Bruce Van Saun is chair and CEO of Citizens Financial Group and sits on the board of Moody’s Corporation and Federal Reserve Bank of Boston. Previously, Bruce has held a number of board roles in both the UK and the US, including RBS. Here, he gives his perspective on the collapse of SVB, and shares the three lynchpins that underpin an organisation’s success.
Based on your experience on both sides of the Atlantic, what are some key differences between being on a board in the US and the UK?
Broadly speaking, the composition and behaviours of boards are pretty similar. But I can think of two divergences with an actual impact:
- First, how comings and goings need to be managed to secure a functioning board. In the UK, it’s somewhat hardwired that you’ve got nine years before you’re off, whereas in the US it’s more common to use age limits to move people off boards. Although this means you have a long institutional memory on the board and a wealth of experience, you need to take more active steps to ensure that you’re bringing in fresh perspectives to the board.
- Second, US boards tend to be more cohesive in their culture, whilst UK boards are often more independent and spend less time engaging socially with each other and the organisation. This is also reflected in the relative access to management that a board member in either jurisdiction would have. In the US, board members in town for a meeting will frequently have breakfasts and lunches with management where they can ask questions about the company; I get the sense that this sort of thing isn’t as common in the UK.
And what can boards in each country learn from how the others tend to structure their information?
I loved the way we did our board papers in the UK. Following governmental intervention at RBS, we had carried out a comprehensive review of our board information and our company secretary had introduced a standardised executive summary that would accompany each paper coming to the board. On it, you had to communicate the key takeaways of your paper in five points, ensuring that important central messages were given upfront and not hidden in unnecessary detail. We also limited the papers themselves to a maximum of 20 pages — again, making sure that discussions weren’t getting lost in the weeds but could remain elevated.
The effectiveness of this approach stuck with me, and when I arrived at Citizens I made sure that we adopted it in our own board reporting. It’s also an iterative process of finding out what works best; for example, we started adding a section at the back of each paper outlining our strategic dialogue, which lists the five most pressing or potential areas on which the management team would like to engage directors on to get their perspective. The result is a boardroom conversation that is significantly more effective, with the papers supplementing lively discussion rather than just being presented to bleary-eyed directors before swiftly moving on.
The collapse of Silicon Valley Bank has raised concerns of a lack of expertise in boardrooms. What lessons can directors learn from this? And should we expect regulators to increasingly step in?
Regulators do have a privileged outlook, as they can easily compare how organisations run things versus their peers and spot those falling behind. And yet, even with that unique knowledge, and even in a heavily regulated industry such as banking, the watchdogs can be hesitant to intervene until it’s too late — they want the board and management team to run the show.
And so, the lesson I’d take away is that boards and management teams must adopt a proactive “belt and braces” approach: giving themselves the means to assess their own capabilities and spot gaps in the skills and experience needed to understand and execute their strategy, rather than relying on external warnings and assuming that everything is dandy as long as they don’t hear from the regulator.
In the case of SVB, it looks like this know-how and self-reflection was missing. Individually, their board members might have been talented, but within the entire group only one of the non-executives had serious banking experience in past roles, and that person wasn’t even on the risk committee! The CEO and the directors failed to look at the construction of the board as a whole and ensure that it was actually fit for purpose — to disastrous effects.
Throughout your career, what ways of working have you seen give an organisation its competitive advantage?
Looking back at the success Citizens has seen since its IPO in 2014 in becoming a top super regional bank, I think it all boils down to leadership, culture, and talent:
- You need strong leadership from the board, which is provided by the CEO and chair; if they are the same person, then independent directors and committee chairs can provide powerful leads here too.
- You need a culture in which everybody’s pulling their oar in the same direction and respecting each other; culture should be collaborative and collegial, especially at the level of the board.
- And finally, you also need the full complement of skills on the board that forms the base for rich conversations that bring to bear the full diversity of thought and opinion that helps us arrive at the right decisions.
Underpinning all this should be a mindset of continuous improvement and innovation. If you want to be a top-performing organisation, then you must be constantly alert to opportunities to provide customers with a better experience — and anything other than a striving mindset will let you down.
However, you can’t just expect this from your staff if you don’t acknowledge their achievements, so strong recognition of employees is essential. A good example of this is our Credo Awards: at the end of last year, we gave out 16,000 awards and 350 chairman’s winners; we arranged a big party with live music in a football stadium and everyone had a great evening. It was a fantastic time, and just as importantly it was a way to keep building our competitive advantage.
Do you have any golden rules that you follow in the boardroom?
Always do your best and strive to reach your potential. I think that if everyone does this then people generally will be happier and more productive, and society will be better off overall. At Citizens, we talk about one of our purposes as being to help our customers, colleagues, and communities reach their potential; I think this captures another golden rule well, which is to offer all the help you can to support others striving to reach their own potential. Ultimately, this all comes down to the old adage of treating others as you want to be treated – so make time to listen to colleagues’ concerns and be respectful; always aim to be a good friend, boss, or colleague to the people you interact with.
What book is on your bedside table?
Besides a copy of the Bible, I have Richard Osman’s The Bullet that Missed, which I’ve just finished. A friend gave me the Thursday Murder Club trilogy and I’ve been working my way through them, and I’ve really enjoyed them. It’s good to read things just for fun, and to just enjoy a good yarn every now and then.
