encourage the, you know, financial institutions to look at and think about what good looks like for them and what they want good to be. more so than in years past in 2023, uh, speaking with a lot of the, the clients of ours. You know, there's been this big focus in how do they move beyond traditional lending that their financial institutions have done.

And for most of them, that's how do they find, C&I business to diversify away from the heavy concentrations of CRE. That most of the community banks we, we serve have, and so that's causing a shift in what good looks like for, for those banks and, and for their RMs. I don't think it's fair to just expect that, a relationship manager who has spent their whole career, you know, targeting CRE deals, chasing CRE deals that, that they're all of a sudden going to understand how to go and get C&I business.

So I think, you know, that that begs the question of, of the entire financial institution sector of what do you want your RMs to be? And what do you want them to do? And how do you want them to operate? With that, I think becomes need to focus on technology. You know, you look at a lot of the banks that we talk to, I think a lot of the community banks, certainly in the United States, the ability to, to track and manage and understand the, the behaviors of your field staff is challenging.

A lot of people still do their pipelines in Excel. They don't have good activity tracking and they've just relied historically on performance. You know, did you, did you hit your, your lending goal numbers or not? as opposed to are the behaviors there that we want to see. and I think that's going to be more critical than ever as, you know, we've seen the credit crunch in, uh, in 2023 expected to continue a bit in 2024.

Uh, but again, looking to come out the other side stronger than you went into it, you know, building those profiles of what good looks like for you, making sure you have the systems that can support tracking what good looks like so that you have good performance indicators. And you can kind of manage to the data instead of managing just to results and what you feel is happening in the space.

David: Right, there are process steps for, for every RM to take and the question is, are you measuring what those process steps are and holding people accountable to outcomes at each, each step along the way versus just the outcome in general, which is a fairly easy to aggregate just the outcomes because you can see that in production, but, through the process or through, You know, how they're interacting with within the institution, how they're interacting with their client, what kind of experiences they're creating with the client, how much of the work are they doing versus delegation?

And is that the appropriate amount? Is that what you how you want to run the business? So it's really about understanding. What good looks like what you're like, exactly what you said, Brian, what, and how are we going to measure that? And what tools do we have in place to measure that? And it's not just an end measurement, right?

It's a process.

Bryan: And it also comes with. the need to commit to the level of investment necessary in building people up to that level of good. you know, sure, it's, it'd be great to just go hire good, find those, rainmakers, fill all your spots with rainmakers. That's just not reality. You, you've got to have that definition of good, and then you've got to have, you know, that commitment.

And it's, it's, investing in technology, like you talked about, David, it's investing in training, it's investing in the build out of your own strategy that supports it to ensure that you're bringing those, you know, C players up to a B, those B's up to A's, empowering those A's to continue to operate. At the level that they operate and to keep them with your firm. The problem with the A's, if you're not investing in them, if you're not making it easier for them to do deals, easier to understand their customers, more ability to deliver wow experiences to those customers, they're going to go somewhere else that does. so you got to continue investing in them.

It's not about bringing A's higher. It's about keeping the A's and making sure they don't deliver a performance for somebody else, but also being able to find the, you know, the, the C's that aren't improving the D's that, that are there and finding a way to manage them out. but you have to have the backbone, you have to have all of the training in place.

You have to have the software, the technology to, to track what you want to track, measure what you want to measure And the strategy, right, that, that underlines all of it, that, you know, we're going to go out and we're going to go after these kinds of businesses in this way. And, and here's what the, the pursuit processes look like, the deal structures look like, et cetera.

David: Yeah, and if you have that, culture of performance management, that's what I like to call it. But performance management is, is cultural, right? It's how we're measuring things, how we're measuring the process, what tools we use to measure those, where are we on our plan versus our actual. and making that part of the culture and then when you go and find another A player somewhere else you can help them understand This is our culture. Do you fit?

Because you don't want to pull an A player in that's culturally not compatible. And you also don't want culture to discrete itself. You want to be intentional with the culture you create around performance management for RMs and then give them the tools to facilitate their success. If they're not successful, they'll know it because they're measuring using the same tools you're measuring them by.

And they'll move on. And don't be afraid of them moving on. They're not a fit. They're not a fit. It's like any other business. Yep.

Bryan: It's, that's probably one of the biggest killers in this space is, is just, you know, remaining committed to folks that, that aren't a fit, you know, reminds me of, uh, Zappos, the shoe company and what their founder did in the early days, of really focusing in on, you know, cutting bait early.

If you're not a fit, let's, let's get you out there, get, get you out of here and find one that is. And it, that in that instance, didn't have anything to do necessarily with performance. You might be a high performer. That's not a fit. so defining what. good is for your institute. What do you want out of an RM?

You know, it'd be easy for us to speculate on what it looks like holistically, but it's going to be different, right? The, the ideal RM for a billion dollar commercially focused bank in, you know, the. middle of nowhere, Wisconsin, uh, as opposed to an RM for a 15 billion, legacy savings and loan in New York City versus a 50 billion commercial bank in, in LA, right?

Those are going to be. wildly different, views of an RM and what makes them great because of the markets they serve, the communities they serve, the types of products that the banks offer. So it's really hard to talk about, you know, a great RM without understanding the financial institution, their focus, their strategy.

But again, I think it all comes back to that definition and, and striving for building world class, technology in support of them, world class training. world class product offerings for what it is you're intending to do.

Mitch: You know, one of the things that's kind of standing out to me here is you're not talking about compensation and benefits packages, right? You're talking about true skill development, right? upskilling and, and developing, A players and, and continuing to develop them, right? So what does that look like for a high performing RM?

What are some things that a bank could do to help retain them? Um, knowing that it's not always about the compensation. It is about the culture. It is about. Providing those opportunities for, for career advancement and development. Let's talk a little, a little bit about that. What does that look like for, for a bank today?

Bryan: Yeah, I think David hit on a good bit of it at the, uh, the onset here, Mitch, where, you know, it, it almost sounds ridiculously simple that the RMs focus on the relationships with the bank's clients, but that, that is the crux of it. You know, the, the relationship managers, the loan officers, they come into it with a focus on the client.

And to the extent that you can make that easy for the RMs, that goes a long way towards retaining the ones you want to retain. If it is easy for me to get deals done, if it is easy for me to, you know, approve a draw against a line of credit, even if I'm out and about in the field, if it's It's easy for me to go into one system and see a complete view of the client that I'm about to walk in and visit, whether that's, you know, the deposit relationship, the lending relationship, outstanding balances, past dues, anything of that nature, you know, one place, one stop shop.

So that's easy for me. That matters. the salary, the benefits, the. The commission rates on, on closed deal, all of that plays in, right? You have to be competitive, but if you make it easy on them to get deals done and to serve the clients, they're going to stay.

David: I agree.

Mitch: David, Bryan, thank you guys so much for your insights today. I think a great conversation and really a lot of insights about a really important role for, for any bank or credit union that's focused on commercial lending. So thank you guys both for that. And, and thanks everyone out there for listening to today's episode of Lending Made Easy.