Understanding how to create a dynamic succession plan is key to the success of your institution. I was recently asked to present a webinar for a banking association on succession planning. The member banks requested a more in-depth session to help them develop a succession plan that is workable and flexible to change as needed.

The topic of succession planning is sensitive because it requires the leaders of the organization to think of their own timeline. It is especially difficult for the owners and founders of institutions that have been in the family for generations. And it is even more difficult for third of fourth generation bankers who don’t have family members willing to follow their footsteps. Similarly, there are senior executives who are owners and involved in the day-to-day management of the organization. They are used to doing things their way and fear that no one else can do it quite as well as them. All these fears lead to lack of succession planning until it’s too late.

In this blog, we will not focus on Board succession planning as that requires a different process to identify the Directors retiring and potential successors. The training and development of Directors is also different from that of employees in the institution. Therefore, we focus on succession planning for the entire management team and other key positions in the institution.

Let’s address how to create a dynamic succession plan in two parts:

Part I: Laying the Foundation

Building a Strong Future:

The first step is to establish a Succession Planning Process. This process describes how you identify employees who may be retiring in the next 1-5 years, regardless of job. It also describes how you identify your potential successors for any job. The Succession Planning Process lists the key positions along with the CEO, Senior Leadership Team, and next level managers. Lastly, the process describes how you train and develop the successors to prepare them to take over their new roles.

The Blueprint for Success:

The next step is to develop the Succession Plan for the CEO, each SLT job, and each key position identified. Remember that a “key position” is not just the obvious such as IT, Compliance, Ag Lender, or BSA Officer. A key position could be the deposit operations employee who has been with the organization for forty years. That person has great institutional knowledge and often the job was built around their skills rather than a specific position.

HR professionals can now utilize Artificial Intelligence (AI) to help find the right successors based on job requirements. AI can identify the right type of personality, skills, and experience needed to match the types of jobs available.

Future Proofing Your Institution:

One of the keys to establishing a successful Succession Plan is to understand your institution’s talent and skills gaps. What expertise do your employees have? On the other hand, what expertise, knowledge, or experience is your institution missing? Based on your strategic plan, what positions will you need in the future to accomplish your goals? If you are getting into new markets, do you have experienced lenders and deposit experts?

To answer these questions, you need to conduct a talent assessment such as the StrengthsFinder 2.0. This assessment, based on a study of over 2 million people, reveals the top five talents of the individual. You then place employees based on their talents where they operate from their giftings. Next, you conduct one-on-one “discovery sessions” with employees to discover other skills and experience they have. Sometimes employees bring unrelated experience to their current job that could be utilized later in a different role. Now you have a complete talent assessment.

Similarly, when you identify what positions the institution will require in the future based on strategic objectives, you discover skills gaps. What you’re missing. Now, based on the skills and experience needed in the future, you have two options. One, you seek new talent outside the organization to fill in the gaps or two, you train your existing staff.

Part II: Developing Your Successors

Nurturing Tomorrow’s Leaders:

Once you identified the successors to the specific positions, now it’s time to create a unique Personal Development Plan. Having a plan for each individual provides a higher probability for success – both for the successor and for the institution. Again, you can use AI to assist you in developing their plan. Base it on their personality, current skills, and what experience they’re missing to fill the role.

From Potential to Performance:

It is important to differentiate between leadership talent and management skills. In short, leaders provide the vision and managers execute the vision. However, leaders of today must do both. They need to lead their team and perform managerial duties. Therefore, you must develop a Personal Development Plan that incorporates both leadership development and management skills training.

Empowering Successors:

The last step to develop the successors is to establish a formal training plan. This plan incorporates the technical skills to do their jobs and soft skills to improve themselves. Technical skills training includes how to do the daily functions as well as how to navigate the network and core systems. The soft skills training can include presentation, negotiation, and communication skills as well as how to get along with others.

Establishing a Succession Plan is a function of Human Resources. However, your HR Director or “HR person” cannot do it alone. They need the input from every manager from the top of the organization to every level. This is a team effort that gets accomplished only by working together and with the support of top leadership. They set the example by identifying their own potential successors and listing the key functions in their own roles. The goal is to do what’s best for your customers or members which ultimately impacts the longevity of the institution.

I hope this blog helps you get started on your Strategic Planning Process and how to create a dynamic succession plan. If you want to learn more, you can register for our upcoming webinar here: Succession Planning for Community Banks.