Most banks have a formal succession planning process. They have named successors for the truck scenario (short-term), medium-term, and long-term. The same names typically show up in many boxes. The process is intact, but the results are not entirely realistic.
Many banks are also experiencing many impending retirements as a generation of bank leaders is aging out. At the same time, while showing much promise, many potential successors are not ready yet to take on the position for which they have been trained and developed.
As a result, succession gaps are ubiquitous in many banks, and development plans for the most senior positions are the purview of upper-middle management executives.
It is incumbent upon bank leadership teams to reach deeper into their organizations to identify younger, less experienced potential future leaders at the lower levels of their organizations to avoid succession gaps in the future and ensure that fresh perspectives and energetic younger executives become an integral part of today’s and tomorrow’s Executive Leadership Teams.
Further, many banks have a strong, palpable culture that has served them well for generations. Such banks will benefit from promoting internal candidates to the most senior positions. The succession planning process must be enhanced to develop internal succession candidates more effectively and productively.
Achieving this goal will require several shifts in today’s succession planning process in many banks. Consider the following process enhancements:
1. Targeting late 20s-early 30s candidate pool. We start too late to cull out our talent pool. Starting early not only signals your high-potential younger employees that you’re willing to invest in them. It also helps you fill positions where they can contribute more while developing people more likely to retain (through better training, pay, recognition, exposure to ELT, involvement in important projects, etc.).
2. Interfacing with senior executives across verticals. Most career patterns are siloed. Driven young employees know that success means advancement in their vertical line of business. Exposing them to other opportunities through leadership contact and cross-silo projects will enrich their job and enhance their management skills and potential contributions to the organization.
3. Use M&A to enrich the candidate pool. M&A has long been one possible solution to CEO succession. It can also add value to all business lines, including technology and operations.
4. Expand reporting lines for underutilized positions (CFO, CRO). These highly technical positions typically attract highly talented individuals who can contribute more beyond their technical expertise. Why not test their versatility by giving them a business or another staff department to manage? It could be an outstanding bridge toward broader management responsibilities and even possible CEO succession.
5. Rotation programs. Part of the “general management” theme encourages up-and-comers to go beyond their comfort zones and assume responsibility outside their technical expertise. While this is potentially risky, it can certainly help you identify those you’d want to be in the foxhole with, leaders who will follow you and inspire others as well.
6. Use lookbacks and other tools to enhance accountability. All too often, we take some of the steps mentioned above, but accountability is deferred or reduced for various reasons. I’m a great believer in accountability at all levels. Lookbacks are essential to future success!
7. Offer legacy people new job configurations. Executives have always been concerned about their retirement; today, this is truer than ever. As a result, folks repeatedly push off their target retirement date, which blocks others from well-deserved promotions. Creative job configurations for incumbents can facilitate their gentle moving on without losing their considerable institutional knowledge and intellectual capital. Note: healthcare benefits often cause individuals to delay their retirement.
8. Consider the benefits of hiring older, senior people with no ego and nothing to provide who seek the position because they want to work and make additional contributions. These additional leaders are often used as a bridge when your successors aren’t yet ready to assume the senior position they’re slotted for.
Please share any additional counsel and advice from your own experience. Succession planning is a central managerial job. The more effective you can make it, the more your organization and its teams will be.