Our latest contest received pessimistic responses.

The topic: What do you do when the boss promotes his son way above his qualifications and the young man starts pulling weight around the bank, badly hurting morale?

Most respondents said, in effect, "When 10 doctors tell you you are dead, lie down." They suggested that to other officers this is a "no win" situation, and they should start looking elsewhere for employment.

Two respondents, however, were more positive.

The first, from Philipp J. Walter Jr., executive vice president of Founders' Bank of Bryn Mawr, Pa., explains that packing your bags and leaving doesn't do anything to protect the bank and probably creates real economic problems for the people who elect to resign.

He therefore suggests instead:

In as nice a way as possible suggest to the offending Son of President that there can be a number of ways to solve problems and that maybe his is not the optimal solution. This probably will fail if the ego is as large as it appears to be.

Also, tell the CEO either in a carefully worded memo or, preferably, in a group session or through his secretary that there is a problem that eventually could cause the bank significant harm through steady deterioration of employee morale - this will work if the CEO is a good leader and places the bank's interests ahead of all others, including those of his son.

But our award as president for the day of the Schmidlap National Bank must go to Daniel Loundy of Devon Bank in Chicago.

Mr. Loundy's explanation of why he responded in the first place is self- evident:

"This is a particularly interesting situation to me, since I have just finished my second year as a non-officer 'management trainee' at a small bank in Chicago where my father is CEO (as was his father before him). I started out behind the teller line for a few weeks, and I have spent time in most every department in the bank. I am now apprenticed to a loan officer in the commercial loan department. I have an engineering degree and an MBA, but I had no banking experience when I started. The executive vice president was put in charge of my training program so that I wouldn't be seen as working directly for my father."

He then gave his suggestion:

"I think that senior management should inform the CEO of what is happening, and make sure it is taken care of. An attitude like that can only hurt everyone involved: the father, the son, and the bank. The CEO must be made to realize this, otherwise senior management isn't doing their job. The son probably shouldn't have been started out as an officer, though in that size bank, it's probably too late to change things now.

"To protect the bank and prevent further damage, the CEO should contact someone at his primary correspondent bank to try to arrange for his son to take part in a formal training program. This should hopefully take care of the lack of experience and maybe even the poor judgment. Not being the boss' son for an extended period of time may get rid of the tendency to abuse the position when he gets back. This should also allow the son to save face, as he won't be seen as having been demoted by his father."

***

While not related to our contest, the following letters from readers offer interesting observations from community bankers.

J. Knox McConnell, president of the First National Bank of Keystone, W. Va., writes:

"In 1994, we earned 6.47% on assets. Our board of directors, officers, and staff are bound and determined to have a return on assets of 10% for 1995. In order to do this, we are concentrating on a loan portfolio, unblemished in any way; plus the fact we are cutting costs where possible. In fact, we are now starting to pay our shareholders dividends twice a year instead of four times a year. As you know, postage has gone up, and although this a small savings, it is still a savings. We are doing everything possible to make certain that everything we do is profit- minded."

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