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Enhancing Credible Challenge
Bill Grant remembers working as an examiner for the Office of the Comptroller of Currency back in the 1970s, when some bank presidents refused to talk to female examiners.
A lot has changed since then. Nearly half of respondents to Bank Director’s 2024 Governance Best Practices Survey, 48%, said their board has at least three diverse members characterized by race, gender or ethnicity. Yet only 16% of the CEOs and board members responding to Bank Director’s 2024 Governance Best Practices Survey were women.
Grant has a lot of experience in banking. He worked at the OCC for 27 years, starting his career as a bank examiner. Later, he served on several bank boards, most recently Grasshopper Bancorp in New York City. He’s retired today. But one of the things he noticed over his career was that bank boardrooms with diversity, especially women members, had a different perspective that improved discussions. “I noticed what women brought to the table,” he says. “It was a different, critical-thinking mindset.”
Credible challenge is one of the most important concepts in bank boardrooms. It refers to the expectation that the board should hold management accountable on behalf of shareholders. It’s not about being confrontational and divisive. It’s about asking the right questions and ensuring management performs in line with directors’ expectations.
A deeper analysis of Bank Director’s 2024 Governance Best Practices Survey seems to support the theory that diversity improves credible challenge on bank boards, or at least the perception of it. Forty-two percent of directors representing boards that lacked any diversity identified a lack of credible challenge as a deficiency in their boardrooms. Only 10% of directors on boards with at least three diverse members reported similar concerns.
The days when women were excluded from positions of authority are mostly gone. Boards are becoming more diverse. And there’s evidence that banking may be better for it.
• Naomi Snyder, editor-in-chief for Bank Director
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