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Mar 31
2011
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LET'S GET RID OF THE 'BANK BULLY'Posted by Ed O'Leary in Talking Credit   |
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Bullies come in many shapes and sizes, but all are bad news for banks that would be well-run
In my years in banking in staff, line, and executive positions, I've observed a fair amount of bullying. It can be almost anywhere, if you really look for it-lenders dealing with borrowers; borrowers dealing with lenders; seniors cowing subordinates; lending managers dealing with loan review or auditors; high-powered managers dealing with auditors.
The presence or absence of strength of character and intestinal fortitude are on display when bullies are at their offending worst. Unhappily, the victims are often no match for the behaviors of the bullies, especially since so many of the bullies are bosses.
And the results can be beyond troubling when the matter at issue is bank credit.
When lenders face bullies
In my own experience, I recall two situations separated by geography and ten years in time, where a loan review professional was under severe pressure from executive management to alter his critical views on certain large credits.
The stakes were as consistent as they were considerable-a higher provision to the loan loss reserve driving current bank earnings deeper into the red and a continued trend of increasing criticized asset totals. It did not then occur to me that I was witnessing contests between professional colleagues where the core behavior of the protagonists was bullying.
In the first instance, the bank was considered by some to be at risk of foundering.
The loan review officer, a former examiner, stood his ground against withering pressure by the President and the Chief Financial Officer. I was not exactly wet behind the ears in those days, but do recall that the executive managers made compelling, if unsuccessful cases, and that the loan review officer was respectful but unmoved by entreaties.
My most vivid memory, though, was the way that loan review officer was badgered in front of a small group of his peers.
Nonetheless, he held his ground, and that impressed me and still does to this day.
(And I must confess that I had no personal liking for this person. He constantly pointed out our internal flaws and errors to his former examiner colleagues and as a result was seriously distrusted by his peers within the bank. Arguably it was part of his job-but he seemed to enjoy that part of it too much.)
The other case occurred more recently.
The bank was under heavy examiner criticism over practices and procedures but was not believed to be severely strained by problem asset totals of an acute or largely unfixable nature. The loan review officer was a young man, 35 or so, and had a variety of experiences in banking not all of them lending related. From a professional experience point of view, he seemed more vulnerable to being talked out of a position, or so I thought.
As the new CEO of the bank, I had to affirm the independence of Loan Review by sign and symbol or risk the wrath of the examiners and the internal auditor (no shrinking violet himself).
So there were a series of encounters I presided over but in which I did not prescribe the outcome. Rather, I viewed my role as that of an impartial arbitrator. The young loan review officer did not relent, though the pressure on him was as intense as any I can recall witnessing. He was in fact being bullied by the lenders, people used to having their own ways within the management structure of the bank.
Loan Review independence critical
The victory in both of these situations was the triumph of independence of one of the most valuable of all internal credit controls. Loan review was in fact independent and as I mentally reviewed these events years later, I am convinced that those who lost were the bullies and the organization and its shareholders were the big winners.
Why? Because the incumbents in the function were found to be personally and professionally credible. It's not that they were necessarily or absolutely correct in their judgments. Credit calls can often go either way, especially the tough ones where there is an honest difference of opinion. Time and again, Loan Review is seen as unfriendly to the views of the lender and skeptical to what he or she is being told. So the arguments, for and against a credit quality position is a healthy and necessary process.
What was on display during this process was overt bullying of two separate loan review officers and the processes of which these individuals were custodians. The discussions started out dignified enough, but deteriorated as they progressed. The loan reviewers and their institutions were the better for their actions in the long run, though the banks probably were not.
The bullies moved on to other occasions and other victims probably never realizing how negative and corrosive their behaviors actually were.
Workplace bullying corrodes the organization
Bullying is a much broader subject than simply the role it may play in the loan review process. It has very disturbing implications in the modern day workplace.
Most all the stereotypes about bullies are true: bullies are predominantly men; they are predominantly bosses; and their targets are predominantly women.
In a 2007 Zogby International poll of 7,740 adults sponsored by the Bullying Institute, 37% reported that they had experienced bullying behavior; 45% of the targets reported stress-related symptoms; and 62% indicated that employers ignored the problem.
