During your strategic sessions, when planning for leadership succession, focus on the talent. Succession planning is on everyone’s top strategic objectives. And you must choose the right successors for each leadership position. The leadership team comprises of a variety of talent, skill, and experience. So how do you choose successors to the top-level leaders successfully?
Below are five talents to look for as you look for successors to the top positions of your organization:

The Talent of Leadership.

You can argue that leaders are born or made. I believe it’s both. The best leaders are those who are naturally good influencers of people which is the top talent to look for in your senior leadership team. Leaders take the initiative to lead. They are excellent decision makers with the information they have available at the time. They also own their decisions and consequences of those decisions.
Influential leaders don’t “tell” others what to do. They “coach” others to discover the answers for themselves. Top leaders must trust their employees that they know how to perform the job the company hired them to do.
Lastly, it is crucial to understand the difference between leadership and management. Leaders impart the vision to others. Managers execute the vision. Leadership is a talent. Management is a skill. The best leaders are also successful managers. Top leaders must be willing to develop their leadership talent and to enhance their management skills.

The Talent of Communication.

The talent of communication includes the ability to communicate well in every area and in a variety of ways. Good communicators are well spoken and can also communicate successfully in writing. They have the common sense to discern when an in-person conversation is better than an email or voice mail based on the circumstances. They choose words wisely to ensure others understand the message correctly and avoid misunderstandings or hurting other people’s feelings.
Excellent communicators listen well and repeat what others say to ensure they understood the message. Leaders who possess this talent mold their communication style to others’ styles to ensure a successful interaction. They take the initiative to understand the communication style of those they interact with and confront situations as they arise.

The Talent of Strategic.

Top leadership must be strategic about the future on how to direct the company’s endeavors. Collaborating with the other top leaders as a team, leaders make decisions that impact all stakeholders. People who possess the Strategic talent, according to the CliftonStrengths themes, create alternative ways to proceed after they explore at all the options.
Even when a company has a vision, without strategy at the top level of leadership, the company wonders around and does not accomplish its goals nor the vision. As a strategic team, they select members based on the knowledge gaps and needs of the team. It is crucial for the future success of the organization to choose the right successors for the top positions of the company.

The Talent of Includer.

Not one person can lead an organization without consulting and including the rest of the team—not even the CEO. Therefore, it is imperative for a Senior Leadership Team to look for leaders who include others in the decision-making process and that listen to others’ perspectives and points of view. Just as important, once a decision is made, whether everyone agreed or not, the team must support the decision.
According to the CliftonStrengths themes, those who possess the talent of includer simply “accept others.” Even though this talent is important, on one hand, the team must ensure the entire staff is represented at the leadership level. On the other hand, they must ensure that confidential information does not get out prematurely to the staff in an effort to “include everyone.” Doing so can present legal risks to the company if they share information that is not appropriate to be shared until the right time.

The Talent of Responsibility.

Top leaders must accept the huge responsibility it is to lead others. Some people only want the title but don’t want to take on the additional responsibilities that go with the title. Ensure your C-Level leaders embrace and own the responsibility given to them. They hold each other accountable.
Leaders with the talent of responsibility get things done. And precisely because they do what they say, they typically don’t understand others who don’t follow through. For them this is inconceivable. That’s when the communication gift comes in handy to understand others who don’t possess that talent and talk about it.
I will leave you with these related questions as you search for successors:

• How deep is your talent pool? Could you find successors to the top leadership positions internally?
• Are you focusing on depth of talent to include talent, skill, experience, and expertise to fill the open seats?
• Are you looking for people who share your core values and the skills to match the business needs?

Succession planning is a great way to introduce new set of skills and expertise you may have been missing in the past. Therefore, when planning for leadership succession, focus on the talent. I hope searching for these five talents in your top leaders’ successors helps you form a successful team.

