Given the current state of the economy, it's no surprise that many financial institutions are re-evaluating their current staffing structure as part of their overall planning process. From realignment of organization structure to reduction in force, community banks are doing whatever they can to help them survive these tough times. It might be hard to recognize, but making these kinds of short and long term staffing decisions also provides banks with a perfect opportunity to evaluate their current succession plans. The American Association of Bank Directors, the American Bankers Association, and Grant Thornton have all stated that less than half of banking organizations have succession plans in place. This is especially sobering considering 2008 statistics from the Journal of Financial Services Research: the average age for a bank CEO is 57.25, with an average tenure of 8.6 years.
Recent statistics from the Society of Human Resource Management (SHRM) might suggest that succession planning can take a back seat to other priorities, but that strategy could end up being very short-sighted. According to the SHRM Labor Market Outlook 1Q 2009, 58% of the respondents felt they weren't saving enough for retirement and 65% said they would delay retirement and work longer, if the economy didn't significantly improve. Instead of seeing this delay as an excuse to postpone succession planning, community banks should take this opportunity not only to develop their succession strategy but also give the next generation of leaders the ability to be mentored into the position during a very unique economic time.
Many executives nearing retirement today also weathered the savings and loan crisis of the 1980s, learning lessons that that prepared them for challenges and economic changes throughout their career. Perhaps now is the optimum moment to impart that knowledge to the next generation of executives. In fact, mentoring a junior executive through the current economic cycle can provide real insight into their innate leadership abilities, as well as the way they adapt and navigate through unexpected circumstances.
Another benefit of dealing with succession planning head-on is improved retention of high performers. It goes without saying that retaining these "stars" is vital to the organization, but they also need to know that internal advancement is available and that a defined plan is in place. However, having the plan ready is only the first step. Once the successors have been identified, a continuous focus on the goals, benchmarks and feedback must be maintained. This level of attention takes time and additional effort, but it will ultimately be worth it, perhaps even becoming the defining factor in your organization's long-term success.