Pub. 4 2013 Issue 2

www.wvbankers.org 16 By the year 2016, it’s estimated that 60 percent of today’s CEOs in the banking industry will be retired – and there aren’t enough candidates in the leadership pipeline to handle the demand. A t the same time, the industry is tak- ing a hard look at profitability and performance. The spotlight is on developing new products and revenue sources, and organizations will require carefully crafted business strategies to address the effects of regulatory reform, technology change, and market move- ments. The competitive advantage in the years ahead will go to those banking institutions that have the foresight to plan for their future talent needs to meet these critical challenges. In order to avert a crisis in leadership, management must seriously consider their current mission plans – one year out, five years out, ten years out – and determine whether they have the people in place to achieve those goals and objectives. The first step toward developing an effective succession plan is to review and evaluate the current situation, focusing on an analysis of the strengths and weaknesses of the existing talent pool. A formal evalua- tion process should reveal areas in the organization that require bolstering. Next it’s necessary to develop and implement an action plan. Required elements in the process include: • Ensuring a proper training and development experience for current employees. • Knowing the A and B players on the organizational chart. This should include a formal evaluation process which is done at least once/year. • Initiating a mentoring system. • Cross-training employees. • Nurturing the unique culture of the organization. This would also include maintaining the organization’s brand identity. • Putting into place a recruiting and hiring plan if talent is not available internally. • Developing effective retention strategies. These could include incentive/bonus plans as well as stock/equity plans. • Communicating the plan from top down to all levels. Once developed, the action plan is not static. Success and failures must be monitored and assessed, and revisions made where needed. It is always im- portant to look back at the past twelve months and fine tune the plan, factor- ing in changes in the organizational structure and executing contingency plans for unexpected developments. That’s especially critical in today’s difficult economic times. Banks are facing tremendous challenges and unfortunately some key players aren’t talented enough to handle these prob- lems. It can require a different skill set to cope with some of the tremendous pressures being put on the executive teams in this day and age. Some banks are heeding the warning signs and preparing for their future leadership needs. A $250 million Mid- west community bank, for example, presents an example of good succes- sion planning. Because the CEO was planning to retire at the end of 2008, board-level discussion of his replace- ment started during the last quarter of 2007. Tapping into internal talent was a distinct possibility, so the first step was an assessment of the internal talent versus external candidates in Lack of Succession Planning Threatens the Future of Many Banks By Brian Rhonemus, Angott Search Group