Succeeding At SuccessionChallenges Facing Smaller Banks 21 Loyalty/Stickiness Mobility/P2P Payments Relevance Limited Menu of Fee-Based Products Complexity Consistent Earnings Stream

Iowa Bankers Association

Annual Convention

2018IMPACTING PEOPLE LLC 1

Succeeding

At

Succession

Agenda

1. Levels of Succession

2. The People Portfolio

3. Succession Management

IMPACTING PEOPLE LLC 2

Levels of Succession

1. Ownership

2. Board

3. CEO

4. Key Positions


Ownership•What is the ownership structure today?

•How might it change going forward?

•What is the end game?

•In what timeframe?


Board•Is there a Plan?

•Are the needed skills, knowledge and qualifications known?

•What structure is needed for the Bank today? Future?

•What is the recruiting strategy?

5IMPACTING PEOPLE LLC

CEO Succession

•What is the timeframe?

•Is it “succession” or “replacement”?

•What are the needed skills, knowledge, abilities for the next CEO?

•What is the long term strategy of the Bank?


CEO Succession

Succession•18 months or more in the future

•Determine who owns the process (Board, Board Committee, Family, etc)

•Determine Profile for the future CEO position

•Define the potential internal pool

•Evaluate/assess internal talent

•Recruiting strategy and On-boarding process


Key Position Succession

•Determine key positions to include

•Determine internal candidate pool

•Assess internal candidates/talent

•Commit to Development

•Connect to Annual Goal Setting and Strategic Planning


Components of a Succession Plan

1. Organizational Summary of key issues and risks2. Current Organization Chart (Mission Critical

Positions)3. Current Job Description(s)

◦ Key responsibilities and accountabilities◦ Competencies needed for success◦ Qualifications

4. Readiness Chart(s)5. Profile(s) of potential successors6. Development Plans for potential successors


Do You Agree?

10

People are your most valuable asset!

IMPACTING PEOPLE LLC

Asset Management:•What are the assets in the portfolio?

•How robust is the portfolio, monitoring systems, portfolio reviews?

•How clear are the roles, responsibilities, and accountabilities?

•How much time is dedicated to managing the assets?

•What are the needed qualifications of people in charge of managing the Assets?


Capital Adequacy

What do you know about the portfolio?

Is the Bank . . .

⚫Well capitalized?

⚫Adequately capitalized?

⚫Under-capitalized?


People Portfolio

• Portfolio Content

• Quality

• Monitoring Systems

• Portfolio Reviews

• Compliance

• Active Management


Know Your Bank’s People Portfolio

• Content and Quality• Expense and Investment Needs• Results of Monitoring Systems• Drive timely reviews and

agendas• Compliance• Active Management


Talent RiskFour Kinds of Talent Risk•Vacancy Risk – risk of critical leadership

positions being vacant

•Readiness Risk – risk of underdeveloped successors

•Transition Risk – risk of poor assimilation of executive talent

•Portfolio Risk – risk of poor deployment of talent against business goals.


Why Now?

Competitive Changes◦ Economic rebound – more opportunity◦ Human capital as a differentiator

Labor Market Changes◦ Demographic trends◦ More dynamic labor markets

Organizational Changes◦ New organizational structure◦ New focus on leadership and governance


Workforce Trends

1. Changing Models of Work: Employees will work in more decentralized, specialized firms, and employer-employee relationships will become less standardized and more individualized.

2. Greater Diversity: Slower labor force growth will encourage employers to adopt flexible approaches to facilitate greater labor force participation among women, the elderly, and people with disabilities.

3. Automation, AI, Digital World: Greater emphasis will be placed on retraining and lifelong learning as the U.S. workforce tries to stay competitive in the global marketplace and respond to technological changes.

4. Income: Future productivity growth may support rising wages;may affect the wage distribution; the tie between employment and access to fringe benefits will be weakened.

Source: The Future at Work – Trends and Implicationswww. Rand.com


The Business Case


Iowa Statistics


Iowa Statistics


Challenges Facing Smaller Banks

21

Loyalty/Stickiness

Mobility/P2PPayments

Relevance

Limited Menu of Fee-Based Products

Complexity

Consistent Earnings Stream

Succession

CapitalLarger, Low-Cost

Distributors

Talent

Branch Structure

Overall Efficiency

EmergingChannels


Cost of Technology

22

Bank Strategy

Linking Bank Strategy and the People Portfolio

The Human Organization(People Portfolio)

HR StrategiesAnd Practices

Criteria

Criteria

Create

Implement


“People aren’t a company’s most important asset . . .

the RIGHT people are.”

– Jim Collins, Good to Great


Succeeding with Succession

An integrated set of proactive processes that identifies and prepares successors for key roles needed to deliver the business strategy.

