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PCBB Banc Investment Daily July 15, 2013
Banc Investment Daily
July 15, 2013

Locking In Better Performance

We saw an interesting story that made us consider the importance of internal communications in the workplace. There was a medical supply company executive who recently was detained by his own employees in China. This was not a "let's grab the Dean for a few hours" at the college sit-in kind of detainment. Rather, the executive was held for 6 days and described his imprisonment as feeling like "an animal in a zoo." When reading stories like this, we always ponder the important questions, like which animal and whether it is a carnivore, herbivore or omnivore?
The issue began as a misunderstanding around plans by the company to move part of its operations to India, resulting in 35 layoffs from the 97 employee plant. The company had made a severance deal with those employees and all employees had signed an agreement outlining the changes at the plant. The problem was the remaining employees wanted a similar payment and even more important, there were rumors that the entire plant was going to be closed. In the end, the gossip mill caused employees to physically stop the boss from leaving the building, though he tried several times. On the 7th day, the manager finally made a James Bond-esque escape and made it home unharmed to New Jersey.
What could this employer have done differently and is there a lesson in this for community banks? There are certainly cultural differences that no doubt complicated things in this case, but if we look at some best practices in employee relations, it seems most of the ideas are pretty universal and probably could have reduced the drama.
The Institute of Public Relations undertook a study of employee communications best practices and in particular looked at the factors in internal communications that contributed to the success of best-in-class companies. One important factor was an organizational structure that encourages internal communication both up and down the chain of command. That, plus a universal understanding in the company that strong internal communications has a positive return for the brand are key factors. These strong internal communications are driven by both listening skills and by skills used in communicating a message. When communicating outbound, executives need to understand that timeliness is very important and all employees should be informed before stories get churning in the rumor mill (or make it to social or mass media).
Other important elements to good communications include helping employees understand organizational change and how it might affect both the organization and their own work. If employees are presented with a roadmap for changes and have a clear idea and ability to measure progress, the company is empowered because the employees are empowered. Asking a new generation of employees to contribute ideas toward organizational growth and change was also important, not only because it reinforces their value to the company, but also brings new ideas to management.
Finally, executives should offer clear communications utilizing benchmarks and key metrics, to show how employees have helped the company achieve key objectives.
It turns out that it's not unusual for Chinese workers to hold their managers captive and that police there are reluctant to intervene, as it is considered a business dispute. Start your day considering the benefit of being in the business of running a community bank, where relationships between employees and employers may not always be simple, but are more predictable.