Post on 16-Apr-2017
Critical Factors for DrivingWorkforce Performance & Financial Results
May 29, 2014
2
SunTrust – An Overview
Assets$180
B
Loans$128
B
Deposits$133
B
2013 Revenue
$8.2 B2013 Net Income
$1.3 BAuA
$149 B
Teammates25,92
5
RelationshipsOver 5 MM
Branches1,501
Key Statistics
Mortgage Banking
15%
Corporate & Other 2%
Revenue Distribution3
Footprint• Consumer franchise concentrated in the more
densely populated, fast-growing markets within the Southeast and Mid-Atlantic regions
• National wholesale, mortgage and consumer lending businesses
Note: All metrics represent 1Q 2014 unless otherwise stated
Consumer Banking& Private Wealth Management
50%Wholesale
37%
Mortgage11%
3
SunTrust Has Delivered Significantly Improved Performance and Shareholder Returns Over Last 3 Years
$17.70
$28.35
$36.81
Dec 31, 2011 Dec 31, 2012 Dec 31, 2013
Share Price Appreciation
60%
30%
71.7%
68.9%
65.3%
2011 2012 2013 2014 Target
Efficiency Ratio
< 64%
5
In the Ongoing Debate of What is a Larger Determinant of Performance – Majority Agrees That Flawless Execution is Becoming A Key Determinant
Execution is becoming critical because of 3 factors:• In a number of industries there is minimal strategic differentiation between companies• Getting execution right is a complex exercise with widespread organizational impact• Human Capital dimensions are central to medium – long term success of the business
70%
Strategic initiatives FAILED due to poor EXECUTIONJohn Kotter, HBR, 2012
37%Companies that are
GOOD at when it comes to EXECUTION
HBR Survey 2010 of 1000 Executives
Most senior leaders spend ~75% of their time on talent management and execution planning
Research on Execution Criticality Senior Management Time Spent
University of Chicago
6
Organizational Capability is a Key Driver of Execution Excellence and Ultimately the Business Performance
Source: Bain High Performance Organization Database (n=365)
23%
62%
15%
Our organization holds us
back
Our organization is sufficient for
achieving reasonable
successOur
organization helps the business
outperform
Yet only 15% of the companies have truly high performing
organization
Organizational Capability
Performance
LOB 1
LOB 2
LOB 4
LOB 3
LOB 5
Company A
LOB 6
Company B
Company D
Company C
Company E
Company F
LOB 7
LOB 8
LOB 9
Illustrative
Source: Scott Keller & Colin Price, Beyond Performance
There is a strong correlation between organizational capability
and performance
Creates sustained
competitive advantageCause
Effec
t
7
Data Analytics as Predictive Indicator
Analysis
Why did it happen?
Monitoring
What’s happening
now?
Prediction
What can we expect to happen?
Business Value
Complexity
High
Low
Low High
Content & Technology
Acceleration
Reporting
What Happened?
Organization Capability value is well recognized – however there
are some key questions
Advancement in analytics have made it feasible to predict
performance
• What are the critical elements of organizational capability?
• How do we determine which elements matter most to specific companies?
• How do we sequence our actions?
• Are there leading signals to predict performance or take proactive corrective actions?
