From Strategy to Stability: Succession Planning Essentials for Community Banks
If there’s one thing community bankers know, it’s that change is constant. Whether it’s shifting market dynamics, evolving customer expectations, or the ever-present march of technology, our industry never stands still. But while we often focus on external risks, it’s the internal ones—like sudden leadership changes—that can catch us off guard and have the biggest impact on our bank’s culture and stability.
That’s why our latest risk management webinar zeroed in on succession planning. Here’s a recap of the key takeaways, with practical advice you can put to work right away.
Why Succession Planning Matters (More Than Ever)
Succession planning isn’t just about filling seats when someone retires or moves on. It’s about building a resilient organization that can weather any storm—planned or unplanned. As Rian Uelmen, Bankers’ Bank’s HR Director, put it: “Succession planning is like having talent insurance. When you do it right, it builds trust, demonstrates commitment to your team, and ensures the long-term success of your bank.”
Consider these eye-opening stats:
- 67% of organizations lack a formal succession plan.
- Companies with robust succession plans see 2.5x higher revenue per employee.
- 10,000 baby boomers retire every day, taking decades of knowledge with them.
Without a plan, leadership gaps can cost your bank dearly—both in dollars and in lost momentum.
Four Phases for Effective Succession Planning
Rian shared a straightforward framework to keep succession planning clear and actionable:
1. Strategy: Clarify your purpose. Are you planning for leadership continuity, minimizing disruption, or developing internal talent? Usually, it’s all of the above.
2. Identification: Pinpoint the critical roles that would cause the biggest disruption if left vacant. Who are your future leaders? Who’s ready now, and who needs development?
3. Development: Invest in your people. Use the “three E’s”—Education, Experience, and Exposure. Stretch assignments, shadowing, and cross-training are game changers.
4. Stability: Build knowledge transfer into your culture. Document key processes, encourage mentoring, and make sure institutional knowledge doesn’t walk out the door.
Tools and Tips for Community Banks
- Talent Reviews: Use tools like the nine-box grid to assess performance and potential. This helps you focus your development efforts where they’ll have the most impact.
- Critical Role Mapping: Not every position is equally vital. Identify those with high business impact and limited successors.
- Career Conversations: Open-ended, forward-looking questions spark meaningful dialogue and help align employee aspirations with organizational needs.
- Hybrid Approach: Sometimes you need to look outside for fresh perspectives, especially if your bank is growing or transforming. But internal development should always be your first stop.
Risk Management: Planned vs. Unplanned Transitions
David Paxton from Bankers’ Bank’s Risk Management Solutions team highlighted the strategic, reputational, and systemic risks tied to leadership changes:
- Strategic Risk: Leadership transitions can shift your bank’s direction. Make sure new leaders align with your long-term goals and have the right support around them.
- Reputational Risk: Communicate early and often with customers and the community. Don’t let the rumor mill fill in the blanks.
- Systemic Risk: Unexpected departures can create knowledge gaps and destabilize your culture. Have an emergency succession plan and start knowledge transfer early.
Final Thoughts
Succession planning isn’t a “set it and forget it” exercise. It’s an ongoing process that needs to be measured, monitored, and refined. Start small if you need to—keep your plan to one page, track your progress, and adjust as you go.
As Coach K famously said, “Leadership is a continuous study of people.” The more you know your team, the better prepared you’ll be for whatever comes next.
If you’d like more resources or want to talk through your bank’s succession planning strategy, don’t hesitate to reach out to our team at Bankers’ Bank. We’re here to help you build a stronger, more resilient future.