Succession Planning:
Succession Planning – Immediate and Long-Term
Plan for Both
If the CEO of your bank won the lottery tomorrow, who
could run your bank?
Planning for an emergency
AND
“Sharing and Passing the Torch” – a planned succession
Passing not just the title but also a shared culture and
vision. Continuity and managed change.
“An organization’s fate is more important than
the fate of it’s current leadership”
How would you respond to a
shareholder or auditor who
wanted to see your Succession
Plan?
Succession Planning – Not just an HR
exercise anymore…
Boards, CEO, and other senior
Management must be involved
Where will your next managers/leaders come from and who are their
replacements?
Where does your next CFO, COO, Sr. Loan Manager come from?
Succession Planning for “A” positions as critical as developing “A” players. Who backfills your backfill? What is your “bench strength”?
Recruiting/Relocation costs versus internal development.
Are you ready for a Merger or Acquisition?
Do you have the talent to plan/execute integrating organizations?
To manage a larger, more complex organization?
Increasing competition for critical management talent, turnover, salary
pressures, increasing retirement rates ...All factors that will reduce
available talent with critically needed skills.
The Overall Process:
Establish Succession Principles
Identify Key Positions
Source Pre-work
Plan to Plan
Identify Candidates
Communicate
Development Planning
Purpose:
¾
To ensure your bank has the executives and key
talent with the skills and depth of experience
required to meet your short and long-term
operational and strategic plans.
¾
A total integrated system linking
¾
“A” Positions and “A” Players, mapping career paths to
critical development positions.
¾
Forecasting skill needs, retirements, turnover, etc.
¾
Staffing (sourcing, selection, hiring critical/key skills)
¾
Career Planning and Development
A First Step – Determine your “Succession Principles”
Who Participates in the Process?
CEO, HR, Sr. Team (by name), Board
How much involvement by your board?
How well do they know your team?
Review or Input?
How broad is your process?
CEO? All Officers? Other “A” Positions? High Potential Employees?
Phased approach
What is your commitment to “development”?
Budget for training and development
Tolerance for risk/learning curves
What, when and who communicates?
Are people told they are a successor candidate? High Potential?
Key – is your Succession process appropriate for your Bank’s size and complexity, and consistent with your Bank’s vision and culture.
Sample Succession Principles:
We have an obligation to plan for the succession of key executive positions to minimize risk to all stakeholders.
We have an obligation to identify “A” positions and fill these positions with
Succession Candidates or High Potential Employees.
Selection as a succession candidate is not a commitment of promotion or opportunity.
Succession Candidates and “High Potential” employees can not be
effectively mentored/developed if they don’t know they have been identified as such.
Executive Development is a shared responsibility and requires a
commitment from both the employee and the company.
All succession candidates should have a personalized development plan.
Step 2 - Key Position Definition
Key or “A” positions are executive positions or “executive feeder” positions critical to the development and implementation of long term strategies for the Bank and are essential to the Bank’s ability to execute its’ mission.
Not all Key or “A” positions report to the CEO and not all CEO Direct report positions are necessarily Key or “A”, not based solely on hierarchy.
Assess for your bank based on factors/experience critical to success today and in the future.
Some positions will be “A” positions based on current circumstances, e.g. a
loan officer in a critical emerging market, or a Customer Service Director for a bank working to improve its’ customer relations.
Can’t afford “A” players in all positions.
Sample Key Positions
Chief Executive Officer
Chief Financial Officer
Chief Operations Officer
Vice President Information Technology
Vice President Human Resources
Loan Officers
If you struggle identifying Key/”A” positions…
Turn your Organization chart into a development Map … Ask what
functions/skills is it essential to have to fill the CEO (or other) Position
CEO
CFO
HR
COO
New BusinessDevIT Controller Compliance
Branch MGR Branch
Step 3 – Source Pre-work
Get an accurate set of Organization Charts
How many layers depends on size and complexity of your organization. May highlight other issues (levels/span of Control)
Do you have “A” Players reporting to “C” Players?
Listing of all employees
Length of service, educational background, past Performance Ratings
Conduct a Retirement Analysis
Are you prepared for the retiring “baby boomer” wave?
How many key people will exit in next year? 2 – 3 years, 3 – 5?
Your Bank’s Strategic and Operational Plan(s)
What future are you planning your human resources for?
New branches? Geographies? Lines of business? Technologies?
An Environmental Analysis
Competitive landscape
Unemployment levels
Step 4 - Planning to Make the Plan:
Develop a Succession Planning timeline and process
Dedicate time to the process and assessment of potential candidates
Ensure you have a place to meet that respects confidentiality of the process
Clearly identify who will be involved in each stage of the process
Which staff members? Who else needs to know?
Establish the ground rules
Open communication
Absolute confidentiality
Process is not a performance review
Review with your Board
Do they concur on selection of Key/”A” positions”?
Have input to the process?
Finally – Step 5 – Identifying Succession
Candidates
The CEO works with the Board to identify his/her potential
successors. Implies the board has access to and ability to
assess internal candidates.
