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Succession planning is retention insurance for your financial institutions’ future

Oct 12, 2022

Succession planning must be a top priority for all financial institutions, especially as more baby boomers reach retirement. It’s not all about retirement, though. People can leave at any time without warning. Some relocate. Some leave for other jobs. There may be unexpected illnesses or even death.

Financial institutions across the country are doing more of this planning than ever. It doesn’t matter how large or small your financial institution is, there needs to be a succession plan. Forging ahead without one is unnecessarily stressful and can leave you caught off guard during a very stressful time.

All organizations must identify who will be ready to take over when the time comes and make sure those future leaders are compensated well enough to stick around.

Going through the exercise of succession planning can be motivating for employees, helping with retention. Telling an employee they are part of the long-term plan is highly motivating and is likely to cause them to stay if they have a vision for their future.

Generally, a robust succession planning process includes the following steps:

  1. Identify key positions or roles in your organization: Clarify the skills, knowledge and attributes needed for success in these key roles. Determine competencies important to the organization overall, as well as leadership competencies for various roles. Start with the executive team and work your way down the organizational chart.
  2. Identify high-potential, high-performance employees: Identify who has or can develop the necessary skills, knowledge and attributes to succeed the incumbent in each key position. Focus on retaining these employees first. It’s important to assess successor candidates against the competencies to identify gaps in order to develop a career blueprint for each successor. Be sure to ask each successor candidate if they have a desire to be a leader in the organization before proceeding with extensive development opportunities.
  3. Evaluate the employee population: Look for highly skilled individuals and those with unique knowledge to determine who would replace them should they leave. How do you know who these people are? Ask the question: “If this person left the organization today, would it leave a significant void that we wouldn’t immediately know how to fill?”
  4. Determine successor candidates’ readiness to move to another position: Readiness charts can help you identify their strengths and development needs, as well as track who is immediately ready to assume a role, who may be able to serve in an interim capacity, and who may be ready over time. A leadership assessment tool can help determine each candidate’s competency strengths.

Succession planning helps job retention, but so does career planning in general. Any practice a financial institution can implement to retain talent is important. Give people a picture of their future career path and how to progress, and those employees are more likely to remain loyal to their employer. Most importantly, don’t let your high potential employees be recruited away by your competitors.

Need assistance?

Wipfli can help your organization implement effective succession planning, taking you through each step of the process and providing an objective perspective to help you make the right decisions for your organization. Contact us to learn more.

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Barbara Low, SPHR, RODC
Senior Manager
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