Four years ago, Jorge Gonzalez didn’t have to be told that economic factors were not conducive for banks to report good earnings. There were indicators everywhere: the economy was weak, the real estate market was weak, interest rates were down and regulatory costs were up.
While those uncontrollables made it challenging to reposition City National Bank of Florida, of which he was president then and later CEO, Gonzalez had a plan. And it worked. Last year, the bank had the best year in its history. Net income was $190.2 million, compared to $34.4 million for 2011. Revenue for 2012 was $190 million.
The success caught the eye of several suitors, and Banco de Credito e Inversiones of Chile in May purchased City National Bank from Bankia of Spain for $882.8 million, which was 1½ times its book value.
Gonzalez’s plan centered on having the right foundation in place to create the scalability and the proper infrastructure to support growth.
“You can’t just start to grow organizations,” he says. “So many times when we run across companies that have very good growth plans on the top line relative to how they are going to acquire new business, they haven’t necessarily thought through how they are going to be able to absorb and manage it once it is in the door.”
Gonzalez also issues a caveat. There is more to a plan than words on a piece of paper.
“You can have the best business plan in the world but if you don’t have the right people to execute the plan, you’re not going to get home. You’re not going to be able to get across the finish line.”
Here is how Gonzalez made sure the foundation of the organization, the backbone, the people and the technology were all in place and had the scalability to create a larger organization.
Build a rock-solid foundation
There is an undeniable benefit to having an organization’s foundation in place before successful growth can occur. Gonzalez envisioned a simple “if-then” approach.
“This allowed us to do to things,” he says. “No. 1, accelerate the growth because we were ready to take it on, and No. 2, navigate the less-than-easy landscape economically because the different ingredients were in place that were necessary to be able to execute our plan.”
When you are about to build the foundation, identify the empirical formulas.
“The foundation to any business is, No. 1, people,” he says. “In our business, I like to say that our money is not any greener. It is about having the right people in the right seats.
“So we spend a lot of time making sure that we have people who have the right skill sets, the right experience, and very importantly, are willing to operate within our culture.
“It is one thing to hire good people, but if they don’t fit into the organization’s culture, then ultimately you don’t have people performing at high levels.”
When repositioning a company, you need to have the strength and presence to lead you through some turnover.
“We had turnover of probably 50 percent of our employee base over the last four years as we’ve repositioned the company,” Gonzalez says. “But the 50 percent turnover was intentional. Sometimes the people that were in our organization had the right skill sets for the company at that period of time, but may not have had the right skill sets for the company that we were trying to build and the objectives that we are trying to reach three or four years later.
“It is just too important of a factor to not deal with.”
As for the “50 percenters” who made the grade, they need to understand how the culture has been redefined. The values need to be clearly defined and presented in a bottom-up approach.
“I wanted everybody to participate in trying to define and agree to what that culture should be,” Gonzalez says. “We made that a very critical component of the things that were in our plan that we needed to work on.”
The effort should be about defining the culture, having engagement, and everybody making that decision and sticking to it, he says.
“I think a lot of organizations do a good job of talking about core values. They do a good job about talking about culture but then in the execution of that, it is lost.”
Empower and measure
Empowerment is a big part of culture because people need to be empowered to take a sense of ownership of their respective businesses. Culture in many ways is the motivational quotient that may be the difference between business success and failure.
“The leader needs to be able to delegate the decision-making and the authority to the people who are executing the jobs day in and day out,” Gonzalez says. “Give them the ability to make decisions within certain parameters. Outside of those parameters, then we need to have a sit-down conversation. But they need to feel empowered to be able to go run the business.”
Another way to look at the parameters is to think of them as guardrails.
“We kind of set guardrails for ourselves,” he says. “In other words, we want to operate within these rails so we give people the leadership to say, ‘Hey, between these ranges, go do your thing.’”
It is essential to have measurable objectives that you want to accomplish over a period of time.
“I am a big believer in that if you don’t measure things, they typically don’t happen,” he says. “So that is also part of going back to culture. Each line of business has key performance indicators and metrics that we focus on because, again, if you can’t go back and assess or measure relative to what you set out to do, then how do you assess whether you are able to accomplish that or not?”
Write into your culture a goal of adaptability, about how important it is to be flexible.
“If you are not adapting, not changing, I think you are almost falling backward,” Gonzalez says. “Part of our core values is embracing change. We have to be able to adapt, and our plan can’t be so rigid that it doesn’t allow us to adapt with whatever uncontrollable wolves are out there.”
