The final episode in our 4-part series about engaging, and re-engaging employees. In this episode Don talks to Nathan Rogge, President and CEO of the Bank of Southern California. Subscribe to the show on iTunes, Spotify, Stitcher, and Google Play.
Nathan Rogge [00:00:09] My perception, and maybe this is a little selfish, is that going back to those clients that I want to serve in the hyper-competitive environment in the only way to provide an amazing customer experience, is to do it with empowered and engaged employees. And so this isn’t so much about satisfaction. I mean, I hope that everyone is is satisfied. But more importantly, I’m really concerned about. Do they understand how they fit into the organization and why what they do every day is so important to the overall cause of providing a great customer experience to those small to medium sized businesses.
Don [00:00:40] My name is Don Rheem, CEO of E3 Solutions and author of the book Thrive by Design: The Neuroscience That Drives High Performance Cultures. I speak across North America on the neuroscience of engagement, and I’m passionate about helping leaders at every level create engaging workplace environments where employees feel safe, recognized and validated. Employees who feel safe are happier, healthier and more productive. Each week my team and I take on topics impacting managers and we offer solutions to your biggest workplace challenges. And you’re listening to Thrive by Design, a podcast created by E3 Solutions to give managers, CEOs and leaders tips, strategies and tools needed to create an engaged culture at work.
Don [00:01:41] Welcome. I’m your host, Don Rheem, CEO of E3 Solutions. Today, the next conversation in our new series with industry leaders about the challenges of employee engagement. I’m delighted to welcome Nathan Rogge, the President and CEO of the Bank of Southern California, where he’s worked since 2006. Last year, Nathan was recognized as a most admired CEO by the San Diego Business Journal, and under his leadership, the bank was honored as one of the city’s best places to work. Welcome, Nathan, and thanks for being here today. Tell us a little bit about the Bank of Southern California and your work culture there.
Nathan Rogge [00:02:20] A little background on the bank – it was originally started under a different name out in a rural portion of San Diego and really was a tiny little organization. I always like to tell people that that bank got in trouble with the regulators before it was sexy to get in trouble with the regulators before the recession. And we’ve really spent a lot of time taking that little rural bank and transforming it into what we aspire to be, which is a regional bank focused on small and medium sized businesses in Southern California.
Don [00:02:48] You’ve got a lot of competition. What what distinguishes you from similar banks in the area?
Nathan Rogge [00:02:54] That’s a great point. In fact, Southern California, fifth, sixth largest economy in the world. There are literally an infinite amount of financial institutions and or competition out there. We do think that by being extremely focused on that small to medium sized business client, a client who really needs a relationship with the bank, and this is an important aspect. We we focus on really experienced bankers in the market that we serve and maybe our little niche or where we hope to differentiate ourselves. We’d like to move fast and competently. So we spend a lot of time on that. That’s that’s who we are, because there are there are, like I said, an infinite amount of choices for the same clients.
Don [00:03:35] Well, I love those two distinguishing characteristics, relational and agile, that as a small business man myself, that would be wonderful because I don’t have that in my regionally, so I haven’t found it yet. I know you’re very aspirational and where you want to go. Every time I come out and we measure engagement, you have more employees you’ve acquired and it seems like additional banks. But in all of this growth that you’re involved with. Nathan, why pause, if you will, and have this focus on employee engagement and measure it?
Nathan Rogge [00:04:04] Let’s go back to that comment about growth. The tiny little bank that I started with was about 36 million dollars in total assets. That means loans. And the offsetting deposits we have. If you look backwards, we’ve doubled the size of the bank about every three years. Now, obviously, going from 36 million to 72 million dollars is a lot easier feat than going from 500 million to a billion. But the concept is still the same, which is repeating that process of providing an amazing experience for your clients and doing it with what we believe is an important component. Is it a highly engaged employee group? Now, when you’re growing like that, you do have this interesting dynamic, which is you’re looking organically to grow and we do that very well. But then we do an acquisition about one every one to two years. And so that means bringing on an entire new group of people who didn’t necessarily sign up to work for you. Yeah. And so to come in with a highly engaged workforce to start out and also be able to explain to those new employees that are coming on board who we are and what we aspire to be is very important. And so the engagement component of this for those employees is really one of the biggest concerns. And I also think that one of the reasons why we’re so successful, a lot of people let leaders that feel that they’re focused on employee engagement are actually very focused on employee satisfaction. And we see the two is completely different place employees satisfaction being an attitude in employee engagement being a behavior.
Don [00:05:39] But how do you see it as a leader? Is this just about making employees happy? Or is this something else?
Nathan Rogge [00:05:45] My perception and maybe this is a little selfish, is that going back to those clients that I want to serve in the hyper competitive environment is the only way to provide an amazing customer experience is to do it with empowered and engaged employees. And so to your point, this isn’t so much about satisfaction. I mean, I hope that everyone is is satisfied, but more importantly, I’m really concerned about. Do they understand how they fit into the organization? Why what they do every day is so important to the overall cause of providing a great customer experience to those small and medium sized businesses.
