EOS winning devotees in banking

Both banks in the Waseca Bancshares holding company – Lake Area Bank, Lindstrom, Minn., and Roundbank, Waseca, Minn. – were stabilizing in 2015. The banks had come through the recession and put regulatory concerns behind them. Sean Cole, the banks' chief financial officer, said there was a feeling it was "time to start playing offense instead of defense." Lake Area Bank board member Jim Redpath, who heads an accounting firm in White Bear Lake, Minn., suggested the bank adopt a management approach called EOS, which stands for Entrepreneurial Operating System. Cole had recently attended a seminar hosted by Wipfli where David Reiling, CEO of Sunrise Banks in St. Paul, Minn., touted his experience with the system, which also is referred to as Traction..EOS is a set of concepts used by business leaders to clarify and simplify the management framework at their company. Emphasizing discipline and accountability, EOS is designed to get everyone in the organization working in alignment with company goals..After some study, in mid-2015 the management teams at both of Waseca Bancshares banks decided to adopt the system. Today, EOS provides the structure that the two banks — with more than $600 million in assets, nine offices and 178 employees — use to achieve numbers near the top of their peer group..Cole said EOS has made it possible for them "to accomplish a lot more than we thought possible, certainly more than we were doing previously," Cole said. "It has allowed us to do more with less.."We have no people problems, or the ones we have are easier to take care of," Cole said. "Using EOS, staffs at both banks have made progress on efficiency ratio, service fees, staffing and loan rates," Cole said..Nichol Beckstrand, president of Sunrise Bank, said EOS has helped staff focus on clear quarterly goals. Implemented five years ago at Sunrise, the system works particularly well in their organization, Beckstrand said, where they have a clear visionary — Reiling — and an implementer — Beckstrand. "Typically, when you work for an entrepreneurial person, you can use assistance on focus. You focus on what you can do. It creates a discipline in the organization.".Last year, Mike Paton, who formerly worked in a bank, explained EOS to about 175 bankers at a seminar hosted by the Bank Hol.ding Company Association in Bloomington, Minn. Paton, who helps dozens of companies implement EOS, including five banks, is one of the leading EOS advocates in the world. He learned the system from founder, Gino Wickman, a Michigan-based entrepreneur who created EOS 20 years ago and has written several books about it. More than 4,000 companies have hired one of the 187 professional EOS implementers such as Paton, and some 40,000 companies have downloaded the free EOS implementing tools available at EOSworldwide.com..Speaking to the BHCA audience, Paton said 95 percent of entrepreneurs don't get back what they feel they are putting into their businesses, not just financially, but emotionally as well, taking into account all the family and personal time they give up. Paton explained the problem is not lack of vision, but not enough traction, which is what he calls the ability to execute every day with discipline and accountability. "Vision without traction is hallucination," Paton summarized..Paton outlined six things a company generating traction does that other companies do not. He commented on the six components that make up EOS:.Vision: Have a crystal-clear vision, and make sure everyone in the organization is on the same page.People: Have the right people in your company. Implement a mechanism to attract great people and repel everyone else.Data: Run on facts and figures, not emotions.Issues: Companies need to get good at identifying issues and resolving them.Process: With good processes, a business can get the most important things done right every time, even when the leader is not there.Traction: Ultimately, it is about focus, discipline and accountability..Paton cautioned that no business will demonstrate 100 percent strength in each of these six categories but said companies that get to 80 percent can be considered great businesses..Paton admitted EOS is not for everyone, although Cole commented the system works for any organization with 10 to 250 people. He said a service company, such as a bank, is as good a candidate for EOS as a manufacturing company, which will have issues around supply chain and inventory. But whether a business leader chooses to implement EOS or not, Paton commented: "All businesses need a system for getting everyone aligned around a common vision and executing on that vision.".Paton visited Cole's banks in 2015 to launch EOS with a meeting called Traction Day, where management clarified its vision and core values and set a strategy for implementing the system. Following the launch, management teams at both banks met weekly to discuss issues, prioritize problems and identify who should take responsibility for follow through. Paton returned