After a decade of aggressive expansion across Michigan, Indiana and Georgia, Flagstar Bank discovered a consequence of being a far-flung organization: dissent regarding performance goals. "By 2006 we were struggling with getting our branch managers to buy into their locations' annual performance goals," recalls Allessandro DiNello, president of the Troy, Mich.-based institution. "Although we had developed a spreadsheet system for establishing goals, it was insufficient for analyzing all of the market and demographic variables for each location."
Late in 2006 DiNello was introduced to specialized predictive analytics solutions for bank goal-setting at the annual BAI retail delivery conference. Of the three vendors at the conference, Flagstar ($17 billion in total assets) was familiar with Pitney Bowes MapInfo from a previous project. "Our experience with the vendor's retail site selection solution, WinSite, was extremely positive," DiNello relates.
DiNello reasoned that a goal-setting solution would be more beneficial if it interacted seamlessly with the Pitney Bowes site selection tool. "Since performance and location determine profitability, we wanted a goal-setting tool that would enhance the process of selecting new locations as well as improve outcomes at existing branches," he explains. "By standardizing on one vendor, we hoped to reduce inefficiencies and risks associated with providing internal data to multiple ASPs. So we decided to focus on Pitney Bowes' Web-enabled Perform, and if it didn't work out, then we'd take a different direction."
As vendor negotiations proceeded during spring 2007, a fourth-quarter implementation was established in order to leverage the ASP tool for 2008 goal-setting. Prior to inking a final agreement in late October, DiNello brought division managers into the decision-making process to ensure support for the project.
"However, closing the deal so late created an operational challenge because we were too optimistic about the learning curve," remarks DiNello. "Since the system isn't highly intuitive and requires a fair amount of training, we really had to push hard to finish setting goals by year-end. Otherwise the technology deployment for extracting information from our data warehouse and providing it to Pitney Bowes was uneventful."
Nothing to Hide
Instead of anticipating significant performance increases, DiNello says, success was measured by employees' relative embrace of 2008 performance goals versus 2007. "Since the tool provides a detailed summary of how goals are established, employees reported feeling more confident that management didn't have anything to hide," he notes. "In fact, employees responded so positively that they actually asked us to include even more details about variables and scenarios in their goal reports going forward."
Enthusiasm for the new system became measurable during the 2009 goal-setting cycle. "Previously about half of our employees felt their goals were fair," reports DiNello. "With Perform, it's more than 80 percent. One recent hire, who came from a very large bank, said he was amazed at the comparative thoroughness and transparency of our goal-setting."
Now Flagstar is taking goal-setting a step further. "We'll be using Perform to establish long-term profitability projections for each branch," DiNello says. "For locations with insufficient projections, we'll use the tool to evaluate our options. In some cases we'll combine Perform with WinSite to determine which locations to consolidate, move or close."
Regardless, Flagstar's investment is paying off. "Despite the downturn our organizational confidence has improved and objective goal-setting is playing an important role," DiNello asserts. "Employees no longer fear that achieving their goals this year will only result in higher, unreasonable goals next year. With Pitney Bowes, our employees see their goals are based on real-world conditions, making them reasonable and achievable. This, in turn, is helping us weather a difficult economy successfully."
Case Study Snapshot
Institution: Flagstar Bank (Troy, Mich.).
Assets: $17 billion.
Business Challenge: Improve accuracy and acceptance of branch location performance goals.
Solution: Pitney Bowes MapInfo's (Troy, N.Y.) Perform predictive analytics solution.
Anne Rawland Gabriel is a technology writer and marketing communications consultant based in the Minneapolis/St. Paul metro area. Among other projects, she's a regular contributor to UBM Tech's Bank Systems & Technology, Insurance & Technology and Wall Street & Technology ... View Full Bio