From the regulators to the board of directors, to bank executives to human resources leaders, succession planning and talent retention is a hot topic! Not only is finding quality talent a challenge faced by every organization in every industry at every level, but retaining that highly sought after talent has also become a significant challenge—particularly for the banking industry.
As the qualified labor market continues to shrink, key leaders prepare for retirement, demographic shifts escalate, and employees redefine the workplace, banks need to be proactively engaged in developing and managing talent. Retention of talent should be a key priority and a key performance metric for every bank in today’s highly competitive labor market. Banks need to embrace succession planning as a critical talent retention strategy—today.
There is a tremendous amount of generational diversity in the workforce! In 2015, the Millennial generation became the largest segment of the workforce. This generation is likely to leapfrog Xers and Boomers into positions of leadership and various other roles of responsibility.Therefore, it is important to establish an intentional, systematic strategy to support and utilize the inherent differences and strengths of each generation.
Executive leadership and human resource professionals often appear to trade off succession planning for other more pressing priorities, not because of lack of interest or lack of understanding of the importance of engaging in succession and talent assessment activities. In large part, this is likely caused by the fact that the return on the investment for succession planning is often too far out in the future and that the demands of today are the demands of the day. Time to work on the business to secure a successful future is simply diverted to time spent working in the business by solving everyday problems and meeting immediate customer, employee, community, or board of directors’ needs.
Succession management is a core component of the human capital strategy: Making sure that the bank is appropriately investing in its people to ensure a deep and continuous supply of talent that is passionate about the bank, the community, and customers served is the essence of leadership. Succession management is a process and consideration owned by the entirety of the executive and senior leadership, not just the human resources leader.
The key leadership questions related to succession and talent include:
- Do we have the talent with the potential to move into various roles within the bank and into the highest levels of leadership?
- Are we focusing talent development on the right roles?
- Do we have a solid understanding of the skills and experiences needed for success in the role?
- Have we identified our “least able to lose” talent?
- Are the vision and values of the bank consistent with the vision, values, and ambitions of the potential successor candidates?
- What should we be doing to prepare and develop talent to be ready?
Many banks struggle with creating a robust approach that moves beyond a static list of names kept in a file. Effective succession management starts with a clear understanding of where the bank is going and what leadership skills are needed to get there. A succession management program includes a focus on positions critical to the bank’s strategic plan as well as a focus on employees and their development. There are several key components to consider:
- Clarifying future needs: An important first step is to clarify the skills, knowledge, and experiences, as well as behaviors and attributes, needed for success in key roles. This provides the foundation for assessing and developing future successors. It is important to note that succession is for key and/or critical roles that may extend further than the senior leadership of the bank.
- Assessing talent: A facilitated discussion of talent with multiple inputs and perspectives provides insight into the depth of the talent pool. The most common tool used to support discussions about talent is a nine-box matrix that reflects the performance and potential of employees. The assessment of employees guides the bank’s investment in development and can identify roadblocks to having robust talent pools.
- Identifying successor readiness: Knowing the readiness of successor candidates is critical for effective planning. Effective planning programs include processes that identify employees’ strengths and development needs and determine who is immediately ready and who can be ready over time for key/critical roles. Banks often use readiness charts to track all potential successors. A readiness chart shows how many candidates there are within the bank ready to assume higher levels of authority and responsibility and their identified talent gaps.
- Understanding employee career interests: Asking employees about their career goals and interests is often an overlooked step in the planning process. Succession planning processes should include discussions with employees to understand what future they aspire to within the bank. This helps to ensure that the bank’s investment in development is focused on the right place at the right time.
- Developing talent: Developing talent is an ongoing process. While there are many approaches, the needs of the employees guide the final investment. Stretch assignments, special projects, coaching, and mentoring are important techniques used to accelerate development of talent.
- Ongoing review: Effective succession planning requires ongoing review and updating to keep the program alive and meaningful. Best practice suggests that talent assessments are reviewed with leaders every 9-15 months and again when there is a major leadership change. Plans should be adapted as goals change, positions change, or individuals change or do not develop aligned with position needs.
High-performing banks and those aspiring to be top of class understand that success is built upon the knowledge, skills, and abilities of its employees. Talent—the people—is a bank’s competitive advantage in the market.