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Limiting exposure of the community bank directorate March 2014
Debbie L. Meyers, Senior Consultant
Bank Strategies LLC

The community bank director takes on significant responsibilities upon election to the community bank board. Given those responsibilities, the director would be exposed to various legal and personal liability should the director not fulfill these responsibilities with the duty and care expected of the position. In carrying out the significant responsibilities expected of the position, the directorate of a community bank must exercise sound and objective judgment and follow good governance practices given the special protection accorded the industry in the form of government insurance for bank deposits. Directors must be especially diligent to ensure they thoroughly review materials, request explanations to understand transactions for which they are unfamiliar or unclear, seek expertise or guidance as necessary for unusual transactions, and exercise their independent judgment. It is important that community banks orient new board members regarding the scope of their responsibilities and the extent of liability associated with their position by providing training. The community bank should also provide ongoing and periodic training for all directors to remind them of their responsibilities as well as keep them abreast of regulatory and industry changes. All regulatory agencies provide comprehensive director training programs, many of them online, which can be utilized for this purpose.

To evidence that actions and decisions of the board are considered with the duty and care of the position, a best practice is to prepare adequate documentation of the discussions and decisions of the directorate, both at the board level and in committee minutes, on all key matters facing the directorate. While the organization does not need to overly document all decisions, additional care should be taken to document any discussions regarding issues critical to bank operations and strategy. Those decisions and discussions warranting additional documentation should include, but not be limited to, those transactions associated with affiliates or insiders, actions which could raise potential questions regarding conflicts of interest, or those which could raise future concerns regarding if the transaction is in the best interest of the bank. Although directors and officers liability insurance provides protection under many circumstances, the coverage does not extend to acts of dishonesty and those that are criminal, conflicts of interest issues, or transactions that are undertaken for personal gain.

This is part of a series of articles providing suggestions for improving the performance and effectiveness of the directorates of community banks. It was posted by Bankers’ Bank of the West with the author’s permission.

About Bank Strategies LLC

Through a menu of strategic planning, profit improvement, corporate governance and other services, Bank Strategies, LLC has consistently demonstrated the ability to generate superior performance and profitability for its client banks while allowing them to continue to operate in a safe and sound manner. The firm’s professionals are well-known and respected in the community banking sphere of bank attorneys, bank certified public accountants, bank trade association executives, and the press due to their quality of service, expertise and knowledge, and bank reputation. More information about this bank consulting firm is available at www.bankstrategiesllc.com.

How to Lead When Your Employees Don’t Have to Follow
by David M. Dye (posted by Bankers’ Bank of the West with the author’s permission)


How long can you hold your breath?

Better yet, unless it’s dangerous to your health, try it right now: hold your breath as long as you can.

I’ll wait…

How long did you make it? 30 seconds, one minute, maybe two? Before long, you couldn’t help yourself – you just had to breathe.

In fact, I could offer a huge incentive for you to hold your breath, but no matter how much money I offer, at some point you have no choice. Your body will force the issue.

The fundamental leadership truth you cannot ignore

There are only two things in the world that you have to do: breathe and eliminate waste. Every other behavior is a choice.

You choose how you show up to work each day: Will you give it your best or just occupy space and slide by? It’s a choice you make.

The fundamental leadership truth you cannot ignore is that if it’s a choice for you, it’s also a choice for your team. Everyone is a volunteer.

Show me the money?

You cannot force anyone to do anything.

“Wait a minute, David,” you might say, “if they don’t do their job they can be fired.”

You’re right of course, but that doesn’t change anything. They still have a choice about what they do and whether or not to remain on the team. Think about your own situation: to keep your job, there is a minimum effort you have to put in.

Oddly enough, I’ve never coached or worked with a single leader who wanted a team’s minimum effort. Of course not! As a leader you want motivated, committed, engaged teams. In short: teams that choose to give their best.

The path to engaged teams begins when you realize that everyone chooses:

  • If they will be a part of your team.
  • How they will show up.
  • How much effort they will give.
  • How well they will perform their role.

How to lead when they don’t have to follow

This fundamental truth — that everyone is a volunteer — will change your leadership forever. Every person on your team becomes a gift. Every action they take is a freely given gift. Every ounce of energy they expend on a project is a gift.

Your work as a leader shifts from force to invitation, from control to influence, from fear to gratitude. You won’t lead to wring out the worst, but to bring out the best.

Here are a few specific tools you can use to begin:

  • Connect the “what” to the “why.” Work without meaning is a form of punishment suitable to prison camps. Make sure your team knows the purpose behind their tasks, the value in the organization’s work, and how their work makes a difference. If the work has no meaning — eliminate it!
  • Ask “How can I help?” Your team needs support and training that only you can provide. Make sure they have the training, equipment, and political support they need to succeed. Don’t do their work for them, but help them grow and expand their ability to problem solve by asking critical thinking questions.
  • Apologize when you screw up. Apologizing doesn’t make you weak. It demonstrates courage, builds your credibility, and models taking responsibility when you drop the ball. That’s what you want from your staff, right?
  • Maintain standards and expectations. Volunteers, more than anyone, need to know that their time is valued. When you permit people to underperform without consequence, then you effectively tell everyone who chooses to do their best that they are wasting their time.
  • Say “thank you.” Do you like what your team did? Do they know it? Do you want more of it? Don’t wait to say “thank you.”

Your turn

If you think about your own performance, I’ll bet your best efforts were not the result of money or a fear of being fired.

Leave us a comment and let us know:

  • How have your leaders brought out the best in you?
  • How can you do the same for your team?

Everyone is a volunteer. Lead with gratitude!

David M. Dye, leadership speaker and business consultant, is the author of The Seven Things Your Team Needs to Hear You Say. He will deliver the luncheon keynote talk at the Bank Operations Conference(presented by Bankers’ Bank of the West) to be held in Denver on May 15. To learn more about David, or comment on this article, visit www.trailblazeinc.com.