When Cultures Collide

Tom Quinn had just finished giving a speech at Xavier University in Cincinnati, the home of Fifth Third Bank's headquarters, when an attendee asked him how he hit the jackpot with an assignment as the bank's South Florida market president in Naples.

Today, Naples does look like the jackpot to Quinn, a modest father of five who looks more football coach than banker. But the situation was less than idyllic when he arrived 18 months ago, walking into messy merger cleanup duty.

"It wasn't that long ago that people were saying, 'You need your head examined,'" Quinn says of his decision to take the Naples job.

When he arrived-11 months after Fifth Third's merger with home-grown First National Bank of Florida-employee turnover at the bank had reached 70 percent.

Although they acknowledge there is still work to be done, Quinn and his team have success to report: The turnover rate in South Florida's 50 locations has dropped below 30 percent. After slipping to No. 2 last year, Fifth Third has reclaimed the top spot in market share of deposits in Collier County. The bank has gained market share in Lee and Sarasota counties. And it is positioning itself to grow again, with as many as 100 new branches in South Florida in its strategic plan.

"Florida is really the bright spot in the whole franchise," says Morgan Keegan & Co. analyst Robert Patten.

In many ways, the challenges Quinn dealt with are growing more common in Southwest Florida since the residential real estate market dropped. Major employers face layoffs and turnover or transition in the corner office.

What lessons does Fifth Third have to share? How did Quinn lead his organization through a period of tumultuous change? What steps did he take to get control, move forward and rebuild?

"No one deserves all the credit," says Quinn. "You have to have a team and set your egos aside. The best idea's going to win."

Power of the people

Whether it's because of a merger, a major new initiative, the arrival of a shake-'em-up CEO or the threat of impending layoffs, people-employees, customers and vendors-don't like change, and they hate uncertainty. Uncertainty coupled with a leadership deficit and poor planning can propel a company into a death spiral.

Mergers bring instant uncertainty, and many get ugly. It's a truism that gives executive consultants like Vince Crew, of Naples-based REACH Development Services, job security. He wasn't involved with Fifth Third, but he's seen it before in his 10 years of advising executives of companies throughout the country.

"So much emphasis is put on doing the deal, and so little emphasis is put on making it work," Crew says. "The biggest thing that's overlooked by the big shots in the C suite is the people issues."

Merger architects often think if a deal creates wealth for shareholders, everything else will fall into place. But while a merger might look good on paper, a company can take a significant revenue hit when the people issues turn sour.

What happens if half of your top performers walk out the door because of how the merger is handled? The executives who don't ask that question may get a very rude awakening on the bottom line, says Crew.

A rocky start

That the Fifth Third Bancorp merger with Naples-based First National Bankshares of Florida would produce some tumultuous times seems obvious in hindsight. The marriage itself began with some unwelcome advances from Fifth Third to First National. Securities and Exchange Commission documents that describe the deal say First National founder Gary Tice told Fifth Third's dealmakers the bank wasn't for sale.

Ultimately, the $1.5 billion offer from Fifth Third was too sweet for First National's leadership to pass up.

Usually, the merger story goes like this: Big bank swallows little bank, and little bank management team gets kicked to the corner. But First National eclipsed national behemoth Fifth Third on the Florida stage; First National had 77 branches in Florida to Fifth Third's 16.

First National had merger baggage of its own. It had acquired Orlando-based Southern Community Bancorp only months before the Fifth Third deal. The January 2005 merger with Fifth Third resulted in more than 200 immediate layoffs, most in First National's back-office processing unit.

First National president Kevin Hale had been put in an unholy position at the head of Fifth Third's Florida affiliate, and high-profile shake-ups in the upper echelon played out over a series of months.

Fifth Third's longtime Florida president, Colleen Kvetko, whom U.S. Banker magazine the year before had named the Fifth Most Powerful Woman in Banking in the country, found herself answering to Hale.

