Author Archive

8 September

ENGAGE YOUR BOARD

The top complaint that I hear from directors is that they don’t spend enough time in discussion. We prepare reports for them. We present to them. We talk at them. Regulators demand of them. But how much of your board meetings are spent in strategic discussion? How many true conversations are you having that don’t have to do with a regulatory required exercise or report?

This strategic planning season do yourself and your board a favor – engage.

Before: Have a third party interview your board one on one to get pure and rich feedback on what is important to them for the future of the bank and for the strategic direction of the institution.

During: Structure your planning meeting to stay 100% targeted on the strategic discussion needed to increase the performance of your institution.

After: EVERY meeting should have scheduled time to pull out the strategic plan and take a strategic initiative out for discussion. EVERY meeting.

Proper governance is using one’s talents and experience to advance the strategic direction of the bank. Make sure you are giving your directors the opportunity to fulfill the role expected of them.

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6 June

SIX SIGNS YOU HAVE A MEDIOCRE STRATEGIC PLAN

Mediocrity: a quality that is adequate or acceptable, but not very good. There are very few instances, if any, where mediocrity is tolerable, especially in our industry. Yet, so many strategic plans are mediocre. Not bad…but not very good.

No one chooses mediocrity, but many choose to accept it.

Now is the time to take a look at your strategic plan and ask, “Is my plan merely mediocre, or is it a plan that will lead to greatness?” Setting the strategic direction of your bank must be nothing short of spectacular.

As a board, it’s your responsibility to set the overall direction. Without a clear, compelling, and specific vision of the future, captured in your strategic plan, executives and staff may “make it up as they go.” Not for lack of competence, but for lack of clarity. High-performance banking isn’t improv. Strong performance flows from actionable scripting.

For over 16 years, I have been in bank boardrooms and served as a strategic facilitator. During that time, hundreds of passive, pieced-together plans have come across my desk. Here are the six guaranteed signs of a mediocre strategic plan:

1. The plan fails to capture a tangible strategic path for the bank.
2. The plan does not clearly and concisely answer the question: “How will we maintain and expand profitability in the future?”
3. The plan fails to address the competitive forces beyond your immediate competition.
4. The plan doesn’t focus on relevant strategies…answering the “why.”
5. The plan is short-term in nature and fails to account for the long-term implications.
6. The plan fails to articulate clear benchmarks, deadlines and responsibilities.

The strategic plan should be the actionable battle plan, created with direction from the board, insight into execution from the executive team, and with clear, specific tactics to be rolled out for each major strategy. Without it, you’ll just have another binder to collect dust on the boardroom bookshelf.

Think You Have a Mediocre Strategic Plan? Use This 7-Step Test to Find Out

Your plan is mediocre if:

1. The core strategic vision cannot be summarized in a single paragraph.
2. The core strategic vision cannot be articulated by all directors and senior management.
3. It does not clearly state the top initiatives that will be used to achieve the core strategic vision.
4. It does not firmly define what “profitability” means to the organization.
5. It does not place responsibility on management with specific assignments, timelines, and expectations.
6. It isn’t reviewed every quarter.
7. It does not concretely answer: “How do we get a new customer?” and “How do we keep that customer?”

If you find yourself in possession of a mediocre plan for the current year, you need to uncover and accept the lack of excellence where it exists in your plan. Then start planning your next cycle today, allowing for a full and rich process. Take mediocrity and transform it into something dynamic.

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20 April

INSIDE THE BOARDROOM OF TOP-PERFORMING INSTITUTIONS

A lot of emphasis and pressure has been placed on directors in the area of governance post-financial crisis. Responsibilities have grown exponentially, and the depth of knowledge needed can seem like a black hole some days. Directors can struggle. Are you paying attention?

There are many reasons why your board might be underperforming: They don’t have industry background, they have inadequate exposure to the information needed to govern fully, they have limited opportunities to strategize as the agenda is filled with regulator-driven items. But the most common reason a board underperforms is that they don’t know how.

Directorship is just like any other job: It requires guidelines, stated expectations, and concrete responsibilities and evaluation methods. How else will a director give the bank what is needed if we haven’t told them how? Directors need to know when to take charge, when to collaborate, and when to stay out of the way. For most, this is a developed skill, not an inborn talent. There is no school for directors (although I mean to change that), so it is our responsibility to provide the guidance and tools they need to excel at the job.

