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1997 Financial Impact Optimas Award ProfileBRFirst Tennessee National Corp

March 1, 1997
Do you know how much money your company saves when an employee takes the afternoon off to watch his daughter's soccer match? Or how much money it makes when a worker stays home with her newborn a few days a week? Can you see the wealth expand when an entire department decides not to work three days a month? First Tennessee National Corp. can.

These days, work/life issues are bottom-line issues. A major sign that Big Business as a whole takes the work/life issue seriously: BusinessWeek magazine, a publication targeting hard-line business people, conducted its first-ever rating of company work/family programs. It ranked First Tennessee Bank in the top 10 in the country, giving it an A—in the "strategy and programs" category and an A in the "employee rating" category.

The HR professionals at Memphis-based First Tennessee firm up their seemingly soft programs with hard numbers. They have proof that empowered employees, flexible programs and a little understanding do translate into higher productivity, lower turnover and a better all-around workforce. And that in turn translates into big money.

First Tennessee has proven that supervisors considered supportive of work/life balance by subordinates retain those employees twice as long as the bank average. That retention has meant better customer service—in turn retaining 7 percent more retail customers. The higher customer-retention rates helped the bank to a 55 percent profit gain of $106 million between 1994 and 1995. Says Linda Foster, vice president of the Midwest division of Work/Family Directions in Chicago: "First Tennessee has done what many companies fail to do... It has found the way to make work/life programs work and to demonstrate concretely, quantitatively, the impact of having these kinds of practices in place. [It] shows it in the pocketbook."

HR moves from rigid to realistic. Like many organizations, First Tennessee Bank had a sprinkling of employee initiatives in the '80s. Flexible benefits, EAPs and wellness programs supported employees.

Unfortunately, a lot of other policies didn't, a fact brought to light by a number of customer gripes. First Tennessee's customers said they wanted to see familiar faces when they walked into any of the bank's branches. They wanted relationships with the people who handled their money. Instead, they said, too often visits required a whole reintroduction to new employees—employees hired on when others left.

Why were employees leaving? First Tennessee had programs that demonstrated it valued its employees. What the HR department discovered was the company lacked the key ingredient to make these programs fly. It lacked flexibility in a big way. It was this same lack of flexibility, the company discovered in employee surveys and focus groups, that was most distressing to employees.

Mike Inkster, senior vice president and manager of quality and research, was on a '92 task force, originally called the parenting task force, which uncovered the problem. Initially assigned to see how employees could be more involved in their children's education, the task force realized employees' involvement was stifled by the fact they had no say in their schedules.

This stringency also thwarted employee empowerment and continuous-improvement programs. "We said to be successful at empowerment on the job, our employees had to feel they were empowered at home," says Inkster. "If they couldn't control or balance their work and family lives, then it was unlikely they were going to be able to make decisions for their customers—whether internal or external."

For instance, First Tennessee's vacation policy was a holdover from the '50s, forcing employees to take their vacations in two-week blocks. The attendance policy was even more rigid. Depending on an employee's length of service, missing more than six to eight days in a 12-month period meant the employee was fired—no exceptions.

In 1992, with the task force's encouragement, the company began to make changes. It began with a few quick hits. The chairman videotaped himself setting fire to the attendance policy. He told employees to head back to their offices and figure out how they were going to handle attendance from then on.

Human resources pulled itself completely out of the process, letting work groups design new policies with their managers. "We said, 'You can do this, but first and foremost, you've got to continue to serve the customer the best [you] can,'" says Bob Vezina, executive vice president of personnel. "'That's the goal. Within those parameters, figure out how you'll best do that and still maybe have some flexibility in your schedules.'"

First Tennessee's chairman at the time also played a large role in the culture change. He started having the task force's HR liaison, Pat Brown, now vice president and manager of personnel strategic issues, start reporting monthly to his executive counsel group, giving the issue more exposure and validity.

Brown says at the beginning, the chairman referred to the initiative as a women's issue or a child-care issue. The inclusion of three men on the initiative's task force, including Inkster, helped dispel that idea. Brown says the group talked with the chairman about the bank's "culture of closet fathers"—that many men had been forced to lie about meeting a client so they could attend their children's activities. That helped reinforce the idea that it was everyone's issue.

How First Tennessee made the leap. Once the company set up a special work/life program, Family Matters, and a special department to run it, headed by Brown, HR set out to ensure managers were taking the change seriously. In '93, Brown and her task force traveled from city to city for three months to train all of the company's 1,000 managers. At each stop, they educated 50 to 100 managers over 3 1/2 days, making the business case for employee-friendly flexibility.

To arm themselves against what Inkster describes as "a lot of doubting Thomases and Thomasinas," before heading out, the group conducted an anonymous survey of managers, asking such questions as whether they'd ever faked being sick to go to a child's event. The results were overwhelming. "We realized this was a much larger problem than anything we had ever thought about. But if we could conquer it, we'd really have something," says Inkster.

