As Alerus Financial was scouting prospective additions to its board a few years back, one director suggested Sally Smith. Not only was she a University of North Dakota alumna with a finance background, Smith also was CEO of booming restaurant chain Buffalo Wild Wings.
Little did that director know that Smith was also the daughter of Dick Wold, longtime leader of Alerus’ predecessor, First National Bank of Grand Forks.
Smith jokes that she was elected “despite the fact” that her father previously helmed the bank, now a multibillion-dollar financial services provider and still based in Grand Forks. She joined in 2007, the beginning of a historically difficult time for the banking industry. “We were shepherding it during a time of real unknown,” she recalls.
Smith, who had been chief financial officer at Golden Valley-based Buffalo Wild Wings before becoming CEO in 1996, applied her financial acumen to help Alerus weather the recession and acquire banks in FDIC-assisted transactions. She helped Alerus tailor communications to distinct stakeholders—from management to employees to customers—when executing deals. Each party has a distinct “need to know” as the deal proceeds. For instance, banking customers would want to know whether to expect changes in the accounts they hold or services they receive. “It’s about trying to anticipate those things,” Smith says. “If it’s your first acquisition, you often don’t think of that.”
Other Board Service
Hormel Foods July 2014-present
Allina Health 2012-present
National Restaurant Association 2002-present
Buena Vista University, Storm Lake, Iowa 1995-99
Alerus CEO Randy Newman says that Smith is an “extremely high example of the type of people we want to attract to our company—employees, customers and future directors.” She challenges Alerus’ board to adhere to best practices of large public companies such as the $1.3 billion business she runs. When directors question the need for such formalities—which aren’t legally required of Alerus—Smith responds: “You’re always judged in retrospect. You have to look at things as though, if your deliberations came to light in an SEC document or an article written about the company, would they hold up?”
Lessons learned at Alerus are implemented at Buffalo Wild Wings. For example, when Alerus considers acquisitions, management gives directors a concise rundown of each prospect. She uses the model when Buffalo Wild Wings identifies smaller brands to invest in, such as pizza chain PizzaRev this year.
Smith believes that serving as an outside director on multiple boards makes her more receptive to input from Buffalo Wild Wings’ directors. When the vice president of purchasing retired, a director with extensive food manufacturing and supply-chain experience challenged Smith to hold off on hiring and invest in a higher salary.
“We revised the job description and scope based on his comments to find somebody who could not just fill the spot, but who could be here 10 years from now and lead our supply chain when we doubled or tripled in size,” she says. “Often it’s the board that recognizes vulnerabilities.”
The main misperception about boards is that they’re just “big business,” where friends sit on each other’s boards and do little but “agree to outrageous compensation packages,” Smith says. Responsible boards examine everything from employee pay to philanthropy—a boardroom discussion spurred Buffalo Wild Wings to support the Boys & Girls Clubs, for example.
Board service also demands dedication. Smith spends upward of 20 hours monthly studying the industries in which her companies operate, plus “a good eight hours on the board book” ahead of board meetings. Conversely, she expects much from her directors, each of whom walk a day in employees’ shoes by working at a Buffalo Wild Wing restaurant each year.
While challenging management is requisite, Smith says collaboration and shared values are paramount. When a former director contested Smith’s decision to terminate an executive who had broken a company policy, arguing that it wasn’t egregious, Smith held that a lower-ranking employee would have been fired. Punishments should be consistent across the ranks.
“What clearly comes out is that board members who don’t match up with the company’s values don’t stay on the board,” she asserts, adding that before her recent decision to join Hormel’s board, she interviewed a number of people to ensure Hormel’s ideals aligned with her own.
Collegiality and alignment are essential to a successful board, Smith believes. “Some boards prefer to have an uneven number of directors, so the chairman determines a tie,” she says. “I always say, if it comes down to a tie, you’ve got bigger problems than the question you’re trying to resolve.”