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Driving change through training and development

A Northern Rock case study

Every organisation needs to move forward and face the future. In order to do so it must take decisions which create a better way of doing things. Change and the improvements brought about by change are at the heart of strategic planning. Strategic planning is a process which involves an organisation in defining its future achievements and then providing the means to achieve these goals.

In 1994 Northern Rock undertook a strategic review which encouraged it to become more proactive than reactive so that it could sustain and improve growth. The key element during this process of change was the training and development of staff. This case study focuses on how training and development at an organisational level, was used by Northern Rock during this process of change to equip the Society for the many challenges of the 21st century.

Over recent years, one market which has been subject to increasing change has been that of financial services. In competitive markets, organisations have to monitor their business environment and adjust their strategies so that consumer needs are fulfilled profitably. In such times it is the responsibility of decision-makers to identify whether change needs to take place and prepare organisations for this change by implementing training and development strategies to help them to build a better future.

With competition in the financial and insurance sector increasing, Northern Rock accepted that it had to recognise the needs of its customers and communicate to them how it had the products and services to satisfy those needs. The review resulted in the development of a programme called Selling To Achieve Results (STAR) which was to provide Northern Rock with the ability to maintain and further develop its competitive position.

Training & development

Training and development is important during a process of change. As changes occur, training is a process which makes sure that individuals can reach an acceptable performance in their jobs. It sets out to fill the gap between what they are currently doing and what they are required to do as and when the changes take place. It therefore builds up the skills which help to increase the competence of people in the work place.

Development is the modification of behaviour through improved experience and understanding of a role or position. Development works hand-in-hand with training as it helps individuals to review their present achievements and experience and set learning goals which relate to where they want to be. This is known as a development plan.

In the tough world of financial services Northern Rock is one of the country’s top-performing building societies. The principal purpose of the Group is the provision of housing finance, savings and investment services and a range of related personal financial and banking services, supported by a commitment to top quality customer service and backed by security afforded by a strong capital position. This intention is clearly stated in Northern Rock’s primary operating policy statement:

Northern Rock is determined to remain a successful and independent building society. We will seek profitable growth by offering a competitive range of financial services grouped mainly around home ownership. Based in the North East of England, each year NORTHERN ROCK:

  1. helps thousands of people to buy a new home;
  2. provides thousands of people with a profitable haven for their savings;
  3. solves or reduces the arrears problems of thousands of people;
  4. creates jobs for people in the North East of England and elsewhere.

In an era of rapid change in the financial services industry, Northern Rock has continued to improve both its efficiency and its financial performance through the delivery of sound products and good service. This has included the successful integration of the former North of England Building Society and the continued development of the business in line with its policy statement in order to be ready and able to meet the challenges of the 21st century.

In 1994 Northern Rock decided to undertake a strategic business review of distribution. A Review enables an organisation to find the answers to two important questions. These are:

  1. Where are we now?
  2. Where do we go from here?

Building societies today are completely different institutions from those of the past. Though the core business still remains as savings deposits andmortgages, Northern Rock now competes with a spectrum of financial services organisations across the whole industry. Whilst this competition provides a threat to Northern Rock’s core business, it also provides Northern Rock with considerable potential to develop new business opportunities. The key ingredient required for Northern Rock to follow through these business opportunities was having the right staff trained at:

  1. an individual level
  2. a job level
  3. a departmental level
  4. an organisation level.

An organisation must continually be assessing current states of employee development by adding value to human resources if it wishes to maintain or further develop its competitive advantage. Wherever the organisation introduces a new strategy or changes its objectives it must identify training and development needs which take it forward.

People and the channel of distribution

The channel of distribution is the system through which financial services are transferred from producer to end-user. It may consist of one or more individuals or organisations who help to make products and services available for end-users. In order to maximise sales opportunities an organisation must appraise existing channels. There are a number of main distribution channels through which Northern Rock reaches its customers. These are:

  1. Branches. These involve over-the-counter, direct contact with customers.
  2. Intermediaries. These might be agents or brokers.
  3. Sales teams. These work on referrals and may cross sell services.
  4. NR Direct. A NR Direct sales team works on retention and renewal.

In order for Northern Rock to assess how well it could react to new business opportunities and develop areas for further potential, it had to evaluate its internal capabilities. This meant using the Distribution Review to look at ways of reaching consumers wishing to purchase a wider range of financial services.

The Distribution Review showed that in order for Northern Rock to develop new business opportunities, it would need to develop both its direct sales and Northern Rock Direct. The Current Distribution Stance showed that although customer needs for many products were being served by the branches, major opportunities existed through direct sales and Northern Rock Direct.

Northern Rock’s new strategy to improve growth was to be sales-orientated, particularly in direct sales and Northern Rock Direct. This would help it to provide carefully targeted financial services products which would meet customer needs within an increasingly competitive market. Planning for the future and change is not always an easy process within an organisation. Managers and other staff have current problems and issues to occupy their time and energy, which can distract them from becoming involved in the overall direction of the organisation.