At the meeting, participants broke into groups of 10 to 15 and spent time letting the managers air their thoughts. To begin with, the managers would introduce themselves and each person would talk about a personal or family situation that had affected work. The stories often were painful to hear. One man talked about his little girl who had leukemia and only wanted her Dad to take her to her therapy sessions. He had been afraid he'd lose his job if he brought it up.

A woman talked about years before when she left her sick child at home alone and called every 15 minutes to check in. Another parent admitted dissolving aspirin in a baby's bottle to bring down a fever so day care would take the child. People who still had sick days left would often lie and say they were ill so they could stay home with children. "It seems like I cried every session," says Brown.

The confessions probably shouldn't be too surprising. In a survey by BusinessWeek and the Boston University Center on Work & Family of almost 8,000 employees in companies with established work/family programs, 42 percent of respondents said work had a negative impact on family life.

Brown, who is single and has no children, admits she herself had to overcome a little prejudice before she took on her new role. She said she may not have been as family-friendly as she should have been. But by the time the training started, she had realized that the Family Matters program included everyone. To illustrate the fact, she would share a story about a car wreck she had and how her co-workers pitched in for her for the six months she couldn't work.

The group also did role plays to work through various employee scenarios and concluded the training with a board game created by Boston-based Work/Family Directions that reinforced flexibility concepts. Winners received a bendable toy figure (get it?) and losers got dinosaurs.

Brown found that because so many managers had been trained to document everything, HR could use this trait in reinforcing the culture change: They'd have managers document their flexibility. "We allowed them to document what they were doing right, instead of what the employee was doing wrong," said Brown. "That gave them a great sense of comfort."

Part of documenting flexibility was demonstrating that the manager worked with the employee on his or her scheduling, because Brown discovered that if the employee participated in the decision making, even if the proposed schedule was denied, the employee accepted the decision better.

What First Tennessee's policy looks like in action. Five years after the bank rolled out its program, more than 60 percent of employees have used some sort of flexibility, whether it's working at home a few days a week, switching to permanent part-time schedules or juggling two hours in their week to make doctor's appointments or attend kid's school events. Even the current chairman, Ralph Horn, makes no bones about rescheduling a meeting so he can go to his daughter's play. "It's been an extreme transformation in what in terms of culture has been a very short amount of time," says Inkster.

One success story is the accounts-reconcilement department. The department has its busiest time at the beginning of each month, because companies the department serve want their accounts reconciled as soon as possible. But the group, overwhelmed by the sheer numbers, had been taking about eight days to do so.

The solution came when the entire department restructured its schedule, working 12-hour days at the beginning of each month in return for time off at the month's end. The new schedule, something that wouldn't have been possible under the old system, has allowed the group to reconcile all the books in four days—half the time it took before. Employees like the time off, and customers like the quick service. First Tennessee Bank has enjoyed a 50 percent leap in customer quality responses, and the department won the 1996 Payment Systems Excellence Award from the Southern Financial Exchange. The award recognizes leadership, creativity and efficiency results in payments.

Another success story is the company's Prime Time program, allowing any worker who has been at the bank one year to scale back to as few as 20 hours a week and still keep benefits. Although Brown says the majority of participants are mothers who've decided they want to be home more, the program is available to any employee. One woman on Brown's staff, for instance, reduced her hours so she could concentrate on the last semester in her undergraduate-degree program. About 100 people currently are classified as Prime Time employees; Brown says the program has saved an 85 percent turnover of people who would've left the bank otherwise.

Often though, it's flexibility on a small scale that characterizes the culture shift. Lethia Mann, vice president of community development, switched her schedule from 8 a.m. to 5 p.m. to 9 a.m. to 4 p.m. after the birth of her second child. The extra two hours makes a huge difference in dropping off and picking up her kids, a 7-year-old and a 3-year-old.

The schedule change has saved Mann 25 minutes in traffic each way, she estimates, and has saved her a lot of worry. "I was so stressed out by the time I got to work," she says of her old schedule. Every day Mann also had to pick up her daughter at school by 6 p.m. "It was 'Please let there not be an accident on the interstate.' It was tension the whole time."

Mann says she sat down with her manager and simply worked through the positives and negatives of her new schedule and—voila!—it's been 9 a.m. to 4 p.m. ever since. "The bank was very open to it," she says.

The overall plan to stave off employee turnover has been a huge success. Since the change to flexibility, the bank has saved more than $3 million in turnover costs alone. And branches with long-tenured employees tend to hold on to customers longer. Brown's team has figured this equation: If a branch's employees average two years in tenure, the customer-retention rate is generally 83 percent. If average tenure increases to four years, customer-retention rates increase to 92 percent. Industry pundits generally say the highest customer-retention rate possible is 97 percent, due to unavoidable loss of customers who move or die. First Tennessee's current customer-retention rate is 96 percent; the industry average is 87 percent.

