How the Board of Directors Can Convey Information to the Chief Executive

By Nadler, Paul S. | American Banker, January 21, 1985 | Go to article overview

How the Board of Directors Can Convey Information to the Chief Executive


Nadler, Paul S., American Banker


THE BASIC THEME that I have taken in several articles is that the board members can serve as the middlemen between the employees and the chief executive officer.

The CEO is seldom told all the truth, a result of the old fear that management will punish the bearer of the bad news.

Thus, it was suggested in this space that if board members were to have meetings with staff people on an informal basis and then relay the information gleaned to the CEO, this could help solve the problem of communication and give board members a better understanding of what is going on in the bank as well.

There has been considerable reaction to this suggestion.

Most representative of the responses of objection to my idea was the letter received from an old friend, David Melnicoff, who just switched from being executive vice president at PSFS, formerly known as the Philadelphia Savings Fund Society, to taking an appointment as visiting professor at Temple University.

Comments Mr. Melnicoff:

"I was appalled by your suggestion that board members should schedule periodic breakfasts or luncheons with various staff members and that board members should explain bank policies and options to staff members. What is the CEO doing? I'll tell you what he is doing: He is tearing his hair wondering if he is ever going to be able to tell his staff to do anything again.

"And what is the staff member doing? He is scared to death for fear that his CEO will think him disloyal and for fear that he cannot carry out the conflicting instructions which he has received from board members.

"There is nothing unique to banking in this problem. Ways have to be found to let the directors meet and to speak with and to appreciate the staff, but this must be done with the cooperation and under the direction of the CEO."

It is impossible to disagree with the thoughts expressed by Prof. Melnicoff's letter. But what can the CEO do to get better communications to find what is really going on in the bank?

Some have taken to MBWA -- Management by Wandering Around. Their feeling is that by walking around the bank and asking "What's new?" they may be able to learn of some developments that do not show up in formal staff meetings.

Others have developed their own networks of intelligence gatherers, although this is a dangerous procedure at times.

Sometimes, for example, the president's secretary will let him know what is being talked about in the lunchroom or at the water cooler, and he can learn as much by this procedure as by calling in department heads. …

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