After losing market share for some years, BigBank (not the company’s real name) needed desperately to grow and to raise profits. The CEO and board believed the answer lay in cross-selling and in managing costs more effectively. This strategy demanded unity from the bank’s five highly independent units—units that had operated as classic silos. Internal rivalry and lack of trust were rampant. So was disrespect, following industry stereotypes: retail banking saw the investment-banking unit as a capital hog, with compensation levels disproportionate to its risks; investment banking felt that retail banking didn’t appreciate the complexities of its business; and both units believed that the wealth division was paying out too much to the sales force and not enough to shareholders. Bringing teams and units together seemed an impossible task. But the CEO was firm: he did not want to replace senior management. So how did he trigger a change in behavior?
First, he instituted a 360-degree feedback program and made it a major component of executives’ variable compensation. He held facilitated sessions so that team members could work together to advance the new strategy while learning ways to foster collaboration and enterprise-wide unity.
It was during one such session that the head of one business unit (we’ll call him Wilson) had an epiphany. Until then, Wilson had seen little upside in the cross-selling strategy for his unit; collaboration meant only more risk with little reward. During the session, the facilitator showed a video of an orchestra conductor coaching a cellist to help her overcome her performance block and gain insight into an important composition. The conductor encouraged her to enjoy her playing more and put aside her fear of making mistakes. He praised his pupil generously to motivate her to keep raising her performance level. He gave her five positive reinforcements for every criticism.
At dinner that night, Wilson replayed the video in his mind. He thought of his son, a talented violinist who was studying at one of the nation’s top music schools. He remembered the succession of teachers who had pushed his son to ever-higher standards of excellence—in the process, dampening his son’s joy and amplifying his fear of making mistakes. As a father, he had regretted this development. Wilson now realized that his son needed to aspire once again in order to overcome his fear of failure and be willing to take risks. It also occurred to Wilson that he himself probably needed the very same attitude in his own efforts to lead the bank to success.
The 360-degree-feedback program turned behaviors around—most markedly in Wilson, who experienced the greatest improvement of any executive that year. The person who had been the most vocal in opposing collaboration was now its strongest proponent. More important, cross-unit sales started to kick in.
As BigBank’s story illustrates, a CEO can incite behavior change at the top by developing a strong plan, instituting a new performance-measurement tool, and linking the resulting measurements to a tangible consequence (compensation). But there must also be a moment of truth when the individuals on the team “get it”: when the change they seek becomes a change in their own understanding and, subsequently, their behavior. Without that internalization, would the linkage to compensation have worked on its own? Or, as is so often the case, would the leaders have eventually gamed the system, without any real change occurring? At BigBank, an external intervention (the video) shifted the frame of reference of just one team member. The change in Wilson’s mindset and performance ignited a chain reaction. Team discussions—about everything from financial goals to talent development—shifted from a unit-only focus to a broader enterprise concern.