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Bank of Montreal Opens Its Checkbook in the Name of Employee Development

October 28, 2005
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In 1995, Ryan McNally had a summer internship at Bank of Montreal Financial Group--more popularly known as BMO. And as far as he knew, that was going to be that. Fresh out of university with an undergraduate degree in history and drama, McNally hardly fit the recruiting profile of a full-time financial services employee.

    But the senior-level executives at BMO thought McNally was a keeper. Following four years of intensive training, including the completion of a custom MBA program, McNally is now the regional director of administration at BMO Harris Private Banking, a division of BMO Financial Group that caters specifically to high-net-worth clients.

    "It’s really noteworthy that the Bank of Montreal hired a summer student from an arts program and then went on to hire him full time because they saw enough potential," McNally says.

    Such potential would never have been realized, however, if not for BMO’s extensive investment in employee learning and development initiatives. McNally is just one of the more than 8,000 employees annually to receive training at the bank’s Institute for Learning, an education complex in suburban Scarborough, Ontario. Both within its walls and virtually, via a fiber-optic network, the institute offers more than 700 courses to more than 34,000 employees. These employees receive about six and a half days of training a year--a figure that has tripled since the institute opened in 1993.

    Ushering BMO workers along their career trajectories is a high-priced exercise. Over the past 10 years, BMO has invested more than $500 million (CDN) in employee training and development. That’s not to mention the $50 million (CDN) construction of the institute, a 13-acre complex encompassing 14 high-tech classrooms, 150 bedrooms to accommodate out-of-town students, a presentation hall seating 400, dining facilities and a gymnasium.

    It’s a sizable financial outlay on career development that is far from risk-free. In addition to its Canadian presence, BMO is continually bolstering its U.S. subsidiary, Harris Bank, through various acquisitions. These purchases require the retraining of new employees and tailoring course curricula to satisfy local regulations. For years now, Canada’s financial power brokers have been pressuring the government to allow national banks to merge, a development that could easily quash BMO’s educational endeavors if the company were to be swallowed up by a competitor. And there’s no guarantee that a recipient of BMO’s extensive training won’t march out the door into the arms of another financial institution.

    But the advantages of enrolling employees in custom-made courses far outweigh any threat of attrition, says Corey Jack, executive head of the Institute for Learning. That’s because unlike the "generic" executive education programs offered by universities, BMO’s courses "connect learning to the bank’s business strategies," he says. What’s more, by sending employees to the institute for training, BMO is helping to reinforce its corporate culture and engender a sense of community among co-workers.

"Real-time relevancy"
    BMO offers a wide range of courses. The bank’s primary programs include a four-year MBA program in financial services, operated in conjunction with Dalhousie School of Management and the Institute for Canadian Bankers. Managerial leadership training is designed to prepare new managers by enhancing their strategic capabilities. Risk management training, which is offered in partnership with York University’s Schulich School of Business, is intended to further develop seasoned risk managers. Project management programs are aimed at instilling change-management expertise.

    The programs offer BMO immediate benefits because they deal with real-world issues that the company faces. Institute attendees are often asked to draft solutions and strategies for existing BMO obstacles rather than tackle hypothetical scenarios.

    "We bring a real-time relevancy to all of the learning, as opposed to more generic, textbook theories," says Rose Patten, executive vice president of human resources and head of strategic management at BMO.

    For all its perks, though, Patten admits that there is "a slight premium" on creating a multimillion-dollar facility and an accompanying series of learning programs as opposed to simply hosting seminars or shipping employees off to conference centers. All of that makes BMO’s ability to justify the cost of its educational initiatives a critical component.

    To ensure maximum bang for its buck, BMO regularly conducts employee surveys to gather feedback on the quality and relevance of its training programs. Acquisition of skills and knowledge is tested throughout the duration of learning sessions. And upon graduating, employees must also pass a skills-testing exam to receive accreditation. Performance assessments conducted by managers help to gauge "the transfer of learning to the job itself," Patten says. BMO measures the overall business impact of its programs by comparing the year’s education spending to the bank’s own performance. And an annual employee survey unearths answers to questions such as "Was the training you received relevant to your job?"

    Another way BMO derives greater value from its learning initiatives is by integrating the behavioral characteristics of top performers into its programs. For example, BMO recently conducted a survey of its highest-ranking commercial account managers and asked them to describe their best work habits and key drivers for success. The responses were then incorporated into a "playbook" given to every employee within the account management sales force.

Cultural compatibility
    BMO’s acquisition activity has also had an impact on its training initiatives. In the past two years alone, BMO purchased Mercantile Bancorp in Hammond, Indiana, and Edville Bankcorp in Villa Park, Illinois.

    "One of the things that we have to watch very carefully is not to have just a ‘Made in Canada’ solution (to training)," says Patten, adding that BMO goes to great lengths to incorporate U.S.-specific rules and legislative matters into its educational programs. Almost 30 percent of BMO’s annual revenue flows from the United States.

    Easing that educational burden is a standard three-tier training strategy that aims to gradually acclimate new U.S. employees to BMO’s corporate culture. This model includes a brief introduction to BMO’s Harris Bank, training in the bank’s key management processes, product lines and branch routines, and a rundown of BMO’s pay scale, compensation structure and performance-review scheduling. By creating a cookie-cutter approach to getting new employees up to speed, Jack says that BMO is better equipped to rapidly absorb new entities, regardless of size.

    "We try to create learning that is scalable so that no matter how big or small the acquisition, these three tiers will work," says Jack, adding that U.S. employees are also eligible to attend the institute for additional training.

    Absorbing new employees into an organization is one thing, but a merger or acquisition with any one of Canada’s four other banks would represent an enormous feat. And such mergers are an issue that looms large for financial institutions there.

    Bank mergers currently aren’t permitted in Canada, but the nation’s federal government has long been working on a paper setting out the criteria needed for them. This much-anticipated 2006 review of financial services legislation won’t be available for several months, but that hasn’t stopped the country’s power brokers from contemplating changes they say would enable Canada’s banks to better compete on a global scale.

    While Patten admits that a bank merger would represent a "huge" undertaking in terms of training, she says that BMO hasn’t taken any steps to prepare for consolidation.

    "I don’t think doing anything different today for an eventual merger down the road is the best use of one’s time," she says. Nevertheless, Patten says that the bank’s history of U.S. acquisitions has helped it to be "more flexible and more accommodating of different cultures"--characteristics that could prove advantageous in the event of a merger.

    Just as Patten won’t speculate on a merger’s impact on BMO’s finely tuned training efforts, she won’t gamble on the company’s sizable investment in education and career development as a surefire way to keep employees with the company.

    Patten says that BMO prefers to focus its efforts on proven employee retention strategies such as the advancement of women and maintaining a diverse workforce. Nevertheless, such programs as the four-year MBA program have proved to be valuable tools. More than 90 percent of its grads stay with BMO. Just like Ryan McNally has.

Workforce Management, October 24, 2005, pp. 46-48 -- Subscribe Now!

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