The appropriate Executives are responsible for the initial
identification of internal succession candidates for each
key position.
When there are no reasonable internal succession options
the appropriate Executives are responsible for the
identification of contingency strategies.
The Team identified in Step 4 meets to review, assess,
debate, discuss and come to agreement on Succession
Candidates. The Executive Team together is committed to
the development of these individuals.
Critical Step in the Process:
The Team identified in Step 4 meets to review, assess, debate,
discuss and come to agreement on Succession Candidates. The
Executive Team together is committed to the development of these
individuals.
How this step is accomplished is key – honest, open dialogue is
essential to a meaningful result.
Ability to give each other feedback on proposed candidates
Trust in absolute confidentiality
Fact based assessment of individuals skills and experience (not a
popularity contest, nor about “nice person” or a “good guy”.
Leadership Assessment Summary – One Tool
Execution, Bossidy and Charan pg 151
Leadership Assessment Summary
EXAMPLE
P E R F O R MA NC E EXCEEDS STANDARD AT STANDARD HIGH POTENTIAL HIGH IMPACT SUCCESSION CANDIDATE PROMOTABLE EXPERIENCED PROFESSIONAL TOO NEW NEEDS HEAVY COACHING NEEDS JOB CHANGE Sam Smith Jim New Jenny Jones Tom Terrible Barry Basic Amy AmiableCreate Succession Charts:
Succession chart for each Key Position should include:
Candidates Name and Current Position
Readiness Assessment
Work History attached
Readiness codes:
12 - 24 months
24 - 36 months
> 36 months
A person may be shown as a succession candidate for more
than one position. In these situations a blended development
plan may be required.
Chart should also address strategies for “Immediate”
replacement. This could include stop gap strategies (person
who can fill in while external hire is made), an internal hire
(either promotion in group or from another group) and/or a
reorganization plan.
Contingent succession strategies will also be identified. These
strategies may include named external candidates or targeted
external recruiting for additions or replacements to build a
“pipe line”.
Sample Succession Chart
Chief Financial Officer
Immediate Strategy:
24 – 36 Months: 12 – 24 Months:
NA
Sam Smith, VP Finance
Bring in independent consultant Corporate Controller as Interim
Step 6 - Communication
Create a common set of Talking Points:
Personalize these messages as much as possible for the employee.
“You have been identified by the senior management team as a potential
Succession Candidate for the position(s) of ______________
This designation is reviewed and agreed to by the entire executive staff and has
the team’s commitment.
Senior Management believes that you have the potential and the ability to
continue to advance in the company, specifically into critical leadership
(managerial or technical) roles within our business. That potential needs to be realized and requires you to take an active role in your own career.
What this means to you is:
HR and your manager will work with you to outline your personal strengths and
development areas, identify a development plan highlighting both formal and informal development activities and a process/timeline for monitoring progress.
This Development Plan may include consideration for rotational opportunities,
special projects, new roles, promotional opportunities, internal and external training opportunities, etc.
What are your next steps?
Keep up your momentum! Keep that focus on your professional growth.
Take advantage of your resources. While this does not guarantee a promotion,
pay increase, or other recognition, it does mean you are well positioned for new opportunities, mentoring, and feedback. Your management team and HR are available to help you identify “next steps.”
Step 7 – Development Planning
Human Resources will work with the candidate and his/her manager to
complete an Employee Data Sheet and Profile, including work history,
performance ratings/status, total compensation status, etc.
Identify skills and experiences needed for succession position.
“Competencies” such as Negotiating, Political Savvy, Delegation, Humor, etc.
Performance Dimensions such as Quality of Work Output, Productive Work Habits, and Customer Impact.
Career Derailers such as Arrogance, Inability to Build a Team, Insensitivity.
A realistic and objective assessment of Areas for Development is
critical. Consider investing in a 360 assessment process, such as
Benchmarks through the Center for Creative Leadership.
FYI, For Your Improvement
Sample Profile – Customize for your Organization
KEY EMPLOYEE PROFILE
NAME
CURRENT POSITION:
Indicate top 3-5 responsibilities in your current position: •
• • • •
DEPARTMENT REPORT TO: WORK PHONE:
Please Attach Resume or work and educational history
CONTINUING EDUCATION: (list seminars, workshops, etc.)
Program: # of Hours Date:
• • • •
Professional Credentials: (Certification, Licenses, etc.)
• • •
Sample Profile – Customize for your Organization
Languages: (Please indicate your proficiency, E = Excellent, G = Good, F = Fair, P = Poor) Native:
Other: Read Write Speak Understand
1. 2. 3.
Relocation and Travel:
• Limitations on relocation? No Yes (if yes, please explain) • Limitations on travel? No Yes (if yes, please explain)
Career Aspirations: (List desired positions, functions, rotations, organizations, or responsibilities you most interested in pursuing)
• • • •
What 2-3 positions/experiences do you feel would most benefit you in achieving your future career goals?
• • •