Don [00:06:18] And, you know, it’s interesting, Nathan, because the research bears that out. One study correlated employee engagement at point eighty five with customer engagement, that it’s almost a one to one relationship. And if you can increase employee engagement by 10 percent, then would make sense that customer engagement would go up by eight and a half percent. But the customer experience is. What develops that emotional connection with a company we talk about creating emotional Velcro between an employee and their employer, but you’re also in the business of creating emotional Velcro between the bank and the customer.
Nathan Rogge [00:06:53] I think the challenge in banking or finance and a lot of businesses might have this is most people don’t wake up in the morning and decide that they want to change their bank. In fact, I can think of about a million things I’d rather do rather than change my bank. It’s on the business owner. So once you’re at that spot one, you’re trying to figure out who do I want to have that relationship on a go forward? And how do I make sure that I’m working with the right company? And I think those engaged employees show that they are the right people to be working with. I also think, on the other hand, that once you come to bank with us, there is very little chance that you’re going to leave. Now, once again, I can’t 100 percent guarantee that on a transactional, I don’t know, real estate loan. But when it comes to the true relationship of where my deposits are and maybe where my line of credit is, things where I need to be working with the bank on a daily basis, that’s where we think we shine. And that’s, by the way, where we think those engaged employees are so important.
Don [00:07:49] So when when we measure engagement like we do with you year over year, there’s always a group of employees that fall into the category of either actively disengaged or somewhat disengaged. What is the danger of those employees in your mind? Why is it so important to know how many they are and where they are?
[00:08:06] I think it does help to understand that you do have these people in the organization and at least in generalities where they’re located. My particular concern is when there are customer facing. Just understanding that that will translate into a poor customer experience. And that’s going to affect our bottom line. I think one of the other challenges, particularly early on, was understanding that some of those most disengaged employees were also some in some key positions and had been at the bank for a while. Yes. And I think that was definitely an eye opener. And then, you know, to your point, that’s a challenge. You know, these aren’t people that you just walk in and go, you know, it’s not a good fit. Have a nice day. Yeah. This is really, you know, systemic to the organization. So obviously very happy with where our numbers have gone. But I think it’s that original identification or acknowledgement of, hey, we all have a problem. We think we’ve got it figured out. There’s a lot of work to be done. And I think that’s paid off first understanding that it exists and then getting it out in the open, talking to the staff on a very regular basis about how important engagement is to us and how we view it, and then letting them see how particularly how the surveys are used to their benefit. I think that makes a big difference.
Don [00:09:26] So, Nathan, I’ve come to know and appreciate you, as both a very relational person with a great sense of humor, while at the same time you’re very detailed. In the first time you saw the numbers, you weren’t entirely happy. So tell me about the experience of having it measured and what you had to do as a CEO. Because most CEOs in the first year they measure there is a sense of disappointment. But but how did you respond and deal with that going forward?
Nathan Rogge [00:09:56] Well, you’re right. I mean, this is all my blood, sweat and tears. And, you know, I’m very proud of the organization. And to see any sort of weakness or maybe places where I’m where I’m not being effective or could be improved. That’s always hard to to acknowledge. Actually, maybe the survey process is really good for somebody like me because it is so black and white. It’s tangible. You can sit there and look at a report. It’s not just well, the sense is or I feel, you know, you’re actually looking at some numbers. So that’s a great way to start. I think from our perspective, it became part of our strategic plan to actually list that as one of five or six components of what we’re working on towards a 2025 goal, which we had put out there at the time, which is now getting closer, as well as what we look at on a three year and a one year as to what we’re doing to improve the engagement scores and the overall engagement of the organization.
Don [00:11:02] So as as the leader of the organization, you know, have these reports, this data on what engagement looks like across the company, but also what engagement looks like in the micro culture that exists under every manager. What have you seen in terms of behavioral changes? I mean, this isn’t a bludgeon that we use on managers, but it’s supposed to actually create guidelines and some very specific actionable things that individual managers can take. What have you seen as the response from managers? Is this something that sits over their head as a threat or is it an asset?
Nathan Rogge [00:11:34] I think it’s probably all about presentation from our perspective. It’s absolutely a tool for. Managers and then it helps us not just identify where we have some weaknesses, but also then let’s work on what can improve those scores. Once again, what I really enjoy about having a scoring system, particularly you’re doing it year over year, is that you can also see some pretty significant improvements when you focus on things. So, yeah, the 20 odd questions and you look at your weakest questions and you sit down with that manager and say, look, here’s what we scored the lowest. What can we do to improve this? And by the way, at least in our organization, it doesn’t seem to be focused on or you don’t see it in just one manager’s case. It tends to be a lot broader. So then it’s a lot easier to be inclusive in the training and the conversations about it. What are we going to do? Maybe no different than, hey, we’re too slow at turning around loan documents. How are we going to improve that? We really kind of take it with much more of a systematic approach.
Don [00:12:37] Well, I have noticed you have kind of a continuous improvement mindset that the Bank of Southern California and under your leadership and and there’s no reason why engagement shouldn’t be viewed under the same lens.