The opportunities identified by the Review that existed in direct sales and Northern Rock Direct could not be achieved without:

  • a major attitudinal and cultural change through the business;
  • a significant investment in the sales role, both face-to-face and on the telephone, in order to improve sales firepower;
  • a company inspired top-down approach to training and development at all levels;
  • a programme which would sustain the new pro-active approach to doing business which would ensure that both new and existing personnel would be included.

Having developed a new sales structure which would act as a platform for distributing products for consumers in a much more competitive business environment, the next step for Northern Rock was to initiate a training programme which would:

  • be capable of being communicated freely and openly at all levels;
  • act as a training programme not just for managers and experienced staff but would also enhance the sales skills and techniques of employees with no previous sales experience.

Selling is a two-way process of personal communication between a seller and a buyer. In highly competitive markets such as those for financial services, personal communication is a critical part of the sales process. Selling involves matching the needs of customers with services designed to meet those needs. Customers want someone they can trust, someone with the maximum information and who will balance alternative strategies and discuss confidential matters such as their needs for financial services. The better the relationship and appropriate match, the more lasting the relationship becomes between the seller and the buyer.

It has been said that sales people are born and not made, but the role of training is a crucial part of the selling process. Training helps to build selling skills and to make use of their personal abilities through the various phases of the sales process.The aims and objectives of the STAR programme involved managers in implementing the process of training as well as helping other members of staff at Northern Rock to develop their sales skills. Aims for Managers:

  • to pass on the content of the programme their staff will undertake and at the same time to refresh the managers on the basic sales process;
  • to manage their staff as a sales unit and to manage the training process on an ongoing basis at the branches before and after staff have attended training course.

Aims and objectives for Staff:

  • to impart the basic service and selling skills to staff and help them to recognise the opportunities for using these skills;
  • to help the staff understand they should sell both the products and the Society.

The STAR programme of training recognised that all individuals have different learning needs and that some individuals might need more support than others. The programme itself involved 14 different elements or key training objectives. Training for sales as part of a programme designed to increase pro-activity is not an overnight process. Initially, staff attended a two day delegate course where they were presented with the objectives of the STAR programme and worked together in workshops comprising groups of staff numbering between 10 and 12. The training process was then taken back to the branches using open learning. Open learning involves developing a training programme which meets the needs of an individual by allowing them:

  • Flexibility of place – means that learning is not confined to a classroom. It can just as easily take place in a work area or in a living room.
  • Flexibility of time – enables learning to take place at the most convenient times of the day or week.
  • Flexibility of pace – allows people to work as quickly or as slowly as they wish because people learn at different rates.

Though the STAR programme involved staff in training themselves, for the initiative to succeed, staff required encouragement and support from their managers. This was undertaken through a process of coaching. Coaching was used by managers to provide personal help and encouragement for staff to develop their skills. Managers had to:

  • allow time both for themselves and their staff. This involved holding an initial coaching meeting to discuss action plans, activities and the process of open learning;
  • provide a place for staff to use which would be conducive to the learning process;
  • make sure that staff were provided with learning materials.

It was important for managers to identify any learning problems and to provide support for their staff, particularly motivation and ongoing support which ensured objectives were being met and staff were provided with constructive feedback.

The Strategic Distribution Review showed that customer service and sales must work hand-in-hand. Therefore as emphasis within the organisation changes towards a more pro-active approach to doing business, with greater emphasis upon sales, it was important for Northern Rock to ensure that changes followed their Quality Everyday standards. After all, branch staff at Northern Rock are the Society’s ambassadors and it is only through the way they work that Northern Rock retains and attracts new customers.

Performance standards were designed by branch staff with the aim of meeting the expectations of customers. Each standard has an objective which is customer driven, with performance criteria for staff to achieve in order to satisfy customer needs. They are divided into four main categories:

  • Environment – branch cleanliness, tidiness, comfort, etc.
  • Relationships – attitude, appearance, enthusiasm, etc.
  • Knowledge/Skill – communication, procedures, products, etc.
  • Telephone Issues – telephone manner, response to queries, holding, call back, etc.

In 1993 Northern Rock introduced the shopping surveys initiative, whereby customers would visit or phone branches at random to assess the level of service they received. During each telephone call or visit each branch was marked according to a list of strict quality criteria. Following each of the visits, staff were given the results and could identify areas for improvement as the year progressed.

The results were dramatic. By providing better ways of improving service quality through its departments and branches, using training and development, Northern Rock has established a better platform from which sales can develop.

The movement towards a more pro-active business has involved considerable investment in staff in order that Northern Rock is able to offer keenly-priced products and services to an increasing number of customers. Feedback from delegates on courses and improvements in branch performance, have all helped to develop a more competitive spirit amongst branches.

By investing heavily in changing the methods by which it trains and develops staff, Northern Rock has set up a process which will enable it both to react to changes in the market-place and also make changes in its own right, so that it can sustain and improve its growth in the face of many different challenges in an increasingly competitive business environment.