You may have seen a recently released video of a Senate Finance Committee hearing surfaced showing the Chairman of the Board of a large national bank being questioned about his company’s behavior regarding opening new accounts on behalf of their clients.
Anyone who sees this video is going to form their own opinion and I don’t have any need or reason to change it. What I do want to discuss is why it was handled as it was by the Chairman and why you can’t do that.
What you can’t do
The infuriating thing about the video is that the Chairman makes a few comments that give the impression that his company did no wrong, that he has no accountability for the whole thing (and nor do his managers), that he cannot provide guidance to the board about the nature of the company’s future actions. He asserts that the whole thing was about one percent of his employees, implying that it’s really not a problem at all. What makes it even more aggravating is that the value of the Chairman’s stock rose about $200 million during this episode – which means that the value of the company’s stock was misrepresented during this period.
Bottom line, while the camera was running, he washed his hands of the whole thing and of his possible future role in taking corrective action, much less punitive action against the senior managers involved.
The reason for his position is that anything he said during that questioning was likely to be used against him and the company. Whether he is a slimy cretin or not, he is an officer in the company and has a fiduciary obligation to protect the company. One might theorize that lying (if that’s what he was doing) isn’t a good way to do that, but I suspect he was advised well in advance about what he could and couldn’t say to avoid making things worse.
Unless you’re the CEO / Chair of the Board of a publicly traded company, you can’t do that.
What you have to do
If something bad like this happens, the worst things you can do are exactly what he did:
- Dodge questions.
- Give vague answers or non-answers.
- State that you have no responsibility, despite being the Chairman of the Board (or in your case, the owner)
- State that you have no obligation to lead your board to a decision about making management accountable.
- State that you cannot lead your board to a decision about making yourself accountable
- Decline to comment about your level of accountability.
This guy’s customers have a choice. They can get over it in some form, or they can eliminate this company from their lives by closing all of their accounts and banking elsewhere. Moving bank accounts is not easy. Between the regulations that require a bunch of paperwork (in most cases) and a visit to a local bank branch, and changing any electronic bill payments (or similar), it isn’t fun.
Your customers will likely have a much easier time moving to a competitor – if that is their choice. Your comments to any questions about whatever you’re dealing with are going to set the tone for their response and reaction.
When you do these things, you likely won’t be scrutinized by the Senate. In your case, your clients will likely be judge, jury and (hopefully not) executioner.
It was only one percent of our employees
One part of this hearing stuck out to me. The Chair said (paraphrased) “it was only one percent of our employees“, in a tone that implied that they were bad apples and he had no control or oversight over them. He said that despite the fact that there was a senior manager implementing the program that started all of this – and that senior manager worked for him. Management laid out the program these people worked under, created the bonus schedule for it, oversaw the program and made it expectations clear.
Whether one percent of your employees is 5000 people or five (or it’s just you), you don’t have the choice this guy made – you have to take accountability straight up – and dole it out to your team as well. When and if something like this happens, the responsibility to own up to it, take your licks, hand out a few and make changes to prevent future occurrences is on you. The rest of your business’ life depends on it.
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