The Evolution of Leadership in Banking

American Business Executive Robert Townsend had a theory on leadership back when the concept of a directorial business position was held together by a much stricter, less intimate definition. His theory asked the question: is the person you report to a leader, or just your boss?   

The difference, as Townsend described it, is one of willingness, encouragement, and a focus on working with your team for the sake of their development first and the company second. For Townsend, the difference between a boss and a leader was that of day and night. If you asked people 50 years ago what it means to lead, a majority of responses would likely be opposing this theory of nurture over production. But in recent decades, even in the past few years, what it means to be a leader has evolved drastically to reflect Townsend’s ideas. This has become more apparent as the pandemic inches into a second year, causing many to again ask what it means to be a leader in today’s covidian age. 

What It Means to Lead 

Most people will tell you that the key characteristics of leadership have changed significantly, but the challenges of this past year have caused many to notice what this truly means. 

“Anyone still leading through autocracy has probably learned early on in this pandemic that their style isn’t going to work,” said Dan Peterson, president and CEO of Stephenson National Bank & Trust (SNBT), Marinette. “You need to let people find their own ways in a lot of cases. Forcing someone to follow the rules you’ve made is going to kick you down really fast. As a leader, you have to view everyone as a teammate.” 

Leading by authority has become less popular as more individuals in executive positions have turned to their teams for collaboration. Many bankers have taken notice of this as those in leadership roles have frequently reached out to employees to not only see how they’re doing but to gather their thoughts on day-to-day activity. While some see this as a necessary development during a time when employees are working remotely, others perceive it as an emphasis on what has already existed for quite some time.  

“I don’t think leadership has changed since the pandemic, but what it has done is it has really magnified the essential characteristics of leadership in today’s culture,” said Dr. Fred Johnson, CEO and founder of InitiativeOne. 

Johnson believes a greater majority of people in positions of power today have gotten where they are because they understand the unparalleled benefit of collaboration over individualism. He cites that ideal leadership is best measured by three defining traits: authenticity, transparency, and vulnerability. The use of all three will naturally result in a trait that is necessary but often overlooked: trust.  

“There's an expectation today that you’ll be competent, but today the foundation of leadership is based upon trust,” Johnson said. “I'm not going to follow you if I don’t trust you. I won’t buy into your philosophical leadership priorities if I don’t trust you. I really don’t care what your experiences are if I don’t trust you.” 

The best way to build this trust, according to Johnson, is by showing you care rather than just saying it. Regularly checking in with employees regarding a variety of subjects is yet another task to add to the never-ending list that leaders face, but it’s one that builds the culture in your workplace for the better. It will be just as important after the pandemic as it is today. 

“When you’re in a mode of crisis leadership, to be effective requires an inordinate level of professional maturity,” said Peterson. “You have to trust your team.”  

Although Johnson believes leadership has only been emphasized during the pandemic rather than directly changed, he stated that it has changed positively in recent decades. 

“Leadership has changed fundamentally,” Johnson said. “The old rules used to be that there’s a personal side and there’s a professional side, and those two sides would never mash. Today, especially with the last two generations in the workplace, they’ve started to reject that. They want a life that has fluidity between the two.” 

As a leader, it is important to empower your team to make the right decisions, but to also trust that they’ll be doing the right thing. Be open and honest and let the productivity flow from the morality you’ve helped instill into your team. It may be an uneasy step, but it’s a step in the right direction.   

“One of the biggest takeaways for me during this time is that we have to be comfortable with being uncomfortable,” Peterson said. “With all the times I’ve had to stretch the rubber band in my life, it’s never comfortable, but that’s how things get changed; when you have that tension.”  

They’re People Before Bankers  

Your team is good at what they do. You likely helped hire them and keep them around because they perform well – but at the end of the day, bankers are not born bankers. In fact, many of them have spent a greater part of their lives being something other than their current job title. Tapping into that ability to reach employees as people who are dealing with emotions, especially during this time, is a critical skill for leaders to have.  