Processes include:

⚫Talent Assessment

⚫Succession Readiness

⚫Development Planning


Key Concepts

Two Distinct Components:

1. Key TALENT

2. Key POSITIONS


ASSESSING TALENT


What is “Talent”?Consider this: An employee known to be

High Performing

with High Engagement

and High Aspirations


Talent Assessment Process

A process of IDENTIFYING TALENT in order to develop their skills and competencies in preparation of advancement into POSITIONS THAT ARE KEY to the success of the business strategy.


Talent Assessment Process

•Necessary for Succession Management

•Can stand alone w/o Succession

•Calibrated with multiple inputs

•Can change over time


Talent Assessment

Most Common Dimensions of Talent:

•Performance – Delivering on goals, results, and accountabilities

•Potential – the ability to adapt to and “fit” into increasingly complex roles and environments:

- Personal and Professional Motivation- Intellectual Curiosity- Innovation and Insight- Engagement- Determination


Performance

• Most recent performance review ratings

• Feedback from others – 360 feedback

• Stretch goals and contributions

Questions to ask:•Does this person have a proven track record for accomplishing

impressive results?

•Are any potential inconsistencies “derailers”?

•Are they already performing at the next level?


Potential

• It is multi-faceted

• Prioritize most important facets to evaluate•Values•Competencies

• It is ALWAYS a judgment call•Minimize subjectivity through comprehensive involvement•The more evidential experience, the better your judgment will be


Source: American Bankers Association


9 - Box Matrix - Example


Source: McKinsey 9-box Grid

Candy Lane

Peter Jensen

Andrea West

Julius Quo

Andrew Layman

Jane Austin

Pat Richardson

Sandy Sneed

Terry Non Lonnie Bates


Example 1


Candy Lane

Peter Jensen

Andrea West

Julius Quo

Andrew Layman

Jane Austin

Pat Richardson

Sandy Sneed

Terry Non

Lonnie Bates

Lindy Noodle

Jackson Normandy

Andy Coffman


Example 2


Talent Assessment Results

•Quantity and Quality of existing talent

•Relevant to all “people” processes:•Recruiting

•Development

•Rewards

•Performance Management

•Succession


“AMI” Strategy

“ ” – Accelerate development; test potential

“M” – Motivate; continue to grow

“I” – Improve performance

Remember: All positions and all employees are important to the organization!


SUCCESSION READINESS


The RIGHT people . . . in the RIGHT seats . . . for the RIGHT time


Succession Readiness

Identify for key positions:

1.Critical skills and competencies

2.Potential candidates for succession

3.Readiness level for succession

4.Developmental needs for skills or competencies


What Are Key Positions?

• Critical to strategic goals

• Key leadership and functional expertise

• Defined by:◦Key Responsibilities – WHAT is to be accomplished

◦Competencies – HOW work gets done (knowledge, skills, and abilities)


Identifying Key Positions

Goal Rationale

•Identify which jobs are mission critical

•Less than 15% of jobs

•Want Top talent in mission critical roles

•Strategy executed by key positions

•Don’t want “B/C” players in strategic roles

•Top talent impacts the bottom line


SUCCESSION READINESS PLAN

KEY POSITION

KEY ACCOUNTABILITIES

COMPETENCIES

DATECOMPLETED

BY:

Candidate NameCurrent Position

Readiness Level

StrengthsDevelopment

NeedsInterimReady Now

2-3yrs 3-5 yrsLong Shot


Succession Readiness

Key Position Planning


Executive

2-3 years

4-5 years

Long Shot

Interim

Development Planning



Development Plans

Clarifying the development gap between what possible successors can already do and what they must do to qualify for advancement


Job assignments

On-the-job training

Off-the-job degree

programs

Development programs

Conferences and

professional association affiliations

Developing others

Reading

Project teams

Mentors

Developmental Activities

48




ORGANIZATIONAL DESIGN

ORGANIZATIONAL STRUCTURE

JOB DESIGN


Org Design/Job Design

1. Need for innovation

2. Need for flexibility

3. Leverage available resources

4. Impact of technology

5. Learning and development


Developing the A-Team

1. Know them

2. Tailor rewards / recognition

3. Develop retention strategies

4. Tell them!

5. Allocate appropriate development $$

6. Track retention


SummarySuccession strategies for all levels

✓Ownership

✓ Board

✓ CEO

✓ Key Positions


SummaryGet real about Talent Assessment!

✓Accelerate Top Talent

✓Motivate and Retain the Core

✓Improve portfolio


SummaryAt the end of the day, it’s all about the “M”!



Cheryl Thomas, SPHR, SHRM-SCP

Managing DirectorImpacting People, LLC

847.274.8783

[email protected]

Questions?

Documents

Succeeding At SuccessionChallenges Facing Smaller Banks 21 Loyalty/Stickiness Mobility/P2P Payments Relevance Limited Menu of Fee-Based Products Complexity Consistent Earnings Stream