The residents of northern California got their first taste of Umpqua Bank last July when the ice-cream trucks rolled in. Only days earlier, the little-known Oregon community bank with the weird name had made headlines when it announced the acquisition of a local 27-branch bank. Now, here came Umpqua's advance guard: trucks filled with free ice-cream sandwiches.
Corny? Maybe. But as Ray Davis, Umpqua's CEO says, "It's the corny things that make the difference" when it comes to providing great customer service. Great service is something every bank claims to offer, of course — and almost never does. Employees helplessly sit on their hands when customers have a simple request, shunting them off to a manager, or worse, the company's 800-number.
The problem, as Davis sees it, is culture. At most banks, a cultural focus on efficiency, process, and controls often stands in the way of doing right by customers. At Umpqua, every element of the culture is focused on serving customers. It's what keeps Umpqua growing in the highly competitive retail banking sector. When Davis, a onetime CPA who spent years as a banking consultant, took the lead job at Umpqua 11 years ago, the Oregon-based bank had just six branches and $140 million in assets. Now it has 92 branches, stretching from Napa to Seattle, and $5 billion in assets.
Davis knows that establishing a culture starts at the top and demands relentless vigilance. "Maintaining a culture is like raising a teenager," he says. "You're constantly checking in. What are you doing? Where are you going? Who are you hanging out with?" It also means recruiting the right people and training them the right way. One of the driving forces behind Umpqua's unique environment is also one of Davis's most controversial creations: the universal associate program. In a typical bank, employees specialize in certain tasks. "How many times have you walked into a bank where there's someone sitting behind a desk, busy — doing something — and you're waiting in line for a half-hour and they won't even look up to make eye contact?" asks Davis. "The reason is because they can't help you. They're doing this job — they don't know that job."
Determined not to let that "it's not my job" philosophy infect their employees, Davis and Steve May, his EVP of "cultural enhancement," decided that every bank staffer should be trained in every task. So a teller, for example, can take a mortgage application, and a loan officer can let you into your safe-deposit box. "Now when a customer walks in, the only people there are people there to serve them," Davis says. After some initial grumbling, the system has made employees a lot happier. Umpqua's staff turnover is just over half the industry average. Customers notice the difference too. Rick Randol has been an Umpqua client for five years. "They've grown, but they still watch out for every customer," he says. "Whether I come in needing a $5,000 loan or just stand in line to make a deposit, they recognize me and are quick to help me out."
May says empowering the associates at Umpqua has had an unexpected result. "We've generally found that the associates are more prudent than executives like me," he says. "By the time a complaint gets to me, I'm more likely to say, 'Oh, sure, refund it all.' An associate is more likely to ask, 'What would it take to make you happy?' And maybe that's refunding 50%."
Davis and his managers know not to stand in the way when bank staffers come up with their own ways to coddle customers. Many branches keep dog bowls full of water just outside the door for clients with pets. At the bank's Pearl District branch in Portland, employees open up the lobby for community events. Recent programs include yoga lessons, movie nights, and a "stitch and bitch" knitting club that meets once a month. The branch even hosted a pet psychic. "At this point, our clients are used to seeing something different whenever they walk in the door," says Carmen Bergby, 28, an associate. "It's about having a good time and enjoying that you're coming to a bank." Davis encourages spontaneous demonstrations of outstanding customer service by giving each branch a special fund expressly for that purpose. Every associate also spends a day training with the Ritz-Carlton.
Davis also understood that he would get the culture he measured and rewarded. The problem: "How do you prove an intangible?" he asks. "Nice calls? No bad letters? A survey?" Davis enlisted May to design a software program to grade those intangibles. "Banks have ratios like 'return on assets' and 'return on equity' to show how they're doing," says Davis. "We call this our 'return on quality.' "
Umpqua measures ROQ for 29 different departments throughout the bank, including back-office services and marketing. The scores for each branch and department are published every month for all to see. "If we're not doing so well in a certain area, we can quickly fix it and do better the next month," says Bergby. ROQ scores also play a big role in how bonuses and incentives are distributed.
As Davis continues to expand his bank, he's counting on the culture to hold it all together. "Our culture is our most valuable asset," he says. "It's stronger today than when we started, and we will not let it get stretched." But stretching the culture is inevitable, says John Kotter, professor of leadership at Harvard Business School and coauthor of Corporate Culture and Performance. Especially when growth comes through acquisitions. Kotter points to once-great culture leaders such as Bank One, Albertsons, and Wal-Mart. "As you get big, the original stuff gets lost," he says. "The original culture disintegrates when you're constantly folding in new people." Davis vows not to let that happen. "Listen, this job is a hoot," he says. "As long as we don't run out of people who value service, we can grow to any size."
Lucas Conley is a Fast Company staff writer.
A version of this article appeared in the April 2005 issue of Fast Company magazine.