About 40% of the targets remained silent about their treatment. And that isn't surprising when you consider that 72% of the time, bullies were bosses.
In the end, nearly two thirds of the victims chose to leave their employment which means that the bullies ultimately prevailed. What do you suppose the costs are of the turmoil, strife, absenteeism, turnover, and mental attitude in general?
They are huge and largely unrecorded.
Root causes of bullying
Careless and thoughtless behaviors lie at the heart of bullying. And perhaps some self-examination is order. ("If the shoe fits...)
Do we treat our subordinates, peers, and even customers in often disrespectful, irresponsible, and uncaring ways?
If and when we do that, we are tearing down our bank, while satisfying our personal urges for dominance, control, and personal gratification.
Bullying need not be personal, but personal inaction or inattention can abet it in others.
Bullies can infect a culture and each of us, especially managers, becomes quickly and effectively inured to it. Newcomers to any organization pick up on these things very quickly. They assimilate the tone of communication and the tolerated limits of what is said and how things are done.
They understand better in a day of observation than a week's worth of reading policy and procedures manuals.
Take a hard look around you
While bullies may not predominate in most organizations, those who enable them by silence probably do.
We tacitly condone inappropriate behaviors and then, by repetition, these behaviors institutionalize themselves to the serious detriment of the organization. It's much harder to reverse a company's culture that's been degraded by neglect and attitude than it is to correct those tendencies that will undermine an otherwise strong one.
OK, Ed, you think: What do I do next?
I suggest that as we repair our credit cultures as the economy improves, we be vigilant about rooting out those bullying behaviors or tendencies. These can undo all our good work in the areas of morale and effective internal controls.
It's hard work. You won't find solutions to these issues in the policies or procedures manuals, nor in the corporate mission or values statements.
* * *
The presence or absence of strength of character and intestinal fortitude are on display when bullies are at their offending worst. Unhappily, the victims are often no match for the behaviors of the bullies, especially since so many of the bullies are bosses.
And the results can be beyond troubling when the matter at issue is bank credit.
When lenders face bullies
In my own experience, I recall two situations separated by geography and ten years in time, where a loan review professional was under severe pressure from executive management to alter his critical views on certain large credits.
The stakes were as consistent as they were considerable-a higher provision to the loan loss reserve driving current bank earnings deeper into the red and a continued trend of increasing criticized asset totals. It did not then occur to me that I was witnessing contests between professional colleagues where the core behavior of the protagonists was bullying.
In the first instance, the bank was considered by some to be at risk of foundering.
The loan review officer, a former examiner, stood his ground against withering pressure by the President and the Chief Financial Officer. I was not exactly wet behind the ears in those days, but do recall that the executive managers made compelling, if unsuccessful cases, and that the loan review officer was respectful but unmoved by entreaties.
My most vivid memory, though, was the way that loan review officer was badgered in front of a small group of his peers.
Nonetheless, he held his ground, and that impressed me and still does to this day.
(And I must confess that I had no personal liking for this person. He constantly pointed out our internal flaws and errors to his former examiner colleagues and as a result was seriously distrusted by his peers within the bank. Arguably it was part of his job-but he seemed to enjoy that part of it too much.)
The other case occurred more recently.
The bank was under heavy examiner criticism over practices and procedures but was not believed to be severely strained by problem asset totals of an acute or largely unfixable nature. The loan review officer was a young man, 35 or so, and had a variety of experiences in banking not all of them lending related. From a professional experience point of view, he seemed more vulnerable to being talked out of a position, or so I thought.
As the new CEO of the bank, I had to affirm the independence of Loan Review by sign and symbol or risk the wrath of the examiners and the internal auditor (no shrinking violet himself).
So there were a series of encounters I presided over but in which I did not prescribe the outcome. Rather, I viewed my role as that of an impartial arbitrator. The young loan review officer did not relent, though the pressure on him was as intense as any I can recall witnessing. He was in fact being bullied by the lenders, people used to having their own ways within the management structure of the bank.
