Double the Time, Double the Cost

Posted on August 2, 2014


I started in banking in 1982.  Back in those days, banks were going through a transition from the lending decisions and documentation being done in the local branch, to centralizing those functions in offsite loan centers.  The transition was painful for both staff and customers.

I was working with the late great Crocker Bank at the time.  When they established the loan center, they did so by having the branch managers select which lenders they sent to the loan center and which they kept in the branch.  The original center was staffed with the lenders that their managers decided not to keep on their teams.  Of course the job in the branch was substantially different as the account executives were responsible for business development and the lenders in the center were responsible for credit quality and compliance.

When I was first assigned to do consumer lending, I was in a branch that was not on the loan center.  That is to say, we were still making the decisions and doing the processing in the branch.  The lending staff consisted of the department manager and yours truly.  I was blessed with a department manager who was very knowledgeable and did not like to do anything himself.  Consequently, I learned a lot in a short amount of time.  We led our region that year with 11 million in new loans.[1]  The next year, I got a promotion to run my own department in another branch.  They beefed up the department in the branch I left to a team of six and did about 10 million.  However, at that point they were dealing with the loan center.

Meanwhile, I too had to deal with the loan center which slowed my processing time and my credit flexibility.  I once had a lender at the center tell me that we did not make the loan just because the customer qualified.  But I digress.  That year, the senior executives from the company did a road show wherein they had events where they spoke to and took questions from the front line officers of the bank.  The questions were written.  I asked about plans to improve service as the advent of the loan center had slowed service to our customers.  Mine was the first question read.  The senior executive responded that the loan centers had improved service to our customers.  I could only think of two interpretations, either a) you are intentionally telling us something you know not to be true or b) you are completely out of touch with the experience at the branch and customer level.

Crocker was later acquired by Wells Fargo in 1986.  At that point, we were in the middle of a refinance frenzy in that mortgage rates were below 10% for the first time in about 8 or 9 years.  Given the application load, it might take three weeks just for the initial credit decision.  Then there was the issue of the back up with the appraisers, title companies, and escrow.  Enter one Drew Tanzman[2] who took over as loan center manager and came up with the service level agreement (SLA).  The idea was that you would establish agreed upon time frames by which certain processes would be completed and you would not allow systems issues to keep you from delivering for your customers.  This not only greatly improved the customer service, but greatly reduced the adversarial relationship and improved the partnership between the branches and the loan center.  In the branch, we could commit to customers about when things would be completed.  In the loan center, as long as you were within SLA, the branch was not going to bother you for status updates.  I believe in service level agreements.

You might have previously read my post on The Remodel ( in which I lamented about the experience of going through a major remodel after 21 years in our home.  As we were going through the process, some friends at pickleball asked us if we were double the time and double the cost yet.  I had not known that was what to expect.  We ended up only about 150% of cost, but the time was more in months than had originally been projected in weeks.  I concluded that post by observing that for financial and sanity reasons, we had to wait on the master bath.

You guessed it.  We have finally come around to dealing with the master bath.  The projected time was 3 weeks.  At this writing, we have passed the five week mark.  I suspect we will again exceed double the time.  It is my supreme hope to never go through a remodel again, but if I should ever endure it again[3] I have a plan.  I will say to the contractor (as I have before), “Realistically, when will the job be done?”  When I get the answer I can say, “Let’s make a deal then.  For every day sooner you finish, I will pay you a 1% bonus, and for every day late, you give me a 1% discount.”  Then the contractor is motivated to get it done, and if he doesn’t, at least I am being compensated for continuing to have my living space disrupted.  I believe in service level agreements.  Under promise; over deliver.

When I was a bank regional manager, at one of our quarterly awards events, the division manager and I were talking with one of our junior personal bankers.  He shared that he had not let his new wife know that the event had run later than he had expected.  We both urged him to call.  Always call.  It’s a service level agreement.  Be there when you say you will.

I only needed one time to learn that lesson.  In the first year we were married, I had one evening that I was at happy hour with the boss and I did not call and showed up hours after expected.  Needless to say, Carol was quite upset with me.  Communicate.  Set the expectations.  Operate within the SLA.

If my last client is scheduled to finish at 6:30pm[4] and takes me 15 minutes to get home, I set the expectation that I will be there at 7pm.  If I get hung up for a few minutes, I still make it home as expected.  If Carol cooked, I don’t hold up dinner.  Set the expectations.  Under promise; over deliver.  Communicate.  Be there when you say you will.  Operate within the service level agreement.  This is one of the many ways to honor one’s partner.


[1] This was 1983 and did not include first mortgages, so that was a bunch.

[2] Sadly, Drew died earlier this year at 56.  I seemed to be saying that of far too many family members and friends lately.

[3] Sort of like families having more than one child even though I hear labor pains are excruciating.

[4] Which really means 6:20pm if I actually wrapped up sessions in 50 minutes like I should.