Is your board an ‘asset’ or an ‘audience’?

Becki Drahota

As a director serving two boards, I can tell you that 2020 reinforced its no-star rating by the challenges it afforded leadership in banks large and small. In both cases, for me, dealing with substantive and emotional issues under significant time constraints made me grateful that both of my boards are strategically focused and functionally practical. But that’s not always the case. Some boards function as little more than an audience for management while others serve the institution as a true asset. Here’s how you can tell the difference.

Your board is an audience if your …

Directors spend 90 percent of the board meeting in silence. Management reports are important and necessary, but if your agenda is designed to just repeat what directors have already read in your board book, your bank is missing the collective wisdom, experience and strategic perspective your directors can and should provide.

Executive session means someone is getting fired. Executive sessions should not engender fear. Hold an executive session quarterly before the plenary session so if issues arise, they can be dealt with expeditiously. Don’t fret about content. I’ve been in many executive sessions that lasted 10 minutes and I can assure you if there’s no smoke, we directors have no desire to build a fire.

Your board is an asset if you …

Embrace diversity. Let’s start with women. According to the Federal Reserve, 12.5 percent of bank directors are women. What percent of your bank’s customers are women? Of the families you serve, what percent of them have women as your primary channel users? Their perspective is important and needs to be represented. Women are also more likely than men to ask questions, which can generate new ideas and open discussion.

Don’t manage the bank in the boardroom. Getting in the weeds is not a director’s job and your bank officers won’t appreciate it if they do. Here’s a good way to know if that’s happening: If you find yourself losing interest in a discussion, it’s probably too granular; if everyone’s engaged, the board is staying in its lane — strategy.

Use real leadership tools. Give me a monthly set of numbers and I’ll give you a blank stare. Put those numbers in context for me, and I can be useful. The bank I serve created a risk dashboard model that informs quickly and can be monitored and modified per the bank’s current appetite for accepting risk in defined areas. Ask yourself: Does the data you provide your directors sufficiently enable them to translate information into knowledge in real time?

Use the talent at the table. Use the talent that made a director desirable to make your enterprise better. One of my favorite activities is for board members to share highlights and trends from their companies and respective industries. It builds mutual respect and fosters positive team dynamics.

Make governance a priority. The same committees and processes of retrieving and communicating information that have worked in the past may be woefully — yes, I said woefully — inadequate to inform your directors in today’s fintech-pandemic-social unrest environment. Do you have a risk committee? Do you separate governance of compliance from audit? Questions like this need to be raised periodically to keep governance aligned with
priority issues and current needs.

On a personal note: It wasn’t until I attended my first director’s conference that I realized I was playing the ignorance is bliss card. Only after I was afforded the opportunity to more fully understand my role, the industry, and regulatory fence lines, was I able to contribute more value. Getting “conference smart” will allow your directors to have a role that creates an energizing symbiosis of leading and learning so they can be assets rather than onlookers for your bank.

 

Becki Drahota is CEO of Mills Marketing, vice chair of Bank Midwest, Spirit Lake, Iowa, and vice chair of the Buena Vista University Board of Trustees. Reach her at [email protected].

Looking for more insight from Becki Drahota on what bankers can learn from 2020? Join us on Tuesday, Nov. 10, for a webinar (learn more or register now) on what to do once you’ve got your COVID protocols managed. What are the most relevant ways to differentiate yourself in a crowded field of traditional and non-traditional competitors?