Pub. 6 2017 Issue 8

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 28 By Jeff Kelly, Vice President of Governance, Risk and Compliance at OnCourse Learning GETTING NEW BOARD MEMBERS ON BOARD T HESE DAYS, ONE OF THE MORE challenging roles to fill within a financial institution is a seat on the board of directors. While board members play a vital role in an institution’s overall governance as well as provide significant fiduciary guidance, the process of identifying, evaluating and providing onboarding and ongoing training for these individuals is often overlooked. With a board member’s personal reputation and assets on the line, it is more vital than ever to find community leaders who are not only well respected but have the wherewithal to guide the bank with integrity from a strategic perspective. To take a deep dive into the evaluation, acquisition and training of a board member, we asked the principles of banking training and coaching company, St. Meyer & Hubbard — Bob St. Meyer, president, and Jack Hubbard, chief experience officer — to share their insights gleaned from 40 years of banking and sales experience. Risk and Responsibilities The challenges banks face in getting board members up to speed on their director role became apparent in their discussion of some of the key responsibilities of boards for financial institutions. Hubbard, who is board member of a Chicago area community bank, suggests three main director duties involve fiduciary, advisory and strategic oversight. Fiduciary “Clearly, the fiduciary responsibility of boards of directors is critical,” Hubbard said. “The buck stops there.” Many potential board members are reluctant to join a bank board because the accompanying liability of taking on the role, according to Hubbard. He cited the significant legal consequence that can occur if board members fraudulently or unwittingly approve unsound loans or look the other way when something unseemly takes place. Advisory The advisory role can be especially challenging for individual board members who do not have a background in banking or who are not able to keep up with the ever-changing banking laws and regulations, according to Hubbard. How far a board member goes into the business of bankers is a legitimate concern. “Board members should not seek to run the bank day-to-day, but it is important to share their expertise and provide their perspective,” Hubbard said. “It isn’t possible to do without some working knowledge of the industry.” Strategy According to Hubbard, strategy is where diversity in experience is extremely important. “It is absolutely vital, not only that banks get people involved from other industries but from other disciplines that can help from a strategic perspective,” Hubbard said. But that does not always happen. “Often, banks bring someone onto the board because they do a lot of business with the bank or they are a big deal in the community,” Hubbard said. “That sounds good on the surface, but then they get into a full board or a committee meeting and they can’t contribute anything.” GettingThemUp to Speed Board members are no different than new bankers. When they are brought onto the team, they need to be properly and effectively onboarded and trained similarly to any new employee joining the bank. It’s the only way to make each productive. “You have brought on someone you believe has the requisite skills to help the bank progress,” St. Meyer said. “They may not know the jargon or the shorthand, and even reading the board reports might be a challenge.” How a new board member is introduced to the information they need to become a successful contributor at board meetings is important. When a new board member joins the bank, Hubbard suggests the following ideas to ease the onboarding process: • Pre-meeting reading materials: Provide some relevant and current information about the industry and high-level