ABA Banking Journal - February 2008 - (Page 46)

COMMUNITY BANK MANAGEMENT about board relations The ugly truth A lthough he was roles, dominant personalwearing a forced ities, egos, group factions, smile, the bank’s weak communications, CEO left the board meetmismatch of skills and ing with a number of negastyles, and an absence of a tive emotions running sense of direction. Most through his head: anger, alarming: Few executive disgust, and most of all, managers or board memfrustration. More than bers have any real clue anything, he wondered how to effectively solve how he could ever get these relationship chalthrough to the #*@x*! lenges. Sometimes they board on the really impordon’t even recognize the tant issues depth of the problem or Sound familiar? the importance and value Despite all that has tranin optimizing boardspired regarding boards of management relations. directors and executive Or they lack the power management teams since or authority to address Enron and WorldCom and the situation. Sarbanes-Oxley came to SOX isn’t the biggest problem, it’s the Four dynamic levels pass, the primary preoccuRelations between boards pation by executive maninterpersonal relationships. Here is a way to and management can be agement and board memmove your board from dysfunctional to optimal. characterized by one of bers continues to be with four different levels of the relationships between the two parties, rather than the structural or procedural issues interpersonal dynamics: minimizing, controlling, emerging, and typically associated with board governance. In fact, in our ongo- optimizing. At some institutions, these levels evolve subtly over ing strategy work with boards and managements, we often hear time; at others, the evolution is more purposeful and calculated. Minimizing — The party who possesses actual control over of increasing concerns about the troublesome relationships between them, and the corresponding costs to the organization, decision-making (traditionally the CEO in community instituplacing these challenges on par with traditional hot-button con- tions, but in other instances, the board) does only what is required or essential in working with the other. Interactions outcerns such as regulatory burdens and competitive pressures. The reality is that most problems with boards and manage- side of regular board meetings, such as planning retreats, are for ment are not about corporate governance “best practices.” show and the appeasement of the other party; no real substantive Rather, they are the challenges stemming from the personal change is usually forthcoming. The primary aim of the dominant interactions between them—micromanagement, ill-defined party is to avoid interactions with the other wherever possible. We still hear CEOs say, “I don’t get my board involved in By Joseph H. Cady, CMC, and William R. Soukup, PhD. strategy or planning.” In one instance a president reported that Cady is the managing partner of CS Consulting Group LLC, a his predecessor had intentionally kept his board of directors in San Diego-based strategy consultancy specializing in financial the dark regarding the technical components in critical oversight institutions. Soukup is a founding partner of the firm, and a areas such as risk management and financial controls. “They retired associate professor of management from the University of don’t need to know this,” was a common refrain. San Diego. jcady@CSConsultingGroup.com Minimizing by the CEO may encompass the entire board, a 46 FEBRUARY 2008/ABA BANKING JOURNAL www.ababj.com/subscribe.html ILLUSTRATION BY BARTON STABLER http://www.csconsultinggroup.com http://www.ababj.com/subscribe.html

Table of Contents Feed for the Digital Edition of ABA Banking Journal - February 2008

ABA Banking Journal - February 2008 Contents On ABABJ.COM: Have You Visited Our Brand-New Website? Editor's Column "That's Edutainment" Snapshot: Tier 1 Ratios Stable so Far 100th Anniversary: Then and Now ABA Resources ABA Chairman's Position Don't Despair Pass the Aspirin Cover Story: Socially Responsible Banking Profitably - Incoming America's Community Bankers Council Chairwoman, Dorothy Bridges Demonstrates the Way A True "Rags-to-Banker" Story Retail Banking: On the Money Hunt Community Bank Management: The Ugly Truth About Board Relations Does Core Really Matter? Security 2.0: Not Just a New Kettle of Phish A Personal Case of Mal-Serendipity DOD Credit Regs Demand Attention Mailbox Banker's Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - February 2008

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