What is being taught? There is a difference between expected knowledge and reality. Are you gaining the information and skills needed to effectively govern for the future? Or are you just catching up with the concepts of the past? It is possible to effectively and productively govern an institution based on a fundamental understanding of the facets on the balance sheet. But if you cannot bridge the gap between strategic and tactical, you are learning the wrong things.

Directors are like bus drivers; they are responsible for getting you where you are supposed to be at the time you are supposed to be there, safe and sound. But as an industry, we lead from the back of the bus. The driver is often not given the destination, nor is clear on how to get there or in what timeframe. But regardless of what is done in the back of the bus, the driver is still ultimately responsible for the trip. How fair are we being to the institution when we don’t give our board what is needed to lead?

Board training begins before anyone even enters a board meeting. You have to have the right people in the right seats. A well-developed board succession plan should encompass the duties, responsibilities, and expectations for each director currently and in the future. Before a board is qualified to lead, they need to be clear on what is expected of them and willing to be evaluated and coached based on those expectations.

Board involvement is the key to long-term strategic success. Effective governance takes intellectual commitment, strategic preparation, active participation, and dedicated governance. Every one of these expectations is founded on information. You can’t govern effectively if you aren’t active in the board room. You can’t be active if you aren’t prepared. And you can’t be prepared without a commitment to gaining knowledge.

To gain the information and skills needed to effectively govern for the future, you need to move away from being educated on the concepts of the past. Focus on understanding the realities of today’s market and the tactics needed to continually move forward while building value.

Successful boards need to focus on the connection of the strategic and the tactical. This will identify any knowledge gaps that occur and provide a means to rectify them.

The Connections:

• Being able to cite and give the status on the identified strategic goals in the strategic plan. • Being able to make the connection between the current strategic plan and the long-term strategic goals of the organization. • Monitoring long-term strategic goals at the same time as short-term goals. • Maintaining the connection between the board agenda and the information needed to actively participate in each board meeting. • Connecting what information is needed and the format in which it needs to be delivered for maximum understanding. • Effectively holding management responsible without creating an erosion of that relationship. • Asking what management needs to achieve the tactical goals they have been charged with, and whether there is a strong understanding of the reason behind those needs. • Knowing what method will be used to continuously gain current information. • Connecting behavior in the board room to quality of decisions made and tactics executed.

Ultimately, the board is responsible for obtaining the strategic goals of the bank. They are responsible to ensure that a Board Succession Plan is written and that it includes concrete statement of expectations for their role. Finally, they are responsible for self and group evaluation and completely open to the coaching that should follow when shortcomings are uncovered.

Michelle Gula has been a board advocate for over 16 years and works tirelessly at creating structures for excellence in the board room. High-performing institutions have high performing governance. You can’t have one without the other. Discover how your board stacks up with the 19-Point High-Performance Board Evaluation — call (610) 737-2875.

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13 August

BEHIND THE BOARDROOM DOOR

The atmosphere, productivity and director’s interaction within the walls of the board room is seldom associated with succession planning. These are behavioral constructs I call Board Dynamics and they have become a leading indicator to the successful governance and performance of an institution. What happens and the manner in which it happens has a huge impact on the decisions that get made. I have seen far too many times that improper board dynamics produced decisions to the detriment of the institution’s profitability.

Succession planning is just as much for the incumbents as the successors. Board succession planning goes beyond setting the stage for the future – it is an incredible opportunity to tighten up the structure you currently have. Focusing on the expectations and rules of engagement for a board member now begets an organization and increasingly powerful board that sets the standard for recruiting new directors.

For example, times dictate the high involvement of the board from a regulatory perspective. In fact, never has there been so much pressure on a board’s performance. Credit issues, capital constraints and shrinking earnings are but a few of the problems that have faced the governance of your bank. For many, the pressure has lifted a bit but the heavy director involvement has not. As we look to conquer a new era in banking, board dynamics at your institution is critical. There is a fine line between productive and intrusive oversight.

So what is the balance at your bank?

Productive oversight matches the list of critical duties of a bank director, such as monitoring and protecting the long-term value for the shareholders, strategic planning and enterprise risk management. Intrusive oversight rears itself in loan decisions, personnel issues and tactical planning. The proper balance at the governance level is directly related to proper balance in board dynamics.

