Our latest contest for the presidency of the Schmidlap National Bank asked why people become bank directors.
Donald P. Crivellone, the principal of facilitation and strategic planning at M&I Data Services in Milwaukee, gave a succinct answer:
"Why do folks become directors?:
"Prestige. This is important to our egos, even though in almost every case director candidates have reached a reasonable level of success. It is a great recognition from peers already on the board.
"Networking and marketing. Because one has reached a level of success, one knows that to continue success, expanding and solidifying relationships is critical.
"Community service is a factor, but this need is better met through involvement with Junior Achievement, educational institutions, the Salvation Army, the opera, etc.
"If compensation enters into the equation, both the organization and the director are truly misguided."
Another interesting response came from a young banker in South Carolina whose job involves liquidating commercial loans. He asked to remain anonymous, but he revealed his dream of serving on the board of a bank or other financial institution. His reason:
"About a week before reading your column I was asking myself: Why do I have this goal?
"My answer may sound funny:
"I want to keep management honest and to keep them from taking advantage of shareholders and depositors by preventing huge bonuses and bad loans. I want to be recognized as being a wise and sensible director who can steer the institution through difficult times.
"I have a vision of being a respected but unpopular director who knows that he helped shareholders to make a reasonable return on their investment, and who kept management from making bad loans and from following unsound business practices."
Terry A. Griffin of the Community Bankers Association of Illinois wrote:
"At CBAI, I am the marketing representative for the Chicago area, including the five collar counties. The position affords me the opportunity to be in the field, meeting primarily with bank presidents and CEOs of community banks, which CBAI represents exclusively.
"While my visit is normally to enroll new banks as members or to retain existing ones, our conversations are by no means limited to membership benefits, since most of my visits are really with old friends.
"Individuals who become directors of community banks are usually motivated to serve because of their investment in the bank and in the community. Most are at a place in life whereby they have the time to serve. Also, most are or have been prominent in the community, either as business leaders or professionals, and want to make a contribution.
"I believe many see service of this kind as prestigious, as indeed it is. From the bank's perspective, directors also serve an important role in promoting business opportunities for the bank."
This Schmidlap contest is still open. Why do you want to be a bank director? Or, better yet, why did you become one? Mr. Nadler, an American Banker contributing editor, is professor of finance at Rutgers University Graduate School of Management.