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BCG(6 Factors, 20 Topics)
McKinsey (9 Dimensions, 38 Practices)
Booz Allen (4 Blocks, 19 Questions)
1. Structural Design• Org Structure• Role of the Center• Org Cost efficiency
• Spans and Layers• Shared Services
2. Roles & Collaboration Mechanisms• Role Clarity• Cross-functional Collaboration• Informal/virtual Networks
3. Processes and Tools• Process Excellence/Optimization• Project Management• Business Analytics and Information Mgmt
4. Leadership• Leadership Performance• Leadership Pipeline• Middle-Mgmt Effectiveness
5. People & Engagement• Recruitment & Retention• Employee Performance Mgmt• Employee Motivation
6. Culture and Change• Change Management Capabilities• Adaptability & Flexibility• Culture
3. Renewal
2. Execution
1. AlignmentDirection
Leadership
Culture & Climate
Accountability
Coordination & Control
Capabilities
Motivation
Innovation and Learning
External Orientation4. Structure
3. Motivators
2. Information
1. Decision Rights• Culture of the organization• Important strategic and operational decision are quickly
translated into action?• What is the primary role of corporate staff?• Do your manager get involved in operating decisions?• Once made, decisions are often “second guessed”• Everyone has a good idea of decisions/actions he/she is
responsible
• Shared Vision• Strategic Clarity• Employee Involvement
• Consultative Leadership
• Authoritative Leadership
• Supportive Leadership
• Challenging Leadership
• Open and Trusting• Internally Competitive• Operationally Disciplined• Creative and
Entrepreneurial
• Role Clarity• Performance Contracts• Consequence
Management• Personal Ownership
• People Performance Review
• Operational Management
• Financial Management• Professional Standards• Risk Management
• Process Based• Talent
Development• Talent Acquisition• Outsourced
Expertise
• Meaningful Values• Inspirational Leaders• Career Opportunities• Financial Incentives• Rewards &
Recognition
• Capturing External Ideas
• Top-down Innovation• Bottom-up
Innovation• Knowledge Sharing
• Customer Focus• Competitive Insights• Business Partnerships• Gov’t & Community
Relationships
• Firm deals successfully with discontinuous change in the competitive environment
• Critical information on competition gets to HQ quickly• Field employees usually have information they need to
understand bottom line impact on their daily choices• Rarely send conflicting messages to the market place• Information flows freely across org. boundaries• Line management has access to the metrics they need to
measure the key drivers of their business
• If firm has a bad year, but one division had a good year, the division head still get a bonus
• Besides pay, many other things motivate individuals to do a good job
• The individual performance appraisal process differentiates among high, adequate, and low performers
• The ability to deliver on performance commitments strongly influences career advancement and compensation
• Average number of direct reports of middle management level
• Promotions include lateral moves• “Fast track” employees here can expect promotions every 3
years or more or less?Bossidy & Charan: Execution
Building Block 1: Leadership• Align People and Business• Set Clear Goals/Priorities• Accountability & Rewards• Expand Capability• Know YourselfBuilding Block 2: Culture• Link to Bottom Line Results• Operationalize Values/Beliefs• Reward PerformanceBuilding Block 3: Talent• Commitment to People Process• Right People, Right Positions• Energy and Enthusiasm
Joyce, Norhia & Roberson: What Really WorksMake Your Strategy Clear & Focused• Clear customer value proposition • Base it outside-in• Clearly CommunicateExecute Flawlessly• Deliver new products/services • Empower front line to respond• Continuous improvementPerformance Culture• Inspire/challenge all to do best• Reward/pay for achievement• Clear company valuesFast and Flat Organization• Eliminate redundant layers• Information exchange across • Best people close to action
Morgan, Levitt, Malek: Executing Strategy
Ideation Imperative• Clarify Identity• Clarify Purpose• Clarify Long-Rang Intention• Ideation and brandVision Imperative• Translate intention into strategy, goals, and metricsNature Imperative• Align strategy, culture, structure• Tackle culture change• Performance evaluation• Allocate people to projects• Align incentives
Fast and Flat Organization• Eliminate redundant
layers• Information exchange
across • Best people close to
actionTalent Management• Promote within• Top of line
training/development• Job designed to
challenge bestLeadership• Connected to all levels• Spot opportunity early• Link pay to
performanceI
People Process• Evaluate in Depth• Identify/Develop Talent• Fill Leadership Pipeline• Link HR to ResultsStrategy Process• Focus on Customer• Capability to Execute• Financial Model• Short/Long Term
MilestonesOperations Process• Product Launches• Marketing Plan• Productivity Plan
Engagement Imperative• Engage strategy through
the project investment stream
• Critical activities & capabilities
• Resource/skill capacitySynthesis Imperative• Align and monitor
project work• Nimble proactive
processes• Manage
interdependenciesTransition Imperative• Move project outputs
into the mainstream
Consulting Companies are Shifting Energy and Resources Towards Execution
Scatterplot of Competitive Capabilities
9
Current Competitiveness
Futu
re Im
porta
nce
Scatterplot of competitive capabilities and their relative importance today and tomorrow
10
SunTrust is Exploring Predictive Execution Index as a Diagnostic as Well as Planning Tool for Organizational Capability
• There are a number of organizational variables you can focus on - getting Insights into these 3 dimensions critical to predicting performance
• Focusing on ‘Alignment’ and getting it right is 1st priority
• These 3 elements are not independent of each other. There is an interplay between them, however getting the basics right on them is critical.