For a healthy and productive board of directors the balance between productive and intrusive oversight is critical. It has been difficult to measure, and thus, difficult to change. Creating the balance is achieved through difficult conversations and practices. That should result in a written statement of expectations, defined rules of engagement and yearly evaluations. This sequence is the foundation of your succession plan and is critical to a high-performing bank.

It’s not just about who is going to be the next director, it is about setting up a strong government structure going forward and being able to apply it correctly now.

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22 May

THE STARTLING DIFFERENCE IN THE BOARDROOM OF TOP-PERFORMING BANKS

A lot of emphasis and pressure has been placed on directors in the area of governance post-financial crisis. Responsibilities have grown exponentially, and the depth of knowledge needed can seem like a black hole some days. Directors can struggle. Are you paying attention?

There are many reasons why your board might be underperforming: They don’t have banking background, they have inadequate exposure to the information needed to govern fully, they have limited opportunities to strategize as the agenda is filled with regulator-driven items. But the most common reason a board underperforms is that they don’t know how.

Directorship is just like any other job: It requires guidelines, stated expectations, and concrete responsibilities and evaluation methods. How else will a director give the bank what is needed if we haven’t told them how?

Directors need to know when to take charge, when to collaborate, and when to stay out of the way. For most, this is not an inborn skill. There is no school for directors (although I mean to change that), so it is our responsibility to provide the guidance and tools they need to excel at the job.

What is being taught? There is a difference between expected knowledge and reality. Are you gaining the information and skills needed to effectively govern for the future? Or are you just catching up with the concepts of the past? It is possible to effectively and productively govern an institution based on a fundamental understanding of the facets on the balance sheet. But if you cannot bridge the gap between strategic and tactical, you are learning the wrong things.

Directors are like bus drivers; they are responsible for getting you where you are supposed to be at the time you are supposed to be there, safe and sound. But as an industry, we lead from the back of the bus. The driver is often not given the destination, nor is clear on how to get there or in what timeframe. But regardless of what is done in the back of the bus, the driver is still ultimately responsible for the trip. How fair are we being to the bank when we don’t give our board what is needed to lead?

Board training begins before anyone even enters a board meeting. You have to have the right people in the right seats. A well-developed board succession plan should encompass the duties, responsibilities, and expectations for each director currently and in the future. Before a board is qualified to lead, they need to be clear on what is expected of them and willing to be evaluated and coached based on those expectations.

Board involvement is the key to long-term strategic success. Effective governance takes intellectual commitment, strategic preparation, active participation, and dedicated governance. Every one of these expectations is founded on information. You can’t govern effectively if you aren’t active in the board room. You can’t be active if you aren’t prepared. And you can’t be prepared without a commitment to gaining knowledge.

To gain the information and skills needed to effectively govern for the future, you need to move away from being educated on the concepts of the past. Focus on understanding the realities of today’s market and the tactics needed to continually move forward while building value.

Successful boards need to focus on the connection of the strategic and the tactical. This will identify any knowledge gaps that occur and provide a means to rectify them.

The Connections:

• Being able to cite and give the status on the identified strategic goals in the strategic plan.
• Being able to make the connection between the current strategic plan and the long-term strategic goals of the organization.
• Monitoring long-term strategic goals at the same time as short-term goals.
• Maintaining the connection between the board agenda and the information needed to actively participate in each board meeting.
• Connecting what information is needed and the format in which it needs to be delivered for maximum understanding.
• Effectively holding management responsible without creating an erosion of that relationship.
• Asking what management needs to achieve the tactical goals they have been charged with, and whether there is a strong understanding of the reason behind those needs.
• Knowing what method will be used to continuously gain current information.
  • Connecting behavior in the board room to quality of decisions made and tactics executed.
  • Ultimately, the board is responsible for obtaining the strategic goals of the bank. They are responsible to ensure that a Board Succession Plan is written and that it includes concrete statement of expectations for their role. Finally, they are responsible for self and group evaluation and completely open to the coaching that should follow when shortcomings are uncovered.

    Read More
    6 March

    Matthew Chandter

    Teachings of the great explorer of truth, the master-builder of human happiness. No one rejects, dislikes, or avoids pleasure itself, because it is pleasure.
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