Executive Letter: The Importance of Succession Planning

By Rose Oswald Poels

It can be difficult to imagine what your bank might look like without you, or other key leaders. This is a topic that executive leadership considers often, and it is one that every bank will face – and has faced – at some point. Regulators routinely look for succession plans during exams not only for the bank president, but also key leaders throughout the institution. Having succession plans for all key roles within the bank helps the institution navigate through a variety of planned and unexpected scenarios. A plan also can be used by executive management as a development tool to ensure that the persons identified as potential successors receive the training necessary to qualify them for the future role.

Beyond staff, you also need to consider shareholder and director succession. We all just finished celebrating our country’s independence this past weekend, enjoying festivities with family and friends or simply relaxing outside in the hot weather. And while I’m sure we all breathed a sigh of relief when another July 4 passed without an alien invasion, on a serious note, the holiday marks the date when our country became independent from Great Britain and serves as a reminder that our freedom isn’t “free.”

I like to consider the importance of our country’s independence when I think about the banking industry. Succession planning across the organization certainly can play a vital role in helping to preserve a bank’s independence if that is ultimately the goal of the shareholders, board, and executive management. Most importantly, it provides options for the institution’s future and positions the bank to be resilient to handle any planned or unexpected events.

In addition to speakers at various WBA education programs, there are many good associate members of WBA that work with banks to help navigate these future changes. And we are already seeing, not unexpectedly, several mergers announced over the last few months. At the same time, I am proud that WBA is also offering a conference at the end of August in Galena designed specifically for community banks, notably those that are closely held or family-owned to address the unique opportunities and challenges facing these institutions as they navigate the future with the goal of remaining independent. More information on this Retreat can be found here. Not surprisingly, having a solid succession plan plays an important role in helping banks remain independent.