Immediate Attention is required
Qualified Zone
Disqualified Zone
• Leadership Competence
• Team Collaboration• Talent Capacity
• Strategy• Shared Purpose & Goals• Shared Accountability
• Structure• Shared Values / Behavior• Process
Alignment
ArchitectureAbility
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Mark A. ChancyCorporate Executive Vice PresidentWholesale Banking Executive
12
SunTrust – An Overview
Note: All metrics represent 1Q 2014 unless otherwise stated
Full-service financial solutions and advice to businesses, institutions, not-for-profit organizations, and government entities
National offices with large corporate client base
2013 Revenue: $3.0 B Total Loans: $58.9 B Total Deposits: $42.1 B
Full-service banking for Retail clients in Southeast and Mid-Atlantic markets and national consumer lending business
Premier provider of wealth management advice and solutions to high net worth individuals and families
2013 Revenue: $4.1 B Total Loans: $41.3 B Total Deposits: $84.6 B
Loan originations in SunTrust retail footprint and adjacent states
Correspondent and broker relationships in 49 states
Top 10 servicer of loans from 49 states and District of Columbia
2013 Total Revenue: $941 MM
Total Loans: $28.3 B Total Deposits: $1.9 B
SunTrust Banks, Inc.
Bill Rogers, CEO
Wholesale Banking
Consumer Banking &
Private Wealth Management
Mortgage Banking
Wholesale Business Overview
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Corporate and
Investment Banking
Commercial and
Business Banking
Commercial Real
Estate
Treasury and
Payment Solutions
Wholesale Risk
Organization
Wholesale Operations
Wholesale Business
Information Office
Support Partners(Fin, HR,
Legal, Mktg etc.)
Wholesale OrganizationWholesale Revenue and Net
Income
Net Income Distribution ($s Millions)
Revenue Distribution ($s Millions)
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The SunTrust Story – Wholesale Key
Dimension Actions Taken
Purpose
Performance
Engagement
Alignment
Architecture
Ability
• Focused effort on creating Wholesale culture • Created and articulated new focus on the middle
market • Built shared vision of leveraging Wholesale platform
to win in the marketplace • Changed the delivery and fulfillment model for better
effectiveness and efficiency (E.g. End to End)• Identified various levers of performance across Revenue
and Cost side• Focused on Pay for Performance
• Aggressively pursued “Top Talent in Top Boxes” approach
• Focused on leadership collaboration and developing talent deeper in the organization
• Linked teammate engagement to increasing client needs met
15
Mayank GuptaHR Business Partner Lead Commercial and Business Banking
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Key Organizational Measures That Led to Success Achieved At CIB
CIB - Revenue CIB - Net Income CIB - Revenue / FTE
13% CAGR
45% CAGR
Alignment • Getting ‘Top Talent’ in ‘Top Boxes’
• Getting teammates with right ‘aptitude’ and ‘attitude’
• Creating environment that rewarded ‘A’ players
Ability Architecture
7% CAGR
• Clearly establishing ‘What game we are playing’ and ‘How do we win that game’
• Linking behavior expectations to above vision
• Establishing and enforcing robust processes. E.g.
• Pay for Performance• Talent calibration • Perf. Management• Client planning
2008 2012 2008 20122008 2012
17
▪ Our growth has been on the back of a rising economy in the core footprint (growth of ~3% vs. economy at 2%)
▪ Projected growth is more aspirational at ~3x economic growth
• Consistent and clear definition of winning
• Clarifying roles and expectations
• Focus on P4P
Alignment
Ability
Architecture
• Putting top talent in top boxes • Building new capabilities
• Realigning roles to support the ‘RM’
• Building new ‘expertise’ structure
• Simplifying processes
SunTrust Commercial Banking Revenue
+3% p.a.+8% p.a.