Five months into the deal-on Fifth Third day, May 3-Kvetko left.

Eight months into the deal, nearly a dozen top brass from First National also left. The exodus included First National's former chief operating officer, chief financial officer and two in-house lawyers.

No doubt Fifth Third suffered a drain of intellectual capital because of fallout from the FNB merger, says Patten. The bank saw customers leave, too.

"They bought FNB and paid an exorbitant premium for it," Patten says.

The FNB deal, in addition to a bond scandal and a balance sheet restructuring by the home company, all contributed to Fifth Third's fall from grace in the past five years, says Patten, and the bank saw its stock plummet from trading in the $70s to the $30s.

"They paid a lot of money, had a lot of change in control and [First National executives] took the money and ran," Patten says of Fifth Third's acquisition of First National.

A restructuring plan split Fifth Third Florida into three affiliates in South Florida, Central Florida and Tampa Bay.

By November 2005, Hale left-of his own volition, he says-with a golden parachute. He is bound by a commitment to refrain from speaking publicly about the bank, and has a noncompete agreement that expires on Dec. 31.

Quinn, who had spent 13 years at Citibank, took over as Fifth Third's South Florida president.

Tough questions

Executives make their biggest mistakes in times of uncertainty when they dodge tough questions, Crew says.

If cutbacks loom, employees panic. Customers want to know who is going to take care of them. Vendors want to know if they'll retain existing contracts.

"The first thing that happens in the minds of the employees is 'Oh my God. Whose job is going to be lost?'" Crew says.

Executives must communicate quickly, directly, honestly and frequently to employees, customers and vendors. Those who don't tell the whole truth risk losing credibility.

They also must anticipate how their company's culture is going to change. Will decision making be top-down or bottom-up? Who will be responsible for discipline? How will they decide whose title will change from senior vice president to director?

Once decisions are made, he adds, effective leaders communicate "what different is, and what different looks like." They do it often, and that's what eventually gets staff, clients and vendors to buy in.

"Everybody has to say, 'Yes, this is a good deal because I know how this is going to affect me,'" Crew says. "They've been told up front. There's no 'Oh, by the way ...'"

The five practices

Fifth Third continued to lose key employees after Quinn arrived, before he had a chance to regain their confidence.

He began assembling his new team. He recruited Lisa Rexroat, a high-energy, fast-talking human resources dynamo, to come down from Fifth Third's Kentucky affiliate.

He also asked Kvetko to return. He says he would have been "an absolute fool" not to.

"Colleen is a part of Fifth Third," Rexroat chimes in.

The three have an easy and relaxed exchange as they sit around the massive cherry table in the bank's panoramic boardroom in Naples. They interrupt each other and praise each other. The camaraderie and candor has come from long hours, hard work and shared tears of frustration, says Quinn.

They faced the challenge of merging not two, but three separate banking cultures.

"There were people living the old FNB culture, people living the old Southern Community culture," Kvetko says.

"And people living the old Fifth Third culture," Quinn finishes the thought.

The culture clash became the stuff of water-cooler debate and insider gossip. Expatriates compared First National's generous employee perks and hands-on customer care espoused by founders Tice and Garrett Richter (Who can forget the fresh-baked cookies?) to Fifth Third's frugal, bottom-line, results-driven ethos.

Quinn's team had to create a totally new culture, and they had many debates over how the business should be run, he says, but at the end of the day, someone has to decide what stays and what goes.

"A true leader will inspire a shared vision," Quinn says.

It's a mantra straight out of Fifth Third South Florida's newly adopted leadership handbook, The Leadership Challenge, by James Kouzes and Barry Posner. Rexroat buys the bestseller for Fifth Third senior managers 25 copies at a time. It's required reading for VPs and above. She preaches the book's "Five Practices of Exemplary Leadership" with the zeal of a true believer.

To build a better bank, they had to build better managers who could engage employees and customers.