Alan Sikora Presented his executive perspective, "Can a Business Focus and Grow?" in Equipment Leasing and Finance Magazine, published October 2016.
First American Equipment Finance has tripled in size to more than $1 billion in assets since becoming a wholly-owned subsidiary of City National Bank in 2012. This organic growth was supported by an evolved organizational design that we believe is more agile and better able to respond to the unique needs of customer segments.
The Problem with Org Charts
Most org charts used during the past century look similar. The familiar pyramid with a few rectangles at the top and many at the bottom can be found in almost any financial services business. Executives at the top have the authority, and the people closest to the clients, the ones that do the real work yet operate at the bottom of the pyramid, do not. Despite these shortcomings, this organizational design has created most successful enterprises the world has ever known.
But the real question is: will this design work in the future? The world is moving toward complete transparency between buyers and sellers. Customers demand (and deserve) a perfect customer experience. The pace of change will never again be as slow as it is today. It may be time to re-think whether your organizational design will be nimble and flexible enough to handle the enormous opportunities ahead – which will look nothing like the opportunities behind.
Silicon Valley Experiments
In recent years, several technology companies have experimented with new management concepts like Holocracy and Teal to rid their companies of the management pyramid and deal with the disconnect between structure and empowerment. Holocracy, for example, replaces traditional managers with self-managed “circles” of employees. Teal similarly focuses on self-management, suggesting that the next evolution of how people organize will be more like living organisms than a machine. Both of these concepts are far outside the traditional pyramid structure. Like many in financial services, we at First American are inspired by technology firms’ entrepreneurial spirit to try new things and learn, even if they fail.
At First American, we have studied these firms and their alternative management concepts to determine which aspects of their models to try. As a result, we have evolved into self-led, cross-functional business units – each serving a specific client industry. For us, that means that all marketing, sales, credit, operations and finance colleagues sit together in our open office environment, continuously collaborating to serve a single customer segment, such as hospitals or law firms.
The colleagues in each business unit are responsible for their own long-range strategic planning and the successful execution of that plan. Our vertical business units have begun to break down departmental silos and improve communication. Each day, together, they look for new innovative ways to serve customers as they work toward common goals.
Big, Important Roles
As a company that has grown rapidly in recent years, we have recognized that entrepreneurial talent prefers big roles at small companies over small roles at big companies. Wearing many hats can be fulfilling. Genuinely giving everyone a seat at the table results in passion and engagement. Since we were becoming larger, the time was right for us to re-think our design. Now, rather than thinking of someone as a financial analyst, we encourage that role to think of themselves as the CFO of their business unit. That, of course, requires a great deal of trust, but in our experience, people are up to the challenge. Everyone on the team has a voice and they are trusted to make a difference.
Change is Here
In an industry with countless changes and new opportunities ahead, agility and client-focus will be essential for survival. It is crucial that all aspects of our businesses are examined continuously, including how we are organized. The right organizational design will ensure that we, as an industry, are ready to respond quickly to change and thrive in the years ahead.
About the Author
Alan Sikora is the CEO of First American Equipment Finance. Alan holds an MBA from the University of Rochester’s Simon Graduate School of Business and is a Certified Leasing and Finance Professional. In the last year, First American has received recognition from ENTREPRENEUR magazine as a Top Company Culture and from FORTUNE magazine as one of the 20 Best Workplaces in Finance and Insurance, 50 Best Workplaces for Recent College Graduates, 50 Best Workplaces for Giving Back, and 100 Best Workplaces for Millennials. First American has also been recognized among the top 5 Best Places to Work in New York for the past five years. Alan joined First American in 2002.