to the organization for its quarterly management meetings in the first year. Since then, Paton has returned twice a year, with Cole handling the other two quarterly meetings..Cole, who said he loves EOS, attended five or six departmental meetings per week in the early days of implementing EOS. As the management teams became more comfortable with the details of operating under EOS, they rolled it out to the rest of the staff at both banks. Cole said implementation went as expected, with a few awkward and clumsy moments in the early stages as each senior manager learned the ropes..Lake Area Bank, which had identified core values before it learned about EOS, actually changed its language once it adopted Traction. "Core values are supposed to be what you do; they are not supposed to be aspirational," Cole said..Cole further explained the bank used to include "honesty" as a core value but decided to drop the term, not because it doesn't value honesty but because "if you're not honest you can't even get in the door around here..[su_box title="More about EOS" box_color="#10263c"]The EOS system was founded by Gino Wickman, who details it in a book titled "Traction." The model requires business leaders to lay out a vision for what it wants to accomplish, build an infrastructure into which it will plug in the right people, use scorecards to hold people accountable and track its metrics, identify obstacles or barriers to success, document its processes, and then manage it all to achieve the banks long-term goals.[/su_box].After working together, the leadership team at Lake Area Bank decided to articulate its core values using the acronym SAILS, which stands for: Shows initiative; Achieves results; Illustrates pride and passion for what we do; Lives with respect, and Service above self..Cole said managers have quarterly discussions with all employees about how they are living up to the bank's core values. Traction offers a tool called the People Analyzer, which encourages an organization to rate each employee with a plus, a minus, or a plus/minus according to each core value. The company is encouraged to establish a floor, typically a rating of three pluses and two plus/minuses. Paton said a company should not tolerate a minus in any category by any employee. Where that shows up, managers are expected to "coach the employee up or out."Borrowing language from Jim Collins who wrote the blockbuster business book, "Good to Great," the People Analyzer is designed to help managers get the right people in the right seats..Cole said the best part of EOS is the structure it offers for weekly meetings, conducted by each department throughout the organization. Meetings are held the same day and time each week, using the same agenda. Previously identified challenges, which are called "rocks," are reviewed at the weekly meetings. Everyone checks in, stating whether their rocks are "on track" or off. Those that are off are added to a list of issues. Once everyone has checked in, meeting participants prioritize the issues and discuss the top ones..Cole and Paton explained this process illustrates the real power of EOS. With the group considering the issue, it gets resolved. Cole said initially, some people were reluctant to report a rock as being off track because they viewed it as an admission they couldn't meet the challenge. But soon, Cole said, people got past this hurdle and now everyone at the two banks sees how powerful it is to have an entire team taking on an issue.."Once the team embraces the concept of an 'off track' rock not being a weakness, stuff gets dropped down more. That's when the magic happens," Cole said..EOS encourages companies to create an accountability chart rather than an organizational chart. Functional labels are used instead of traditional titles. "So I am head of finance and accounting, not the CFO," Cole explained. One box is labeled "integrator," indicating the person who directs and manages all the major components of the organization's workflow. In traditional language, this person is called the president..EOS offers one box above the "integrator" called the "visionary." This articulation of roles is part of what attracted Reiling and Beckstrand of Sunrise Bank to EOS. At Lake Area Bank, however, Cole said they do not have anyone in the visionary role. The presidents of each of the banks head the charts in the integrator boxes. In organizations where there is a clear visionary – oftentimes this is the founder – Paton said it is essential to separate that person from the responsibilities of the integrator. Visionaries and integrators possess distinct skill sets. "No visionary is happy running a going concern," Paton said..When people are in the right roles, systems are in place, issues are being identified and resolved, everyone is aligned according to values and purpose, a company can begin to make progress, or as EOS advocates put it, "gain traction." Paton said it is ultimately about helping business leaders get what they want from their businesses.