« Demographics in the Americas and Their Effect on Migration and Prosperity | Main | Quote of the Day for Monday, March 27, 2006 »
March 26, 2006
While the Heat Gets Turned Up at J.P. Morgan, It's Sleepy Time Down South
One of several airplane reads I had recently was this quite interesting profile of J.P. Morgan’s Jamie Dimon in Fortune. Dimon has turned up some long-overdue heat in this behemoth:
Branch managers are ranked based on how much they raise both profit and revenues; the top group gets bonuses as high as $65,000, and the lowest quintile zip. Salespeople in the branches can do even better, collecting "points" for selling credit cards, mortgages, and other products. Last year the biggest point-gatherer pocketed a $145,000 bonus. If you don't make your quota, you're out.
Dimon is bringing that kind of rigor to every corner of the firm. In the old J.P. Morgan, big units combined their results, so it was difficult for top management to figure out which ones were really making money. "Strong businesses were subsidizing weak ones, but the numbers didn't jump out at you," says CFO Cavanagh. "With the results mashed together, it was easy for managers to hide."
The hiding game is over. Right after the merger, Dimon split J.P. Morgan into six major profit centers--investment banking, retail, and cards are the three biggest--with dozens of units that must report like separate companies. Each month, division heads send Dimon 50-page books packed with data, from the ratio of overhead to sales on every product to BlackBerry bills per employee. Then Dimon goes over the reports in grueling sessions that last hours.
I laughed out loud when I read the line about managers hiding. I was recently with a former senior SunTrust executive who told me that his former employer was getting "big enough for people to hide."
I also understand that SunTrust, in its recent merger with National Commerce, picked its surviving branch and area managers based on portfolio sizes, not growth rate.
SunTrust badly needs its own Jamie Dimon.
Trackback Pings
TrackBack URL for this entry:
http://www.heritagetidbits.com/cgi-bin/mt/mtb.cgi/1354
Comments
Post a comment
Thanks for signing in, . Now you can comment. (sign out)
(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)