Strong community banks are supported by strong, open lines of communication between their CEOs and boards.
Boards of directors offer banks a wealth of diverse information and experience. To access and leverage this expertise, CEOs must craft a robust communication approach between their teams and the board. CEOs must become exceptional translators of their board members’ unique and varied experience and knowledge.
As translators, they must demystify the language, data and approaches inherent in financial services, and connect that to their institution’s own goals and strategy. They must share subject matter knowledge in a way that resonates with directors, who can process and provide feedback, forming the basis for productive communication.
One area where exceptional translation from the CEO and strong, open communication between executives and management is paramount is deciding how a bank should grow. Institutions can grow their businesses through organic customer additions, or look for mergers with other organizations to create synergies and scale to amplify growth and revenue. The decision includes a number of considerations: the bank’s existing capabilities and strengths, the staff’s ability and experience in executing, and having access to experience and knowledge that can guide the bank from assessment to implementation to execution.
One key resource in these deliberations will be the board of directors. The board provides a bank with a deep and useful set of skills, experience and knowledge that is vital for its success. Directors provide expertise and knowledge in areas that benefit decision-making that executives won’t be able to get from internal or third-party sources.
Directors help senior management maintain their focus on long-term value creation and support good decision-making through a transparent and robust relationship. One of their primary responsibilities is providing informed and instructive support by posing questions designed to help executives explore all sides of an argument or position. This critical thinking, which reflects the experience and knowledge that directors bring to the position, is an important resource for the CEO.
How can bank leadership ensure that all of the experiences and wisdom that board members have is fully utilized? Through a comprehensive and interactive relationship model that the CEO builds between the bank and its directors.
This relationship model requires understanding on both sides. A board is a community made up of relationships, cultures, emotions and experiences. This creates, individually and collectively, an approach and understanding of concepts and language that may be surprisingly different from how a CEO or other stakeholder might approach any given topic or question. Directors must be able to synthesize information to develop a comprehensive understanding that supports the CEO with relevant perspective and useful advice.
The CEO’s ability to share subject matter knowledge so board members can understand and integrate it is the basis for productive communication. It is at the core of a dynamic and constructive board/bank relationship.
Industry subject matter that is specific to banking is best delivered in industry-neutral language and a familiar context, when possible. Ideas and perspectives are always more memorable and impactful when they’re supported by examples or experiences that resonate with the audience. This is vital since the CEO’s audience — the board — is made up of top performers from various industries who have their own way of thinking and associated language.
Great CEOs understand that being a director is an experience, not simply a checklist of responsibilities. Varied and thoughtful interaction between the board and the CEO, combined with ongoing education to enhance and improve directors’ ability to synthesize information, will go far in enhancing a positive board experience. For their part, directors should operate with a sense of engagement and stewardship, embodying a governance-based, long-term perspective expressed through their applied knowledge and experience-based counsel.
Community bank CEOs must be great translators to be effective leaders of their institutions. Outstanding and evocative translation ensures that the vast resources of director expertise can be fully utilized as a resource for the bank.