Use Case Management Succession Risk
Succession planning is a means for a bank to ensure its continued effective performance through leadership continuity. For a bank to plan for the replacement of key leaders, potential leaders must first be identified and
prepared to take on those roles. It is not enough to select people in the bank who seem “right” for the job. Not only should the experience and duties be considered, but also the personality, the leadership skills and the readiness for taking on a key leadership role.
Next, determine which people to consider for the leadership positions. It is best to identify this group with an objective system instead of just selecting “favorites.” One option is for people to self-select into the process. This way, those who are already interested in the leadership roles will volunteer. They may be the most likely to take it seriously. Several “hopefuls” should be identified for each position to be filled. This allows the potential leaders to be “groomed,” trained, and mentored for the possibility of filling the leadership positions. When the time comes for the position to be filled, there will be several people from which to choose, all of whom have had the time to develop for the new role. At least one of them may be ready to meet the requirements.
In order to prepare potential leaders, the gap between what they are ready for now and what preparation they need to be ready for the job when it is available needs to be determined. This information can help determine what
training, experience, and mentoring is needed. By considering their past performance as a volunteer, past experience, fit with the bank culture, and other staff members’ acceptance of them as a potential leader, the best fit can be determined. Also, ensure that the potential leaders are willing to carry out the bank’s mission and to continue the bank’s philosophy and culture.
Once the potential leaders have been identified, a plan for each of them should be developed. Each potential leader should be assigned a mentor; this mentor should be the person whom they may replace. The mentor and the potential leader should form a teacher-student relationship. When issues arise that need problem solving or decision making, the leader should meet with the potential leader to ask how he or she would handle the situation.
Allow the potential leaders time to “shadow” the leaders. If possible, allow them to attend board meetings and participate in the decision making. This is a great way to see how they problem solve and interact. The leaders may
even want to present the potential leaders with a problem and allow them to solve it as a group without any benefit of the leaders’ input. See if the potential leaders would react in a way that is suitable or favorable.
Also allow them to participate in goal-setting activities, such as strategic planning or budgeting. It is important to see them in action. This process should not be a means for the leaders to choose the person most like them. Because a potential leader solves problems the same way as the leader does not make him or her the best candidate.
The board may want to plan to conduct interviews with each candidate, assessing his or her abilities to make decisions, solve problems, behave appropriately in sensitive situations and lead those who will report to him or her. If appropriate, it is a good idea to allow direct reports to have some say in who will lead them.
Who Should Assess the Risk? Board of Directors, CEO, Executive Committee