Leaders are more effective when they are allowed to run the show, without distraction. The feeling of ownership, control, responsibility and accountability for high-quality performance comes when they know that the buck stops with them. When the victories or defeats go against the leader, the leader should be able to call the shots. An effective leadership development framework is necessary for building such leadership qualities.
State Bank of India (SBI) has an effective leadership development framework. As part of grooming future leaders, junior and middle management officers have to lead a small branch, to complete their “line assignment”. Primarily for all issues, problems and matters at the branch-level, the Branch Manager is the sole decision-making authority. One has to parent the branch; baby-sitting just doesn’t work. Adequate support system in the form of delegation of authority and other procedures allow the official to reach out to Regional Office, where higher-ranked officials are available to help out.
Once this assignment (usually for a year) is completed, the Bank knows that it has developed another solid leader that can shoulder higher responsibilities. Every CEO of the bank has at one time or the other, passed this line assignment.
SBI has a solid and proven structure for grooming future leaders. Sports bodies, corporations, non-profit organizations, political parties, nations all work towards succession planning. Parenting is also a form of leading that grooms future leaders. All can benefit from the SBI model.
The following points break-down the concept of succession planning and I highlight areas where SBI gets it right:
Officers are promoted through a highly competitive exam/interview structure. They are then provided extensive training on all aspects of banking and people management. Officers are also shunted out of their home-towns, in order to get them acclimatized to different environment and conditions, thus getting them out of their comfort zones. This level of filtration ensures that only the committed and passionate officers embark upon line assignment.
Over the years, through proper delegation of authority and gradually refined procedures, bank branches are staffed optimally. Required currency levels are known in advance based on the type of branch (whether a lending branch, a mainly deposit collection branch or a small rural branch). Other prior training and required assignment take care of the knowledge that is required to run a branch.
The point here is that the Bank positions the official for success. All required training is duly completed, sufficient time is allowed for taking charge and not much is left to chance.
Clearly define roles
As the official takes charge, he/she clearly understands the purpose of the assignment. They would have managed staff, deposits, remittances, loans and even the currency chest. But managing all this collectively and being the sole-decision maker at the branch is what needs to be accomplished in this assignment.
Clarity of role is of utmost importance, and this is widely communicated within the branch, outside the branch but within the bank and also outside the bank.
Provide secondary support
Every branch falls under a Regional Office, which is responsible for staffing, logistics, administration and performance of the branch. This is the secondary level of support that is provided. What matters can be handled by the regional office and what matters must be handled at the branch itself is documented unambiguously.
This allows the branch manager a free hand in managing the branch, with the comfort of knowing that adequate support is available if needed. This is a key success factor in developing effective leaders. For SBI, it also made good business sense in separating the local-level business and administration from higher-level, regional activities.
Make available emergency support
Occasionally during unforeseen absenteeism or sudden need of necessary cash for business, it was not uncommon to seek help from another neighboring SBI branch in another town or city. Since the Regional Office manages a cluster of branches in a geographically contiguous area, this could be executed quite seamlessly.
Every leader dreads the emergency. “What if the unforeseen should happen” is a question that troubles most folk that take up the mantle of leadership. Such emergency provisions go a long way in helping leaders manage the task at hand more effectively.
Get out of the way
According to an old Hindu saying, “Under a banyan tree, nothing grows”. By physically separating the regional office from the branch, a symbolic gesture of accountability is passed. “You are on your own” is the implied message to the branch manager.
How often have we seen grown-up children still dependent on their parents for making routine and basic decisions? Even in major corporations you find micro-managers that step in every now and then in routine activities and do not let the “leader” do their thing.
This “getting out of the way” sends a loud and clear message that the Bank not only expects the branch manager, the leader, to make decisions, but the bank also stands by the decisions so made.
A great amount of trust is laid on the branch manager. This is perhaps the most important component of developing effective leaders.
Review performance periodically
The final piece of puzzle is the periodic performance review. The bank measures performance by way of weekly and monthly reports, periodic branch inspection and annual performance reviews. Other statutory reporting such as weekly cash levels, daily cashbook balancing, monthly loans and recovery levels, interest and fee-based services income are also expected to be provided to the Regional Office.
This allows the Regional Office to maintain the pulse of the branch and step in, should it need to.
Once you identify and appoint a leader to head something, you should have a way to measure the “pulse” from a distance. This will allow the leader to do their thing and at the same time let you know when to step in. Based on what the measurements tell you, either corrective measures could be suggested or support could be provided.
It is not accidental that in spite of being a nationalized bank and implementing the Indian government’s low-margin national subsidy programs, SBI is still one of the nation’s top performing bank.