By G.R. Forehand
In his new book “Average Is Over,” Tyler Cowen makes the credible argument that the economic structure that created community banking is largely obsolete. Today, the future focus is on technology and entrepreneurship – and on the collaboration between the two.
How then is a CEO in today’s banking environment expected to marry the traditional business of banking with the leading-edge of the future economy? How does a CEO achieve high performance?
Before we look at the traits of a high-performance CEO, however, we should define a high-performance bank.
High performance has evolved over the past 25 years in banking, but never has the combination of financial performance measures of ROA, ROE, net interest margin and non-interest income been more critical. With the overdependence on fee income largely obsolete, thanks for increasing regulatory scrutiny on overdraft fees, banks are having to balance high performance among other streams of income.
Having defined a group of high-performance banks over a five-year period, an impressive 56 percent of their executives (president or CEO) returned a personal profile survey for analysis.
Personal Profile Factors
The personal profile system is a four-factor behavioral model which identifies and rates the intensity of four basic behaviors included in a sales and management environment. The model is published by Carlson Learning Co. and is based upon the work and writings of William Marston and John Geier.
The behaviors are defined as:
Dominance: Dominant behavior is a high-risk, task-oriented, independent behavior that operates best under crisis. It is driven by the bottom line, results-oriented and characterized by intense no-nonsense, let’s-get-it-done behavior.
It is often seen as not caring about human resources as long as the job gets accomplished, but in fact it is more often driven by high accountability expectations. It is motivated primarily by challenges and results.
This behavioral tendency seeks to meet its needs by controlling the environment through direct, forceful activity and often overcomes opposition in unfavorable or antagonistic situations.
Influence: Influential behavior is also a high-risk behavior, but it is relationship or people-oriented and operates best under favorable conditions. It is highly focused on people and their interactions in doing business. This behavior seeks to meet its needs by persuading others to work with it to accomplish results. It is often seen as very sales- and marketing-driven behavior.
This behavior avoids conflict or tends to downplay any negativity. Optimism is both its most powerful and destructive tool. It tends to see people in rose-colored glasses. However, this behavior brings people together in times of conflict and is able to facilitate change and growth.
Steadiness: Steadiness behavior is also a relationship-oriented behavior, but it is much lower risk. This behavior tends to meet its needs by cooperating with others in a steady, consistent, process-oriented manner to carry out respective tasks.
It is characterized by loyalty, honesty, hard work, security and stability. This behavior is slow to change and prefers to work in well-defined, predictable situations. It also works best in a supportive and favorable culture. Conflict is often avoided or denied in this behavioral trait.
Conscientiousness: This behavior was originally known as compliance or cautious behavior. This behavior is focused on quality and accuracy. It is often seen as perfectionist in nature. This tendency towards precision and accuracy exists even under unfavorable conditions.
It is low-risk behavior that works best when done independently, but it also likes to work cooperatively with others in a given task or project. This behavior is extremely detailed and analytical in nature.
Personal Profile Measures
The personal profile system ranks each of these behaviors in each individual on an intensity index ranging from 1 to 7. A segment score of 1 is the lowest possible score and a segment score of 7 is the highest possible score. A segment score of 4 is considered average. A score of 5 or higher would be considered a high behavioral trait and a score of 3 or lower would be considered a low behavioral trait in this survey.
What does this mean for CEOs today? Clearly leaders of any kind will fall into the “dominance” category, as those behavioral traits are much of what make a leader viable in any industry. Conscientiousness was the second-most noted high-scoring behavioral trait.
So as a board looking for a CEO to lead your bank into the future, look for the holy grail of the high D/high C personality, one that will lead forcefully but also collaboratively and with detailed attention to numbers and analytics. The future of your bank may depend on the behavioral traits exhibited by its executive leadership. ■
Geri Forehand is a certified professional consultant to management and is president and CEO of Forehand Strategy Group, LLC. Forehand Strategy Group is dedicated to the financial services industry, focusing on process improvement, risk management, strategic planning, profit improvement, process enhancement, culture enhancement and market analysis. Forehand can be reached at email@example.com.