Background:

Martinez, 36 years old, married, and a mother of two, is a CPA with an MBA degree. After working in Makati for a number of years, she married a classmate in MBA School and eventually resigned to concentrate on raising a family. By then, with her two children already studying, she was able to accept a part-time teaching position at a university in Quezon City.

In mid-1998, Martinez’s aunt came for a visit and asked her if she would be interested to serve as a director of the Rural Bank of Galvez in a southern Mindanao province. Martinez’s late mother hailed from this province and had held some stocks in the bank, which Martinez inherited when her mother passed away. Her mother’s sister, Martinez’s aunt, had been a director of the bank for more than 15 years. But she was already 66 years old and has grown tired of attending the Board meetings of the bank, which were held monthly. Martinez’s aunt reminded her that she had an obligation to help the small bank that her mother’s family had helped set up and managed since the early 1970s.

Martinez was delighted by the offer. She felt that, being a director of the rural bank would provide her an excuse to visit her mother’s hometown and meet many of her relations there. Martinez was also enthused because she knew that two of her relatives in Galvez were members of the Board – Tony Gonzalez, who was then the bank’s president, and Jaime Villa, the treasurer.

In early November of 1998, Martinez flew to the province for a three-day visit to attend the bank’s annual stockholders meeting and to discuss with her relatives her plans to join the Board of the bank. At the stockholders meeting attended by more or less 40 stockholders, Martinez’s aunt declined her reelection to the Board and nominated Martinez instead. Martinez was duly elected director that day and received warm congratulations from the stockholders.

Problem Statement:

Karla Martinez is a professional who is being asked to serve as a director of the Rural Bank of Galvez, which is primarily controlled by two families. These two families have historically cooperated to ensure equal participation and representation. The Board members, however, are not really interested in running the affairs of the bank. Karla must now find a political strategy to sway the Board into action and take tough measures for the betterment of the business.