Nathan Rogge [00:12:49] Absolutely. You know, these days it’s it’s it’s out there in the fact that it is so hard to hire new quality employees. And so to take the people that you already have within the organization and focus on them seems to make a lot more sense. As I said earlier, we’re also always acquiring. And so to be able to take some people from another organization sometimes, you know, not necessarily with them having much in the initial decision. And in kind of letting them know this is our process, this is what we aspire to be. And we literally sit down with the employees before and after the surveys to go over what we looked like. Now what where we’re going with this. And then here are our weaknesses as well as our strengths and how we’re going to try to address those. And I think that transparency is definitely paid off when it comes to the existing staff. And like you said, the new staff who go, wow, I’ve never seen anything like this. Yeah, definitely not the way it was at my bank. I’m going to give this a chance. And so we think we’ve had pretty high retention rates with the people that we’re focused on are that we want to come over. And if you see what those numbers overall, in spite of all the transition or the fact that we’re bringing in new employees that are our numbers continue to go up.
Don [00:14:08] Yeah. Your numbers have gone up very substantially year over year. It’s a very impressive track record. When you sit back, Nathan, and look at your relationship with E3 Solutions. We. We help you measure annually with the unique proprietary survey focused on drivers of behavior. We do training and we have this resource for managers to help them continue to grow the manager resource center outcome. What has this relationship with E3 Solutions allowed you to do as a leader that you don’t think you could have done without these resources?
Nathan Rogge [00:14:39] Yes. So before E3, we did have, I guess, what you would call an employee survey, or maybe it was a satisfaction survey. And it was kind of self created. And I think our hearts were in the right place when we were trying to do it. I think the challenges we really didn’t have a combination of a roadmap, something systematic. It may be able to be measured at a larger scale. And so E3 definitely has brought that ability to make this more of a guided process. You know, I would add to your your list of things that E3 offers is just some basic guidance. You know, talk me out of the trees when you’re seeing those initial numbers or as we’ve talked about, particularly the disengaged employees and how to be proactive in that process and not reactive. So I really think that that’s probably the key to that depicted the difference between how we were doing it as a management team, just trying to figure this out, being able to bring in E3 and say give us those tools, give us that survey, give us the training. That isn’t just being done at Bank of Southern California, but over dozens of other companies where you can turn around and say that’s what we’re finding elsewhere and leveraging that back into Bank of Southern California instead of us feeling like we’re just doing it on our own.
Don [00:15:56] Nathan, you report to a board. And how have you been able to use these annual surveys and your continued growth as a tool to signal to the board about the health, for example, of the leadership of the Bank of Southern California? Has it been useful in that way as well?
Nathan Rogge [00:16:15] You know, from the board’s perspective, there are a couple of things that we we leveraged the surveys and the numbers. One is to kind of prove that we’re on the right track when it comes to our acquisition model to prove that this isn’t going to come by this and that. But later on, where we’ve maybe accumulated a much larger organization and done it without careful planning. And this kind of proves, no, we’re on track. Look where the engagement is. Going, you know, we’re not deteriorating. The good stuff. We’re actually improving it. I also think to your point, you know, it shows that, you know, we have a plan and a process that as a management team, once again, we can kind of gage it or grade it on. Here’s where our numbers work. Here’s where we’re going. And I do think that positively reflects particularly on our executive team, but also gets the board some comfort that we’re on the right track.
Don [00:17:06] That’s very helpful. And for you as a CEO, looking at these numbers, does it signal to you that employees are more aligned with the organization and moving with you? Engagement isn’t just about more productive. It’s about. It is about alignment and some of these broader things where we want employees to engage with us at a deeper level. Are you seeing a change in those the quality of those relationships with employees and the company?
Nathan Rogge [00:17:32] You know, I think the biggest example of that. Yes, absolutely. Biggest example is probably how the organization as a whole, meaning people, be it in the branches, in marketing, working on the executive team, how they start to feed into the concept of how are we becoming a more engaged organization. This year we put out our first culture book and why I might have thrown that out into the hemisphere. I definitely didn’t create the book and it was a lot of fun to see how you taking different parts of the entire organization and feeding it into one document. Clearly it’s a document that lives on, but and we’ll be evolving over time. But the fact that somebody people really participated into it and how much fun they had in it and also what was in it, you know, it really starts to show you what your culture is from everybody else. Never mind what Nathan wants it to be. Right. Executive management wants it to be. Here’s what it really is. Yeah. And I love that process. So I think this has been a great journey for us on employee engagement and, you know, continues to be an important part of who we are.
Don [00:18:43] It’s understandable in this interview why you’re one of the most admired CEOs in San Diego and why the Bank of Southern California is one of the best places to work in the San Diego region. Again, thank you for joining us today. Nathan is the president and CEO of the Bank of Southern California. Thank you, Nathan.
Nathan Rogge [00:19:04] Thanks, Don.
Don [00:19:18] That’s it for today. And this concludes our series with industry leaders on the importance of employee engagement. I’m your host, Don Rheem. Thank you for listening and join us again next time for Thrive by Design.
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