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As the financial markets collapsed, TD Ameritrade’s Chris Armstrong spoke to Robert Voth about How to lead during a meltdown. Here is what he had to say:
It was a tumultuous week for the financial markets ; the impact of the mortgage meltdown snowballed; giant names folded or were merged away; money market funds “broke the buck”; regulators changed the rules overnight; and markets reacted violently-up and down. The “independent spirits” – clients that own TD AMERITRADE’s (TD AMERITRADE, Inc. is a member of FINRA and SIPC) seven million accounts – wanted information and the ability to trade on that information, either to protect their portfolios or to take advantage of opportunities to make money. Calls to our client contact people and the transactions we processed were at near record levels. Our people and our systems were stretched beyond anything we had seen. In any financial services business model the most important element is our clients’ trust. So, how do you lead in a crisis like this to protect that trust?
It is important to point out that real leadership doesn’t start at the time of crisis. Real leaders spend lots of time and energy making sure that folks from top to bottom and side to side know the values and principles by which the organization is run. And leaders make sure everyone knows how “playing their position” is vital to the mission and the accomplishment of our objectives.
All of that said, there are three things that I believe are essential in time of crisis:
- 1. Maintain constant flow of information and context.
People want all of the information they can get at times like these. Clients want it and the folks that serve them want it. But information without context is meaningless. Be careful that everything you communicate comes with the “why”. Is it important for clients? Is it important for the mission? If you don’t add context to the information flow your folks will try to create their own and that can lead to chaos.
- 2. Be empathetic but stay on mission.
Your people will be tired. Your clients will be frightened and angry. Emotions will run high and tempers will fray. Leaders learn how to recognize it and honor it but not let it detract from the mission. And staying on mission means reviewing each option to “do something”. There is always a rush to “do something…anything”. Most times, that’s a mistake. If you cannot tie it back to your fundamental mission—don’t do it.
- 3. Be constantly present and visible to drive the troops.
This is the time that your presence is most needed. Staying locked away in the war room or in negotiations doesn’t help your folks nearly as much as your active involvement in the crush of activity. Conference calls; video conferences; blast emails and voice mails; do whatever it takes toshow the troops that you are there and part of the “action”. This presence and these opportunities to keep the organization “on mission” will help get you through to the other side.
John Miclot is currently the President and CEO of Respironics, Inc. He also sits on their Board of Directors. Two years into his role as CEO, John was prompted by his Board to seek an external Board seat. John joined Wright Medical’s Board. “I think as I actually became a member of another Board it clearly enhanced not only how I was viewed by Board but also how I interacted and worked with them”.
In choosing to join Wright’s Board John weighed his talents and skills against those of the other Board members. What could he bring that would be a key differentiator? Did his attributes bring some diversity to the Board? John believed he could make a difference with his experience in strategy marketing and a desire to expand into international growth.
John also talked to Buster Houchins about when one should leave a board. How do you know when it’s time to move on? As a CEO John understands that succession planning is critical and this planning also applies to a Board. The need for vital, refreshing, thought leaders on a Board is important and he has evaluated his own Board member’s contributions and indeed, his own. “I think that is true of almost any job that you do at some point you become an individual that has been in the organization or on the Board for a period of time where suddenly the value you bring isn’t that fresh and isn’t that new and I can tell you that when I came to refresh my own Board many of the things individuals would say had become predictable. You know I use time as a basis. I think anytime that you’ve done anything you know for six or seven years it’s probably time to examine those things and ask people to honest and upfront…”. So, if you have been a board member for more than seven years, you should be asking yourself this question, “am I still a contributor to the growth and vitality of this company?’. If you are not, its time to move on. Many other boards can do with your expertise. Your contribution will be fresh and needed.
Charles J. Robel currently serves as the Chairman of the Board of Directors of McAfee, director and Chairman of the Audit Committee of Autodesk, director and member of the Audit Committee of Informatica Corporation, and a director and Chairman of the Audit Committee of DemandTec, Inc. He spoke to Jamie Carter about how a first time member can quickly integrate themselves with the rest of the board.
Based upon your relevant domain experience, you have just been nominated to your first board of director’s position. So how do you effectively transfer that experience and immediately start adding value? Chuck states that the first item a new board member should concentrate establishing is trust. Whether the issues are strategic or the typical ‘block and tackling’ filings, creating an environment of trust inside the board room is critical to launching balanced and transparent discussions.
Before the first board meeting, find a simple way to informally meet with fellow members. Ask them for their perspectives and knowledge of the company (i.e. what is working well, what is not working well, what does the company need in the next 2-3 years?) Meet with the CEO and simply ask what would help him or her.
Some of the best boards will already have a good “new member overview” of the company prepared for you which includes much better internal information than can be gleaned from the 10K and 10Q. If this is not available, ask for as much information as possible and be sure to do your homework. And of course, read all the available material before the meeting.
Once in the meeting, Chuck has observed that management presentations tend to be optimized by simply starting with, “rather than take me through the slides, assume I have read and understand all of the materials and now just walk me through the three important topics….” Given the limited amount of time provided for each meeting, Chuck has seen this quickly surface the issues that matter.
One mistake Chuck has seen in first time board members is their desire to be too tactical and forgetting to let go of the steering wheel. Although your intent is only to help, you were elected to the board to add strategic help and bring specific knowledge to an area the board was lacking. You were not nominated to run the company!
Communication in-between formal committee or board meetings is crucial. If you are not spending time talking between meetings on at least a monthly basis, you probably aren’t able to provide the value you were nominated for. Most boards in today’s dynamic operating environment encourage it’s directors to meet directly with management. So take advantage of the open door policy and meet with functional management. Not only will you be able to gain additional color and candid perspectives on important topics, but you will also be able to assess the company’s bench strength.
Lastly, don’t make the board meeting about yourself. This may sound obvious, but nothing can be more irritating inside the board room (well, perhaps other than listening to a Blackberry chiming) than listening to a 10 minute speech about how you climbed Mt. Everest with your entire management team on your back. Although you may still be recovering from setting the world record, the board may be less than impressed.