Much of the culture is really just about standard operating procedures.
“There is nothing I’m talking about here that is exotic in its execution,” Gonzalez says. “It is more about executing simple blocking and tackling techniques and how to operate a business.
“But sometimes people get lost in the complexities and forget about the basics. So focus on things that are really creative to the organization, things that really move the needle, and try to execute those to the best of your capability.”
Stress accountability
When accountability is discussed when talking about an organization, it also means employees being accountable to each other. Its value rivals that of family bonds.
“You are part of a team,” Gonzalez says. “If you are not doing your job, you are letting the company down but you are also letting down everybody else around you.”
Try to make sure people understand that their contribution to your plan is key to the success of everyone else around them.
“If they truly believe in the culture and that they are part of this big family, then they are letting the family down,” he says. “Your job is to create that accountability both from a leadership standpoint but also from a peer standpoint so that everybody feels there is a responsibility to the best of their capability.”
Accountability comes in many different forms. Gonzalez uses a lot of real-time coaching, assessing, and a lot of feedback.
“We take the opportunity when we see somebody doing something right to recognize them right away,” he says. “When we see somebody who needs help, we want to deal with that situation right away. I think sometimes there is a tendency to want to put that on your to-do list and unfortunately, you never get to that list.”
To make the feedback process as successful as it can be, it should be a continual process.
“It’s not just a once-a-year process whereby people sit down for 30 minutes and get their performance review and then go back to doing what they were doing,” Gonzalez says. “We try to make it an ongoing part of the management style over the organization.
“In other words, we want people to be given real-time assessments of how they are doing. And it’s not just the things that need improvement. It’s about reinforcing the correct behaviors and the results. We spend a lot of time on that.”
For the underperformers, you may either coach them up or coach them out, but always prepare for the unexpected.
“Make sure you always have a list of people that you are talking to in the marketplace that are potentially good hires for the organization. If you have an unexpected departure, you don’t want to just hire quickly,” Gonzalez says. “If you are not prepared with a list of people who you have been recruiting over a period of time, then you are probably more prone to make a quick decision that may not be the best one.”
How to reach: City National Bank of Florida, (800) 435-8839 or www.citynationalcm.com
Takeaways
Build a rock-solid foundation.
Empower and measure employees.
Stress accountability among workers and management.
The Gonzalez File
Jorge Gonzalez
President and CEO
City National Bank of Florida
Born: Miami, Fla.
Education: I got my bachelor’s degree from Florida International University in Miami in finance and international business and am a graduate of the Kenan-Flagler Business School Executive Leadership Training program at the University of North Carolina.
What was your first job and what did you learn from it?
My dad used to make custom kitchens for people and that was kind of a part-time job. The one thing that it taught me was to have a significant work ethic and the discipline to make sure that the things that have to be done are done. And the other thing was that my dad always taught me that you have to take care of your client. You have to make sure that when you deliver a kitchen that it is of the quality they expect it to be.
Who do you most admire in business?
I do read a lot of former GE CEO Jack Welch’s books. He has a very simple style of management which I can relate to. I like the things that he says, and I’m not sure how much of those, depending on the business, you can execute or not. But I really admire people who are entrepreneurs and take the risk to start a business based on an idea. The luxury of my business is that I get to meet so many different business owners and listen to their stories of how they started out of their garage or just ran across a business idea and now they have this $50 million or $100 million businesses. The entrepreneurial spirit and perseverance and the unwillingness to give up, and the willingness to take risks to me are characteristics that I find extremely recognizable.
What is the best business advice you have ever received?
No. 1 is don’t give up; persevere. That’s from my fathers, Jorge Gonzalez. I don’t think there is a substitute for hard work; the relentless desire to achieve something — that cannot be replaced. Going back to people, that’s somewhat in your DNA, in my opinion. I think you do you have that or you don’t. It’s very hard to instill. It can be done, but it doesn’t come easy. The other thing is always do the right thing, in other words, always take the high road. I think those are two important pieces of advice that I try to live by every day.
What is your definition of a business success?
I think so many times you measure success on your own terms, but ultimately I think the true definition of success is how your clients feel about what you are doing, and if they are sticking around. Sometimes we get too caught up in measuring our own success when really we should be asking our employees and our clients if we are being successful.
