Publisher’s Note: The following was first published today on BusinessWeek.com under their ManagementIQ blog heading. You can read the direct link here. Or feel free to continue reading below.
The Real Issue for BofA: Leadership, Not Just the CEO Search
The quest to fill the CEO position at Bank of America (BofA) may capture the headlines, but it’s far from the most urgent issue facing the nation’s largest bank. While selecting a new CEO is undeniably important, the more pressing concern is how the board plans to steer the bank’s leadership back on course. Emphasizing the search for a CEO at the expense of addressing deeper organizational issues signals poor governance and highlights a flawed belief that simply hiring great talent can fix everything.
Here are several critical steps the bank’s board should be considering—if they aren’t already:
1. Replace the Chairman
Walter Massey’s role as Chairman is now inextricably tied to the former regime, thanks to ongoing litigation, government investigations, and personal connections. This perception problem is a major hurdle for the board. Massey’s brief tenure has been marked by a crisis wave that forced former CEO Ken Lewis to relinquish his chairman title. Massey’s leadership is now under scrutiny, and it should be the board’s first priority to determine if he can effectively help the bank navigate forward, or if his departure is necessary.
2. Navigate the Regulatory and Judicial Maze
Whether BofA hires a new CEO or not, settling legal matters should be an immediate priority. The bank must act swiftly to resolve the ongoing litigation and regulatory issues clouding its operations. While this may seem overly optimistic, a genuine, good-faith effort to address these issues would send a powerful message. A critical part of the new CEO’s role will be to clear the legal and regulatory obstacles surrounding BofA and help restore its stability.
3. Consult Jamie Dimon at JP Morgan Chase
This might seem more like a search tactic than a strategic move, but consulting Jamie Dimon, CEO of JP Morgan Chase, would be a practical and wise step. Dimon has successfully led a similarly sized institution through a period of turmoil, making him uniquely qualified to advise BofA on the challenges it faces. Overlooking his insights would be a significant mistake. It’s also likely that any recruiter chosen for the search will approach Dimon to tap into his wealth of experience and advice.
A Leadership Crisis, Not Just a Search for Superman
This isn’t about wasting a crisis or finding a “Superman” to save the day. It’s about making the right decisions in the aftermath of months of poor management and leadership inertia.
A Silver Lining?
If there’s any good news, it’s that BofA’s business appears to be in better shape than it was a year ago, when the financial system was on the brink of collapse. However, this improvement also highlights the self-perceived advantage that time provides: Time to recover, time to accept more government assistance, and time for assets to rebound. But time is a double-edged sword. The longer the bank stalls, the deeper it risks sinking into the abyss of stagnation. If BofA (or any major bank) ignores this reality, it does so at its own peril.