Page 31 - Summer 2024 - 2.pub

FROM THE BOARD ROOM

Is Your Organization Still Relevant?

BY PHILIP K. SMITH and CHARLES PLUNKETT

There are probably hundreds of other
As we previously wrote in an ar cle at the beginning of the
examples we could give and this is by no
year, one of the themes we were hearing this year as it related to
means an exhaus ve list. But, if any or all
strategic planning was “Survive ll ’25!” As part of this regrouping and of these hit close to home for your
refocus on the organiza on itself, we believe it is important for organiza on, it might be me to engage in
organiza ons, including the Board of Directors and management, to some serious discussions about the
consider a shi in their thinking. While a be er focus on shareholder relevance of your organiza on.
value con nues to be a primary concern, we believe the organiza on’s
overarching obliga ons should shi slightly from an absolute singular As you look to cri cally assess whether Philip Smith is Chairman &
focus on increasing shareholder value to a more comprehensive focus your organiza on is maintaining relevance, CEO of Gerrish Smith Tuck,
on “stakeholder” value. you might even consider looking at various Consultants and Attorneys
aspects of your organiza on and honestly an ACB Associate Member.
The key cons tuents that make up your stakeholders s ll begin asking if it is me to take ac on to “pull You may connect with
primarily with a focus on stockholders and stockholder value. However, the trigger or pull the plug.” By this, we Philip at
in the current environment, an organiza on should inten onally mean it might be me to finally take that (901) 767-0900 or
supplement the focus on shareholder value by also focusing on value ac on you have always been thinking psmith@gerrish.com.
to customers, value to the organiza on’s communi es, and value to about taking, or it might be me to shut
the organiza on’s employees. Most organiza ons do inherently strive down something you have been doing that
for the crea on of value for each of these stakeholders, and we is a drain to the organiza on. That may
encourage organiza ons to be inten onal about developing specific mean finally pulling the trigger on ge ng
strategies to do so.
that incen ve compensa on plan in place
If the organiza on is providing value in each of these areas, then the to incent your management team. It may
organiza on is well-posi oned to be able to maintain its independence mean pulling the trigger to spend the
well into the future, provided that it is also focusing on one other money necessary to upgrade the IT
cri cal area, which is con nuing to strive to maintain organiza onal func ons across the bank and get your
relevance. In essence, the formula for success is that stakeholder value organiza on in a compe ve situa on
plus relevance equals independence. Therefore, we believe it is with the other banks in town.
appropriate that part of the strategic direc on of an organiza on On the other hand, it may be me for the
should be to address the ques on: “Is my organiza on maintaining board of directors or management to
relevance?” We suspect that for many organiza ons that ques on make the difficult decision to lead the
cannot fully be answered unless an addi onal ques on is asked: “How charge to pull the plug on those long-
do you know, or measure, if you are maintaining relevance in each of standing products and services that never Charles Plunkett is an
those areas?” Consider some of the “tests” that are outlined below to have and never will make a dime of money attorney with Gerrish Smith
help you determine if you are maintaining relevance. Some of these for the bank. It might be me to pull the Tuck, an ACB Associate
are intended to be a li le humorous, but we believe they make the plug on some ineffec ve management Member. You may connect
point. You might not be maintaining relevance if: with Charles at
members who are simply unable or (901) 767-0900 or
 Your bank s ll provides telephone banking, but does not offer unwilling to pursue a new strategic cplunkett@gerrish.com.
online account opening; direc on or who would be be er served
working somewhere else. It may be me to pull the plug on
 None of the markets in which you are located are experiencing unprofitable branch loca ons. If the future holds new growth
any actual growth; prospects in other markets, it may be me to deploy capital, resources
 You are building more branches, but you have not yet eliminated and personnel to more produc ve areas rather than allowing non-
Saturday lobby hours; performing areas to languish.
The chief focus for the organiza on is to be aware of these decision
 You s ll have a fax machine, but you do not have electronic points. By focusing on overall stakeholder value, you can more clearly
signature products;
see the need for ac on in these areas. The ques on is not whether
 You do not allow flexible work schedules or remote workers, but you feel relevant today, it’s whether you think you will be relevant in
five years, and if not, what do you need to do from a shareholder,
you do require es;
customer, community and employee standpoint to maintain relevance.
 You allow “casual Fridays,” but you do not provide standing desks; Now is a good me to begin assessing those areas.
 All of your directors were born before the first mobile phone was
introduced (1973);
 You offer unhealthy food and snacks to directors, but you have no
director succession plan.

A COMMUNITY BANKER | 31 | Summer 2024
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