“Don’t be afraid to express some humility and remind your employees that you care,” said Peterson. “It’s been hard for us as leaders during this time, but let’s face it – it’s been a lot harder for so many of our employees having to work remote. There’s so much uncertainty, but if you make it comfortable for them and reassure them of their roles and responsibilities, they’ll continue managing their tasks in the best atmosphere given the situation.” 

Peterson aims to do exactly this. By regularly checking in with employees, he seeks to remind them that even if things are not perfect, they’re going to get through it together. He reminds them how massive of a change this past year has been and how significant of a part they’ve played in maintaining morality and responsibility. Every day has been a curveball, but allowing for authenticity helped SNBT emerge stronger because of it. It’s the type of leadership that Johnson notes wasn’t at all prominent just decades ago.  

“The type of leader who sees their employees as workers instead of actual people would have led just fine in the ‘60s,” Johnson said. “But here’s the thing; it’s not the ‘60s.” 

On this subject, Johnson shared a story from a leadership talk he had with a group of east coast NFL coaches. After Johnson addressed some key characteristics of being a leader, one of coaches responded in an unexpected way: he raised his hands to reveal two massive rings on his fingers and stated, ‘the only thing I need to lead are these championship rings.’ 

“What he was telling me was that his experience gave him the authority to lead,” Johnson said. “What he didn’t realize was that his players were coming to me and saying they didn’t trust this guy.”  

The unnamed coach was eventually let go from the team, which didn’t come as much of a surprise to Johnson; it became clear to the head coach that there was a lack of leadership because the relationship was built on a lack of trust.  

“I remember I asked a few of the players why they didn’t trust him, and I’ll never forget what they said:  ‘He doesn’t care about our story. He doesn't want to know my history or who I am as a person. If I can’t be seen by him as a human, I don’t want to know his defensive philosophies.’ 

Whether it’s an NFL stadium or your local community bank, sometimes people need to be reminded that they’re people. They make mistakes, and those mistakes can be fixed.  

“Creating that safe environment is key,” said Peterson. “When someone runs into a problem or has a concern, they’re going to feel comfortable calling you about it and figuring it out. If you didn’t have that environment before, it’s time to figure out how you’ll be implementing it now. Your workers are people before they’re bankers, after all.” 

Strength in Numbers  

Johnson and Peterson both point to collaboration as a key feature of modern leadership that assists teams in going above and beyond what they believed they were originally capable of. This is not only to say that leaders are collaborating with their employees – to access the true potential of a business, employees are being called on to lead, too.  

“Too many leaders have realized they can only get so far when they try to play Superman,” Peterson said. “Effective decisions are made when you have the proper information and all the right people committed to the decision. Always using collaboration is important, and I think sometimes leaders don’t understand that. Then they try to make these choices by themselves. They don’t see that they’re also human and might not have all the answers.” 

Peterson suggested that—if not implemented already—now is the perfect time to emphasize a collaborative approach. Involving your team in the process of making decisions and calling on others to be leaders are critical parts of crisis management mode, people are more likely to support what they’ve had a say in creating.  

“During these intense situations, we need all the leadership capacity we can muster,” added Peterson. “That means involving everyone and trying to fuel that collaboration. If you make them feel like they’re part of the decision, they’ll be on board and you’ll all pull in the right direction.” 

The foundation of this collaboration today is personal connection. Johnson noted that there's no such thing as leading others until you learn to lead yourself first. This requires becoming an expert in knowing yourself and creating a sense of community based on this ability to not only lead, but trust.  

“Leadership today is about connecting with people,” Johnson said. “It’s about making them feel valued, heard and respected. If you can do that as a leader, then setting goals, holding accountability, and making course adjustments become the easiest thing. You’ve created an environment of trust with your people, and they’re going to show you that they see that. That’s the criteria of leadership today.”  

Interested in learning more about topics like this? Dr. Fred Johnson will be speaking at the Bank Executives Conference on Feb. 3.

By, Alex Paniagua