2009 2013 2016E
SunTrust Commercial Banking Net Income
2009 2013 2016E
+3% p.a.~15% p.a.
Commercial and Business Banking Business is at Similar Inflection Point as CIB was 5 Years Back
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Predictive Execution IndexPEI captures subjective and objective data points to evaluate the level of accomplishment in each element.
Talent Capacity Do you have top talent in top boxes and have robust pipeline for all critical roles ?
% of TMD Spend
in HR % of People in Top
4 Boxes in 9 Box % of Involuntary
Leave
Subjective Objective
Process Conducts systematic reviewing of processes to ensure their effectiveness and outcome?
Structure Are individuals/teams designated with clear authority to make decisions with critical information required to do so?
Strategy Is a specific and clear strategic direction defined throughout the organization?
EPS
TRS
ROIC
Leadership Competency
Team Collaboration
Do teammates focus on larger organizational outcomes rather than narrow departmental goals ?
Do you have senior leadership that drives strategy and execution effectively and develops strong talent ?
Shared Accountability
Is your team defined with clear rewards and accountability for achieving goals?
Shared Values/Behaviors
Do you share the value of organization and adhere to behavior that is defined by the organization?
Shared Purpose/Goals
Is the adherence to common vision and goals at all levels within the organization?
HC ROI
Revenue / FTE
VOT
AR
CH
ITEC
TUR
EA
LIG
NM
ENT
AB
ILIT
Y
Elements
Subjective Q’s Score+
Objective Data Score
=Alignment Score
Subjective Q’s Score+
Objective Data Score
=Architecture Score
Subjective Q’s Score+
Objective Data Score
=Ability Score
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Extrapolating CIB experience to BB / CML Banking Gives An Early Insight Into Future BB / CML Banking Performance
Dimension
CIB BB / CML Banking
Pre - 2009 2013 Pre-2013 2016+
Alignment 0.6 0.9 0.9
Architecture
0.6 0.9 0.9
Ability 0.7 1.0 1.0
Total Score 0.25 0.80 0.8•Strong improvement on all 3 dimensions already•Performance followed the improvement •Need to continually examine the standing on these dimension
•Improvements underway on 3 dimensions •Early positive momentum •Still a journey. Work to do
XX=
0.6 – 1.0 = Strong Enabler 0.4 – 0.6 = Neutral <0.4 = Hindrance
Predictive Execution IndexPEI enables leaders to identify latent issues and prioritize intervention plans by focusing only on vital signs of organizational health
Talent CapacityTeam Collaboration
Leadership Competence
AbQualified ZoneDisqualified ZoneImmediate Attention is needed
AlShared AccountabilityShared Purpose/Goals
Strategy
Ar
ProcessShared Values / Behaviors
Structure
Qualified
Disqualified
Talent Capacity Has your organization identified critical positions, competencies required?
% of TMD Spend in HR
% of People in Top 4 Boxes in 9 Box
% of Involuntary Leave
ProcessConducts systematic reviewing of processes to ensure their effectiveness and outcome?
StructureAre individuals/teams designated with clear authority to make decisions with critical information required to do so?
Strategy Is a specific and clear strategic direction defined throughout the organization?
EPS
TRS
ROIC
Leadership Competence
Team Collaboration
Collaborate with others/other LOBs to engage in projects?
Have a clear idea of leadership competencies that are specific built for the organization?
Shared Accountability
Is your team defined with clear rewards and accountability for achieving goals?
Shared Values/Behaviors
Do you share the value of organization and adhere to behavior that is defined by the organization?
Shared Purpose/Goals
Do you adhere to organization’s vision and goals?
HC ROI Revenue / FTE
VOT
ARCHITECTURE
ALIGNMENT
ABILITY
Elements Subjective Objective
Radar Chart to Evaluate Organizational Capabilities Methodology to Identify Latent Issues
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Q & A