By Scott Byorum,
Nationwide Real Estate Tax Service, Inc.
A sudden health
crisis…forced retirement…a new job opportunity…ethics violation…death.
These things do not typically occur regularly in our day-to-day lives.
We generally go to work each day to familiar faces and familiar
challenges. But life plays by a variable set of unpredictable rules and it is
this unexpectedness that can take our predictable operations by surprise. A
board of directors needs to be prepared in the event a director or officer is
suddenly no longer part of the bank’s future. Since the board’s key
responsibility is governance, leaving this important aspect of bank function to
happenstance is remiss.
Aside from future
preparation, some of the key immediate benefits of succession planning are the
enhancement of leadership skills and a more intimate understanding of each
other’s roles and responsibilities. This is directly linked to improved job
performance and synergistic team interaction. The confidence built in successful
succession planning can also increase the effectiveness of planning in other
areas of the organization.
There are three main areas to
address in succession planning: Short-Term, Long-Term, and Permanent. Each will
address certain key functions of continuity and the skill sets needed to assure
their successful transition. What responsibilities that need to be covered in a
Short-Term absence (three months or less) are quite different than what needs to
be covered in a Long-Term (over three months) or Permanent absence.
During succession planning,
include the involvement and input of all key stakeholders and address the
following primary elements:
Analysis: What are
the key challenges that face the organization today and within the next 5
years? This is important in evaluating whether to promote and train from
within or whether to seek succession in an outside recruitment firm. While
promoting from within can establish strong interpersonal relationships, it
can be a long and involved process. Outside recruitment can bring in
immediate experience, though relationships may take longer to establish
Definition/Review: Undergo an in depth study of each director and
executive’s role, responsibilities, and task definition. Areas
undocumented should be documented. This process will allow everyone to
become very familiar with each other’s roles and heighten the awareness
for successful planning.
Development: If succession is to occur from within, who in the
organization is best qualified to assume key roles? Identify further
training and mentoring needs to bring individuals up to competency in their
succession role. If succession is planned to be outsourced, identify the
target professional’s qualifications for candidacy. Regardless, alternate
internal candidates with comparable skill and competency should be
identified for cross-training, should emergency succession require temporary
Note: Directors should not be looking for cardboard cut-outs to
replace the incumbents. Each individual has a unique personality that allows
them to bring their own definition to the position. Rather, skill sets and
competencies applicable to the requirements of the job should be what are
Detail a process of transition that includes communication to staff,
shareholders, and the public. There are different considerations for
internal succession vs. external succession. With internal succession, the
individual is known to the organization making it easier to address
deficiencies. Regardless of which path an organization selects (or multiple
paths), key milestones should be establish for the first (up to) 12 months a
position is replaced in order to determine if the succession is
accomplishing the organization’s goals. A coach might be brought in to
facilitate the succession.
planning is much like business continuity planning. It needs to be
periodically reviewed and tested for relevancy. Select a time for annual
review of the document. Stage a periodic readiness evaluation, either
artificially or when one of the key figures takes time off, such as a
vacation. By simulating a
succession transition, you can identify areas of weakness that can be
addressed before a real event triggers the plan.
A change in leadership
threatens the stability of any organization, especially if the circumstances
surrounding that change are dramatic or sensationalized. Staff moral,
shareholder confidence, public opinion can all be affected, leading to further
adverse conditions. Rather than be caught off guard and scrambling to cope with
a sudden change in your key personnel, take the time to develop a contingency
plan for a competent and reassuring transition.
to January 2009 Directors Digest>
Byorum is the director of business development at Nationwide Real Estate
Tax Service, Inc. He may be reached by phone at 800-528-7803 or e-mail at email@example.com.