BankThink

Bank Leadership Must Be Earned, Not Announced

In the early 1970s I worked briefly in real estate development for a company that owned several Hilton Hotel franchises, among other properties. In reviewing Hilton's promotional information one year I found a quote that so impressed me I copied it and taped it to every desk that I occupied for the next 10 years.

To my best recollection, the quote read as follows: "Leadership cannot be seized by one or bestowed by another. It must be earned in the daily arena of competition."

I found the quote inspiring, since the company I was working with was quite small and we were competing against much larger and better-capitalized companies. As years passed and I moved on to other opportunities, I found the quote to be relevant to virtually every scenario where leadership is a key component of success.

Having now observed various types of successful and unsuccessful attempts at leadership I have revised that guidance to a much more basic formula, as follows: "If you need to tell somebody that you are a leader, you likely are not. It is only when you are either invited to lead, or are described by others as a leader, that you truly are one."

The rule applies to both individuals and companies. It is particularly relevant to the banking industry, since its leading institutions are not always the largest and its leading individuals on industry issues are likewise not necessarily from the largest institutions. The leading financial performers in the industry and the leaders in technology or product improvement come from banks of all sizes. The impact of strong leadership on the overall performance of financial institutions is well-documented.

In my judgement there are three important components to building and measuring leadership. The first is leadership style. It was my privilege to begin my banking career at the First National Bank of St. Paul. First St. Paul was a leader in every respect. It was the dominant bank in the city and in the then-First Bank System holding company. It led much of the redevelopment of the downtown St. Paul community. And its president and CEO, Philip Nason, was selected to lead the Reserve City Bankers Association, predecessor to the current Financial Services Roundtable. But the people running the bank were mostly taciturn and introverted. I admired their success but knew that their style of leadership was not one I could emulate. I left.

Less than a year later I was on the congressional staff of Rep. Bill Frenzel, R-Minn. Frenzel was an entirely different leader. He was on a first name basis with everyone — in direct contrast to his predecessor. He was inclusive, inclined to give subordinates as much latitude as they could manage and generous with his praise. As such, he attracted top talent to his staff and encouraged them to use the experience as a springboard to other opportunities. Many did just that. It was an environment where high achievers worked hard and relished the opportunity. It was also, conversely, an environment where mediocre performers rarely felt comfortable and often left. With Frenzel, we all shared in the many successes and shared equally in the few but inevitable stumbles. It was a style that I have tried to emulate for the balance of my management career.

The important lesson I learned from both St. Paul and Capitol Hill is that there is more than one successful management style. But the style must match the skills and temperament of the individual or institution.

The second key component of leadership is vision. The strongest leaders do not try to unite people behind themselves, but instead work to unite people behind a greater cause. There may be no better example than when President John Kennedy said in his inaugural address, "Ask not what your country can do for you — ask what you can do for your country." It inspired a generation. Two other great leaders, Franklin Delano Roosevelt and Margaret Thatcher, were philosophical opposites and still generate controversy, but they rallied their respective nations behind fundamental changes in government. They did not ask their citizens to follow them as individuals, but instead asked the nation to unite behind the causes they were leading. Contrast this approach to the occasions on which you have heard purported leaders say, essentially, "I would like to thank the people who supported me in my efforts." Comments like that draw attention away from the cause and to the individual.

The third component is measuring leadership success — the most obvious component of which is determining the extent to which shared objectives or goals are met. This can apply at an organization or a sub-unit of that organization. Another is the extent to which success (or failure) is shared with others in the organization. A criteria I use to evaluate the success of leaders is to measure the retention rate of key employees of an organization. If the good ones stay it speaks volumes about the quality of the leadership.

To repeat the important premise: a leader is only a leader when described by others as such.

Mark W. Olson is chairman of Treliant Risk Advisors LLC and can be reached at molson@treliant.com. He formerly has held positions as governor on the Federal Reserve Board, chairman of the Public Company Accounting Oversight Board, president of the American Bankers Association and bank CEO.

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