Loan Review independence critical
The victory in both of these situations was the triumph of independence of one of the most valuable of all internal credit controls. Loan review was in fact independent and as I mentally reviewed these events years later, I am convinced that those who lost were the bullies and the organization and its shareholders were the big winners.
Why? Because the incumbents in the function were found to be personally and professionally credible. It's not that they were necessarily or absolutely correct in their judgments. Credit calls can often go either way, especially the tough ones where there is an honest difference of opinion. Time and again, Loan Review is seen as unfriendly to the views of the lender and skeptical to what he or she is being told. So the arguments, for and against a credit quality position is a healthy and necessary process.
What was on display during this process was overt bullying of two separate loan review officers and the processes of which these individuals were custodians. The discussions started out dignified enough, but deteriorated as they progressed. The loan reviewers and their institutions were the better for their actions in the long run, though the banks probably were not.
The bullies moved on to other occasions and other victims probably never realizing how negative and corrosive their behaviors actually were.
Workplace bullying corrodes the organization
Bullying is a much broader subject than simply the role it may play in the loan review process. It has very disturbing implications in the modern day workplace.
Most all the stereotypes about bullies are true: bullies are predominantly men; they are predominantly bosses; and their targets are predominantly women.
In a 2007 Zogby International poll of 7,740 adults sponsored by the Bullying Institute, 37% reported that they had experienced bullying behavior; 45% of the targets reported stress-related symptoms; and 62% indicated that employers ignored the problem.
About 40% of the targets remained silent about their treatment. And that isn't surprising when you consider that 72% of the time, bullies were bosses.
In the end, nearly two thirds of the victims chose to leave their employment which means that the bullies ultimately prevailed. What do you suppose the costs are of the turmoil, strife, absenteeism, turnover, and mental attitude in general?
They are huge and largely unrecorded.
Root causes of bullying
Careless and thoughtless behaviors lie at the heart of bullying. And perhaps some self-examination is order. ("If the shoe fits...)
Do we treat our subordinates, peers, and even customers in often disrespectful, irresponsible, and uncaring ways?
If and when we do that, we are tearing down our bank, while satisfying our personal urges for dominance, control, and personal gratification.
Bullying need not be personal, but personal inaction or inattention can abet it in others.
Bullies can infect a culture and each of us, especially managers, becomes quickly and effectively inured to it. Newcomers to any organization pick up on these things very quickly. They assimilate the tone of communication and the tolerated limits of what is said and how things are done.
They understand better in a day of observation than a week's worth of reading policy and procedures manuals.
Take a hard look around you
While bullies may not predominate in most organizations, those who enable them by silence probably do.
We tacitly condone inappropriate behaviors and then, by repetition, these behaviors institutionalize themselves to the serious detriment of the organization. It's much harder to reverse a company's culture that's been degraded by neglect and attitude than it is to correct those tendencies that will undermine an otherwise strong one.
OK, Ed, you think: What do I do next?
I suggest that as we repair our credit cultures as the economy improves, we be vigilant about rooting out those bullying behaviors or tendencies. These can undo all our good work in the areas of morale and effective internal controls.
It's hard work. You won't find solutions to these issues in the policies or procedures manuals, nor in the corporate mission or values statements.
About Ed O'Leary:
Veteran lender and workout expert O'Leary spent more than 40 years in bank commercial credit and related functions, working with both major banks as well as community banking institutions. He earned his workout spurs in the dark days of the 1980s and early 1990s in both oil patch and commercial real estate lending.
O'Leary began his banking career at The Bank of New York in 1964, and worked at banks in Florida, Texas, Oklahoma, and New Mexico. He served as a faculty member and thesis advisor at ABA's Stonier Graduate School of Banking for more than two decades, and served as long as a faculty member for ABA's undergraduate and graduate commercial lending schools.
Today he works as a consultant and expert witness, and serves as instructor for ABA e-learning courses and has been a frequent speaker in ABA's Bank Director Telephone Briefing series. You can hear free audio interviews with Ed about workouts here. You can e-mail him at etoleary@att.net. O'Leary's website can be found at www.etoleary.com.
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