Managing Treasury Management service risk is as important as managing credits. There are several TM services that carry credit risk similar as if they were loan facilities to business customers, as well as other risks. Therefore, it is necessary to conduct service risk assessments and also ensure the businesses using these services are credit worthy.

So where do you begin? How do you identify those services and ensure they are used in a safe and sound manner? You ask similar questions as when you lend money to a business customer: Will the institution get paid back once the money is gone? Does this business have the capacity to support the debt in case the transaction is done and there are no funds to back it up? Let’s examine these services closer:

Wire Transfers

This product is probably the highest risk-rated service at your institution. If your employees don’t follow the appropriate policies, processes, and procedures, once you click “submit,” the money is gone. Therefore, it is imperative that your procedures are followed exactly as written to ensure the institution is not liable if the wire is fraudulent. Additionally, the platform used to initiate and approve wire transfers must have multifactor authentication capabilities and authority levels—both at the customer’s site as well as internally for employees to approve based on their own limits. There is Operational, Technology, Compliance/Regulatory, and Credit Risk when extending wire transfer capabilities to business customers.

Automated Clearing House (ACH)

Direct Deposit of Payroll is probably the most common service institutions offer to business customers. However, businesses are increasingly utilizing ACH to pay their bills because of the additional cash flow control and because it’s significantly cheaper than checks or wires. Businesses select the specific date for the batch of payments to clear their account. From the risk perspective, once the batch leaves, the institution can only retrieve the funds within a specified timeframe and following specific ACH rules. If the business account does not have collected funds, the institution is out the money. Therefore, ACH services are similar to an open Line of Credit and thus bankers must approve this TM service as a credit facility. As with wires, there is Operational, Technology, Compliance/Regulatory, and Credit Risk for ACH services offered to businesses.

Remote Deposit Capture (RDC)

The RDC carries the same risks as the other two services, but it works differently. The primary risk with RDC comes from customers potentially depositing the same physical check more than once, and in more than one institution.

Current scanners have technology to identify payee, routing number, account number, check number, amounts, and even the handwritten amounts. However, there is still a possibility of a fraudulent check deposited at different financial institutions within a certain period of time where it is undetected (at least for a few hours before posting to the accounts). Therefore, institutions must implement policies establishing daily and aggregate limits for checks deposited via RDC. The systems can automatically approve any amount, but the institution must approve each business customer up to a certain limit and treat each deposit as an extension of credit.

Unfortunately, many institutions review all checks deposited via RDC for all customers manually after a certain amount determined by the institution’s policy making this service costly and inefficient. In addition, most institutions grant immediate access to the funds deposited via RDC. For these two main reasons, businesses that utilize this product must obtain credit approval before they use it. Most institutions provide the credit approval at the time of making a loan to the business customer. For depository-only clients, the institution provides credit approval even if the customer does not have a loan.

Mobile Deposit

Consumers and very small businesses use the Mobile Deposit service with few exceptions. Mobile Deposit carries the same risks as RDC. The key determining factor as to which service a business should use, RDC or Mobile Deposit, is volume. Only businesses should use the RDC service. All consumers can use Mobile Deposit. However, the daily limits for consumers is typically lower than for businesses.

Managing treasury management service risk is as important as managing credits and is part of the overall enterprise risk management program of your institution. The purpose of this blog is to explain the various risk categories that each of these important treasury management products brings to the institution. Conduct service risk assessments on these services and ensure your institution is mitigating all the risks. In the end, all other risk categories affect your reputational risk.

Businesses expect community banks and now credit unions to offer these services. Otherwise, you are not competitive. Institutions price loans based on risk. The question I leave you with is this: Do you charge for these services especially now that you understand the additional risks your institution takes by offering them?

As always, we are here to help.

Looking for ideas to expand your Treasury Management reach to new business customers? Look into the TMClarity Framework, our comprehensive and transformative training and Treasury Management business management system that leads to greater sales success, higher margins, and increased customer retention in a competitive marketplace.