To this day, I have a long-lasting memory of facilitating a bank’s board meeting which ended up with the CMO and CRO having a punch-up. #
It was not a pretty sight, but it was all down to the CMO (Chief Marketing Officer) arguing that half of his new applications for loans and credit cards were being turned down by the CRO (Chief Risk Officer), affecting his bonus and ability to meet targets. The CRO argued back that the sophistication of their credit scoring systems meant that the CMO was bringing in the wrong applicants, and he should do his job better.
After a while of tossing insults at each other, the CMO got up and poured a glass of water over the CRO’s head. That’s what marketing people are like. It didn’t go any further than that, but it did result in the CMO finding a new job shortly after.
It also serves to illustrate how one group’s incentives affects another. The CRO can get his bonus at the expense of the CMO and vice versa. There is a mutual dependency and interdependency and if one does not trust the other, or is not incentivised correctly, then it all goes wrong.
For example, in another bank, I was working with the Head of Retail Banking on their forward strategy, and what technologies were key. After six months, he took the presentation into the Board but I had a big question about his conclusions.
My conclusion was that the bank needed to heavily invest in their internet banking services, which were once leading-edge and were now bleeding-edge. The Retail Banking head said that he did not control the internet banking services, as they came under the Marketing Divison. As a result, he would only propose those technologies relevant to the customer engagement in branches.
You can see the dilemma.
This dilemma reared its head again today, as I was talking to a bank about a board offsite meeting and the CxO said that it was a waste of time. He wants me to organise an offsite for his team, and a few friendly invited guests from the other divisions instead, or as well.
I asked him why (a) it was a waste of time and (b) why his team and who were the guests.
The answer intrigued me.
It went along the lines of the offsite board meeting was purely going to reinforce the politics of the King and his Palace. As per any Machiavellian play, the King is the CEO and he (or she) has his (or her) key Knights at the table (CFO and Heads of Lines of Business). There is also the Court Jester (the CMO as the motivator) and the Bishop (CRO as religious counsel), as well as some serfs and court servants (COO, Human Resources and the ilk).
I wondered where the CIO fit and, depending on the bank, reckon that he or she is either a Knight or a Servant. I’ll work with banks where they are Knights, and convert banks to promote their Servants.
Back to the waste of time, the CEO listens to their Knights, indulges their Jester and Bishop, and orders their serfs to do as they wish.
So it has been throughout time and so it will be throughout time, and the offsite is therefore a waste of time as everyone knows their position and role, and they fulfil those roles and positions perfectly.
Meanwhile, the Knights, Jester, Bishop and Servants rarely mingle or intertwine, and so they run their parts of the court accordingly. In this case, this CxO wanted to get their part of the Court prepared for the offsite, by having a good internal meeting with some of the friendly Knights and Servants invited to provide endorsement when they get to the real offsite.
Ah, such is life, such is the Courtroom and such is the silos in banking.
I just wonder whether the Jester and the Bishop will have another fight?