by Dr. Paul S. Nadler
T
he Wall Street Journal was trying to find out what
had made the First National Bank of Boston fall
from grace. It had been the premier bank in New
England and one of the top banks in America by
every standard. Yet it entered a downward path that ended
with the bank being sold to its cross-town rival, Fleet. Not
too long before, this would have seemed like the tail
wagging the dog.
What had caused this decline? The Wall Street
Journal’s article on the question concluded: The first
downward step took place when the CEO stopped having
coffee with his top officers every morning and started
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having it alone in his office. In sum, he had given up his
most reliable source of finding out what was going on.
Similarly, when The Journal was reporting on the
troubles of the Continental Illinois National Bank of
Chicago, another premier institution that lost its way, it
revealed that the CEO had told reporters, “Spending time
with my vice presidents is a waste of my time.”
In both cases, lack of communication and failing to
find out what was going on were important reasons for the
banks’ demise. This is why so many acute CEOs and
department heads in financial institutions face the building
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THE SECURED LENDER MARCH/APRIL 2003 VOLUME 59 NUMBER 2
as they enter each day and lament, “I wish I really knew
what is going on in there.”
Reasons
Of course, this is by no means solely the fault of the CEO,
the section manager or the other individuals to whom
employees report. A conspiracy of silence often exists
about sensitive topics among staff members, under the ageold fear “the king will kill the messenger who brings the
bad news.” And CEOs and department managers generally
find that they can be “one of the boys” for years, but as
soon as they are elevated to a new job that makes former
peers report to them, communication dries up for the same
reason.
How can an officer find out what is really going on in
his or her department or institution? Here are some approaches used by top executives:
➤ Periodic breakfasts and lunches with small groups of
staff members chosen at random and unaccompanied
by intermediate-level officers for open discussion
with no fixed agenda. Top officers tell me they have
found that when the employees’ immediate superiors
are not in the room, many people will be far more
open.
One warning: the role of the leader at such
meetings is to listen, not just to gather people
and tell them what he thinks. The latter approach accomplishes nothing.
➤ Answer your own phone as often as possible.
Managers and CEOs learn a tremendous amount
about what is wrong with the organization when they
take every call they can that has been made to “the
president” or the head of their department and try to
find out what is triggering the call. This is not as
time-consuming as it might appear, they report. Most
people do not ask for the top person unless the call
really is important to the caller.
➤ Set up a suggestion box into which comments and
suggestions can be placed, anonymously, or not. Go
with employees’ wishes. But a suggestion box is of
value only if management follows up.
If the company has a periodic publication which
prints every suggestion, except those of a
personal nature or that involve a vendetta, and
then responds, the process will feed on itself
and lead to more useful suggestions. Such
responses should include an explanation of
what action was taken or else tell why the
organization could not execute the specific
suggestion. Employees must feel that someone
will listen and respect their ideas. Empowerment is the key to effective employees.
➤ Ask a young staff member to leave his or her job for
a day and serve as your driver on a business trip. A
day of one-on-one can lead to some very open
conversations about the organization or department
from the young employee’s standpoint.
➤ Conduct exit interviews with every employee leaving
the bank, whether the departure is on a voluntary
basis or whether the person has been laid off or fired.
Exit interviews with customers who remove their
business can be equally valuable, if they can be
arranged.
➤ Have members of the training program, if you have
one, rotate through various departments and then
submit a critique of what they see that might be
worthy of change.
➤ Ask board members to be the eyes and ears of the
bank through discussions about its practices with
friends and business associations and even through
informal visits to various departments.
➤ Appoint an ombudsman who receives anonymous
comments and complaints for transmission to
management.
➤ Include returnable suggestion forms in monthly
statements and reports to shareholders.
➤ Finally, the simple process of MBWA — “management by wandering around.” Informal walking
though various departments and talking to people
often leads to discovery of important information that
otherwise would never reach a top manager’s ears.
Dilemmas
Sometimes the process of learning what is happening can
create dilemmas. One employee might submit adverse
personal information on another, whether true or false, as
part of a vendetta or to gain revenge for some action in the
past. A good filter for carrying this type of communication
further is necessary.
(Continued on page 32)
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THE SECURED LENDER
One of the most intriguing communication problems
I have heard of was that of a president whose secretary
served as his confidential eyes and ears among the staff in
his bank, joining the employees in all informal discussions
and social activities and then relaying what she gleaned to
her boss. This worked fine until one day she reported that
two employees, each married to someone else, were having
an affair on bank property and during business hours. What
was he to do? If he confronted the perpetrators, everyone
would quickly surmise how he found out about the affair,
and his secretary would no longer be privy to bank goings
on. His decision: he ignored the situation to keep his
valuable source of information intact. He reasoned that it
was more important to continue finding out what was
happening in the overall bank than to resolve the private
case of these two persons.
Maybe in today’s more honest environment, if the
CEO met with his top staff and each department head met
with his or her staff periodically for the sole purpose of
discussing complaints and suggestions, the officers and
staff might be willing to take this occasion to discuss
similar issues that bothered them.
Upward communication of ideas must be developed.
There is nothing worse than managers who feel they know
everything important that is going on in the bank and that a
program of gleaning ideas from “the front” and responding
to them is an unnecessary use of their time. ▲
Dr. Paul S. Nadler is professor of
finance at the Graduate School of
Management, Rutgers University,
Newark, NJ. He is a contributing editor
to THE SECURED LENDER.
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THE SECURED LENDER MARCH/APRIL 2003 VOLUME 59 NUMBER 2