Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, April 1, 1993 TAG: 9304010074
SECTION: VIRGINIA PAGE: A1 EDITION: METRO
SOURCE: DANIEL HOWES STAFF WRITER
DATELINE: LENGTH: Long
EXPENSE SQUEEZE NOT SMALL CHANGE TO FIRST UNION
First Union Corp. is beginning to re-create Roanoke's Dominion Bankshares Corp. in its own image.Efficiency and expense control mark a new corporate culture that's got even Dominion's harshest critics longing for days when business trips to Washington didn't come out of their pockets.
True, Dominion's expense watch stiffened in recent years as the company's financial troubles mounted, sucking down millions to cover real estate messes in Northern Virginia.
But these folks from First Union - the Charlotte, N.C.-based bank that acquired Dominion last month - clearly mean business.
"I think you have to be that way," Benjamin Jenkins III, First Union Corp. of Virginia's president and chief operating officer, said in a recent interview. "Efficiency often doesn't come from huge chunks. It comes from watching this and that."
The new regime is determined to wring unnecessary expenses from its Virginia acquisition. No expense is too minor - "working lunches" for employees will not be reimbursed and only one local newspaper and two copies of The Wall Street Journal will be paid for in each city.
No perk goes unscrutinized - not company-paid club memberships, not cellular phones, not parking subsidies or car allowances.
Local leaders who stood to pull down $3,000 if they attended six meetings per year as local Dominion directors will see that income drop to $750, according to an internal company memorandum detailing the company's new expense policies.
"They're cutting back significantly on expense levels across the company," said a senior executive who plans to leave the company. "Some of it may be knee-jerk and might not be very helpful."
There are the executives summoned to one-hour meetings in Charlotte who spend three hours driving down and three hours driving back - in their own cars. Under the new policies, air fare between Roanoke and Charlotte is not reimbursable.
And there are the executives who spent a whole day driving to Washington, holding a short meeting and then returning to Roanoke. Air fare within First Union's Virginia/Maryland/Washington market is not reimbursable.
"They need to read a time-management primer," the executive said, insisting that he not be identified. "It's almost an indication that they don't value people's time very highly."
Not true, Jenkins insisted, using himself as an example: Getting to the airport, catching a short flight to Washington, renting a car and driving to First Union offices near Washington eats as much time as driving from Roanoke.
Dominion's initial culture shock came before First Union, before rumors that a merger or acquisition was imminent.
Spring of 1990 brought federal regulators and then bad news that Dominion's troubles in Northern Virginia were far worse than anyone - including the most senior executives - feared.
Before 1990, "Money was spent as a part of doing business," remembers a 36-year-old Dominion computer analyst who's scheduled to lose his job this fall. "When things got tight, those things" - training, travel, professional subscriptions - "were the first to go."
The continuing downward financial spiral then brought salary freezes and suspension of company contributions to employee savings plans, sure signs that expense control had become damage control.
A new culture began to emerge, current and former employees said. Cynicism began to color long-held loyalty to the company; the philosophical "contract" that Dominion workers thought they shared with their employers seemed to dissolve, replaced with a Darwinian survivalism.
In some ways, it's happening everywhere. Shocked by a recession that wouldn't seem to go away, American business has cut expenses, eliminated vacancies and revised job descriptions. First Union's austere business philosophy, it seems, dovetails perfectly with a business climate in which doing more with less seems commonplace.
"I don't know anyone here at the bank - or anywhere else - who doesn't want to work hard," the analyst said. "But you expect some reward in the end. I didn't mind being loyal to this company because I thought it would get me somewhere. Apparently not."
Now the boss is First Union, which made austerity and expense control part of its corporate mantra years before other banks realized the growth years were numbered. As early as 1987, Jenkins explained, First Union adopted an expense-conscious strategy because it was convinced the revenue growth of the late 1970s and '80s would not continue.
"I think we saw it clearly because we knew we were going to be acquiring banks," he said. "I don't think everyone saw the world changing then. Taking the long view, we started to work on expenses then."
And that's why First Union crafted a centralized acquisition strategy that would quickly merge an acquired bank's data processing, computer systems and marketing campaigns with the Charlotte bank. The Dominion acquisition was no different.
Dominion, for its part, pursued a so-called "decentralized" acquisition strategy during the '80s, often ensuring acquired banks they could maintain separate accounting systems, marketing campaigns and even bank names. Insiders say the decentralization contributed to Dominion's crippling problems.
For all the criticism leveled at senior Dominion management in recent months, one component of the company's culture still seems to hover above the fray: its commitment to civic affairs.
Be it a road race or a string quartet, Center in the Square or the United Way, Dominion continues to be recognized as a leading - if not the leading - corporate citizen in the Roanoke Valley.
So when Dominion Chairman Warner Dalhouse and First Union Chairman Edward Crutchfield announced in September that First Union would be acquiring Dominion, civic leaders wondered how the deal might effect corporate support for community causes.
Jenkins, a self-described United Way booster, said First Union will continue to sponsor Dominion's annual road race; will lend financial support to arts and cultural groups; will look for ways to support public education.
Already, First Union has donated $300,000 to the campaign to renovate Hotel Roanoke - even before the acquisition became official. Dominion assumed a leading role in a consortium of banks lending $6.5 million to the hotel and conference center project.
Jenkins dismissed persistent rumors that First Union managers will demand 12-hour days of employees more accustomed to working 40-hour weeks. "We don't judge people's performance by how many hours they work; we do judge people by their performance."
He also dismissed concerns voiced privately by some business leaders that lending decisions will not be made in Roanoke, where many have successful businesses and established reputations.
"Loan decisions will be made here," Jenkins said, emphatic. "For the vast majority . . . the decisions will be made right here in Roanoke or in the community someone works in or lives in. The idea that [a loan] goes to Charlotte - we can laugh at that and say it's just not true."