In this blog we share 6 sure ways to lose your Treasury Management Officer (TMO). Community banks and credit unions nationwide are seeking experienced TMOs to help them increase business core deposits and fee income. But even knowing that Treasury Management Officers are in high demand, institutions continue to fail at keeping them. Why? Because they keep repeating the same mistakes. At the fundamental level, the leadership still does not recognize the value that treasury management services bring to their institution.

The challenges that TMOs experience are real, and they need the leadership’s attention. And we need to address these 6 six sure ways to lose your Treasury Management Officer.

Lack of support from leadership.

A successful TMO recently shared with me that the number one reason she was successful was because of the bank president’s support. Without his unconditional support to provide the tools, systems, support, and budget there would be no TM department. Unfortunately, we hear the opposite of this story more often than the success one.

Treasury Management is not a “one-person show.” It’s a team effort. And without the “tone at the top” and leadership’s support, nothing happens. To attract and retain top Treasury Management talent, you must provide the support needed to sell and support the services. Otherwise, your TMO will burn out and simply leave your institution. There are plenty of opportunities for them right now.

Lack of resources.

In addition to the “moral” support that comes from the top, TMOs need physical support too. Creating awareness about Treasury Management’s value is great, but without providing additional staff to help them, it won’t work. They need a separate person to implement the TM services and provide ongoing support and maintenance for TM customers. Otherwise, they will be at their desks doing just that and the sales pipe will dry out.

TMOs must go out of the bank and meet with business customers alongside the business bankers (lenders). The TMO’s role is a sales role (at the Officer level), not a support role. Leadership cannot and should not expect the same person to do the two separate jobs. It is unsustainable! Additionally, they need help opening the business checking accounts for the TM customers. This function typically takes place at the branches by having at least one person knowledgeable about TM business accounts. However, some institutions are opting to bring the account opening function to the TM department for efficiency and consistency.

Insufficient Training for TMOs.

Everyone needs training. If you’re promoting from within, the TMO needs specific training on how to sell TM services and how they work. They also need training on your processes, systems, policies, and risks that TM services bring. Additionally, they will need to be introduced to the institution’s business customers who may need TM solutions.

Similarly, if you bring in an experienced TMO from another institution, they need training on how “you do things your way.” They need to learn who to call for the various issues. And also work with the business bankers to be introduced to their business customers. Lastly, they need to get familiar with your business bankers’ portfolios to look for opportunities. As we mentioned above, TM is a team effort.

Salaries may be below market rates.

TMOs are part of the sales team for your institution and as such they should be paid accordingly. Often TMOs get compensated similarly to the operations or retail staff which is not at market rate. As most institutions experienced in recent years, the depository side is just as important as the loan side. In other words, liabilities are just as important as the assets of the institution’s balance sheet.

Without a strong core deposit base with low cost of funds, the Net Interest Margin deteriorates, which impacts Net Income. Therefore, ensure your HR department conducts market research on the TMO role and pay the TMO at market rate. Otherwise, you will lose your TMO.

Business bankers are not incentivized to sell TM services.

Another challenge institutions face is the lack of incentive plans for business bankers that include deposits and TM fee income. True salespeople sell what they’re incented to sell. If deposits and TM fee income are not included in their plan, nothing happens. They will focus on bringing in loans, which is what they have always done! And the cost of funds continues to increase.

Formulating a simple incentive plan that includes both loan and deposit growth goals as well as fee income produces results. Additionally, business bankers and TMOs learn to work as a team that focuses on bringing the customers’ entire banking relationship. And the added benefit is that your business customer feels your institution meets all their financial needs in one place. This is one of the main goals financial institutions have these days.

The institution may not offer the TM services that business customers expect.

Lastly, just as important, you must offer a robust suite of TM services to meet your customers’ depository needs. Experienced CFOs, Treasurers, and Financial Managers of corporations understand the TM services and capabilities they need. Therefore, it is critical that your institution offers the most common TM services on the market. And if you service more sophisticated markets, you also need to compete with the TM services that national institutions offer. Otherwise, these businesses will simply not choose to bank with your institution, no matter “how nice” you are.

Along with the suite of TM services come the Account Analysis System and the Online Banking Platform you choose to use. Integration amongst all these platforms and with the core system is imperative for a smooth process and optimal service.

It’s our hope that this blog opens your eyes to the 6 sure ways to lose your Treasury Management Officer. If your institution doesn’t address these challenges, it is not a matter of if you will lose your TMO, but of when. But be encouraged! Most institutions we encounter these days are interested in doing the right thing regarding TM. Leaders are looking to increase awareness, support their TMOs, and provide resources to ensure their TM department is successful. In the end, it’s all about serving your business customers both with their lending and depository needs.

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.