Pub. 7 2019 Issue 3

11 The Community Banker 3 STEPS TO KEEPING YOUR DIRECTORS INFORMED AND ENGAGED By Angie Murdo, CPA, CFE, Shareholder Anderson ZurMuehlen E very industry faces a constant common challenge – how do you keep your board of direc- tors informed and engaged? Let’s get right down to it. The best way to keep your directors engaged is to make sure you have the right people on your board. Depending on the size and struc- ture of your bank, board roles can vary drastically. Several small Montana community banks have boards comprised almost solely of the owners and management. Others, however, have tackled the difficult task of bringing on external board members with different areas of expertise. Below, we break down the task of keeping directors both informed and engaged. Find the Right Board Members Candidates with different backgrounds and specialties may give in- sight and perspectives that board members in your industry may not have. If you have members who appear perfect on paper, but don't attend meetings or commit the time, they are not the right person for the job. Members need to devote time, stay engaged, be resolute, and have a thirst for knowledge and answers. Keeping in mind the strengths and weaknesses of the other members when selecting new board members is crucial in forming a successful board. Once you have the right members, it's paramount to keep them informed and engaged. Although seemingly a simple task, many organizations express frustration in keeping their board interested and active. One of the main roadblocks is communication. As in any organization, communication is the key to success. So why is it so often an organization's most substantial weakness? Choose the Right Form of Communication Communication is the subject of countless articles and books. It’s not a problem that has the same solution across all industries and or- ganizations. But, when we consider keeping board members informed and engaged, two specific areas are pertinent to focus on; time and attention. The attention spans of busy people are notoriously short, so it's essential to deliver your message with succinct information to the right people at the correct time. Failures to communicate often occur when we have too much work and not enough time on our hands. In busy times, it can be difficult to set our priorities straight. However, communicating with your board should never be something that gets put on the back burner. It's cru- cial to make the time to communicate with your board a priority, but what is the right way to do it? Include the Right Information What, when, and how often are the questions you need to consider when structuring communication with your board. One significant complaint we hear from board members is the overwhelming amount of information received for each meeting and the limited time to re- view it. Although there are numerous items bank boards are required to review, be sure to evaluate the board packet and confirm you aren't overloading it with unnecessary information. An excellent example of this is interest rate risk (IRR). Most banks use software to help calculate scenarios on their IRR. These reports are printed and given to their board quarterly. Some reporting modules are extensive and incredibly technical. Although these reports have essential information, after reading 50 pages, most will lose interest and focus. Instead, consider summarizing all of that data, and provide two pages rather than 50. Your board can now focus on the overarch- ing results in a simplified and easy to understand format, rather than having to comb through 50 pages of inputs and bank factors. This may not be the reality for every report, but giving detailed information on an annual basis for updated approval or scenario changes will help your board feel informed, without overloading them. The information then becomes more meaningful and increas- es the chance of the board members staying engaged through the discussion. They can accurately read and understand the data before the next board meeting. Comparatively, if you send the right message at the wrong time, it can lead to frustration and confusion. Consider the items that require board approval. If the board needs to approve something, especially if out of the ordinary, it's crucial to give time to review and digest the in- formation before the meeting. Waiting to provide critical information until the meeting may cause board members to feel “out of the loop” and could lead to them disengaging. If you make a habit of rushing members into important decisions, these members may start to think you want their vote of approval more than their advice and input – a fast way to lose coveted board members. Taking the time to consider and determine what the board requires to stay informed and engaged will help you develop the skills for growing a healthy board. The success of your organization depends on the health of its leadership. Caring for your board members will help to secure the future of your bank.