Retooling The Board

American business is rethinking everything, it seems – marketing, distribution, pricing, inventory control, customer service. You name it and it`s changing dramatically. Much of the change is in response to the irresistible force of the Web. And if our bank boards remain an immovable object when faced with this irresistible force, we all may be in a heap of trouble. Chances are, your bank board is doing pretty much the same things your directors have been doing forever, ratifying decisions patiently explained by your managers, reviewing problem loans, talking about whether to add a branch or a new ATM machine. Well, guys (and nine out of 10 of you still are guys, which in itself says a little something, doesn`t it?), take a look at what the boards of Internet companies are doing today. They number six people or less, for the most part, even the boards of some very large companies. That`s because Internet companies recognize the difficulty of asssembling large groups quickly, just as they recognize the need for frequent, short, ad hoc meetings. They spend most of their time designing the processes their companies use for sales, engineering, and marketing, so that the managers can focus on scaling the business. (In another time, this would read, the directors set the strategy, the managers sell the product.) They participate in brainstorming, sometimes guiding management to consultants and outside experts who can be helpful, often making high-level introductions themselves, and occasionally even negotiating strategic alliances. They get involved in hiring, seeing the formation of a skilled management team as being the single most critical element for building a great organization, and seeing team building to be every bit as much the role of the board as of its managers. They receive little or no cash compensation for their director duties, but tend to be well rewarded with options. Annual option awards are the rule rather than the exception, and the expectation is that annual option awards of 5,000 or 10,000 shares will translate into tenfold increases in value via capital gains. As a board, they tend to bring different talents, an Internet specialist, a marketing guru, an acquisitions type, but they tend also to share a worldview of their industry and of the stock market that allows them to move forward in a unified manner. Contrast that, if you will, with your bank board and your bank`s mission as you and others on your board see it. Who knows whether, in the long run, such boards will prove to be creatures of a soaring and seemingly never-ending bull market, or whether this is the way boards will look in the future, not only in tech companies, but in more traditional ones like banking as well.

Join OUr Community

Bank Director’s annual Bank Services Membership Program combines Bank Director’s extensive online library of director training materials, conferences, our quarterly publication, and access to FinXTech Connect.

Become a Member

Our commitment to those leaders who believe a strong board makes a strong bank never wavers.