But straight benefits also come into play when it comes to saving money. Through one employee survey, Brown realized the company lost a lot of workers when they stayed home with ill children. In 1992, the bank estimates it lost $132,000 in productivity because employees stayed home with sick kids a total of 1,500 workdays. To give headquarters' employees the option to come to work, Brown set up a sick-child care program, Sniffles 'n' Snuggles, with a local Memphis hospital. It costs $15 to leave a child there for up to 12 hours. First Tennessee subsidizes the hospital with approximately $8,000 a year. In 1995, the most recent available figure, the bank estimated it saved 150 workdays-the break-even point was 100.

BusinessWeek Brown says in the end, it's not the amount of programs that matter, but whether those programs do what they're supposed to do. "I've talked with companies that really have a much more exhaustive range of benefits than we do, like onsite child care and all these fabulous things. When you talk to their employees, they'll say they still don't feel there's flexibility there. To me, [those] programs are kind of like a Band-Aid® approach—you're not really solving the problem."

Brown lists onsite child care as one of those things she'd like to offer, but really can't justify. Another is paid paternity leave. The company already offers six months' unpaid leave for new fathers, and Brown isn't sure she'd really retain more men by offering the program, as much as she'd like to.

But Brown continues to reinforce the message that flexibility is for everyone, not just those with a spouse and kids. "We personally do not define what is 'family,'" she says. "If it's an issue that's going to affect your productivity, let's discuss it.... On the BusinessWeek survey, some of our single employees said they didn't think [the program] was for them. I took that very personally... But it's making sure that people know [the program] is for whatever issue is out there." The bank expects, for instance, to see a rise of workers using flexible scheduling to help with older relatives: A recent survey showed half of employees expect to take on elder-care responsibilities within five years.

Brown herself has used flex hours or worked at home over the years to accommodate helping an aunt through surgery, moving her mother to Memphis, assisting her best friend after a major car wreck and overseeing her home's reconstruction after a tree fell through it.

Ask for feedback from your HR "customers." Brown says the most important thing in making sure her programs are effective is to survey, then survey again. She gets in touch with customers to make sure the programs are improving service. But she also contacts employees, because she views them as an internal customer group, as consumers of employment who can choose to take their business elsewhere. "We live for feedback. The more the better," she says. "The joke is if two or more employees are together, I will survey them. People see me walk in; they get their pencils ready." Brown says she's continually shocked by the number of companies who don't ask their customers or their employees how the company is doing. It's just poor business, she says.

Brown's surveys have recently revealed that Family Matters has a 96 percent satisfaction rate. A key part of the program's success is LifeWorks. A service offered by Work/Family Directions, LifeWorks is a toll-free number employees can call for information on work/life management issues or referrals for dependent care, elder care and so on. The retention rate for bank employees who use LifeWorks is 93 percent compared to 78 percent for the rest of the company. That's a 900-employee difference, says Brown, which translates into a $4.5 million impact. This year, Brown plans to promote the service even more.

She has a few other items on her to-do list for this year. Turnover has dropped so much that the No. 1 reason for employees leaving the bank is, according to surveys, that employees want to stay home with their children full time.

That's a tough urge to combat, but Brown plans to call all the women who left in '96 to see if they truly want to be at-home moms. She suspects that because these were mainly lower-paid employees leaving, some women may be staying home because economically it made more sense than paying for day care for two or three kids. If that's the case, Brown may consider extra care subsidies to hold on to these women—a cheaper route than losing them.

Another survey revealed that 18 percent of the bank's managers aren't as family-friendly as they need to be. Retraining will be on their plates this year. That's not to say that overall, employees aren't quite pleased to be at the bank. In 1996, 98 percent surveyed said First Tennessee met or exceeded their expectations as an employer.

Customers are happy too: Nine out of 10 customers surveyed rated First Tennessee as the best bank in its markets; customer-retention rates are among the highest in the industry. "They've really made the connection between employee commitment, customer commitment and profitability," says Foster of Work/Family Directions. "They actually put a lot of credence in what employees think, what employees know and what they need to accommodate business goals. They saw the people side as absolutely imperative for them to reach their business goals. That's different than other companies."

In the end, HR at First Tennessee will always be looking for programs and offerings that make a difference to employees, customers—and the bottom line. "It's exciting to be in HR right now because there are so many programs you can develop that are really going to support the company strategy," says Vezina. "We know they'll [work], and we know we can measure it." As the HR folks at First Tennessee say, making these programs work is just a matter of being on "the cutting-edge of common sense."

Workforce, March 1997, Vol. 76, No. 3, pp. 68-74.