Speaker 1:
As a bank that focuses on business, we work with business leaders all day, every day. We have a front row seat to what's working and what has potential. The First Business Bank Podcast is dedicated to sharing insights to help you work better, smarter, and faster to achieve your goals. Let's get into the show.
Mark Meloy:
Hello, I'm Mark Meloy CEO of first business bank. I'd like to welcome you to another episode of the First Business Bank Podcast. Today, we'll talk about management succession planning and important issue for leaders not only as key employees aged towards retirement, but also to be prepared for an untimely and tragic departure. Owners and leaders that aspire to continue the mission or perpetuate a legacy need to think ahead and be strategic about change.
Mark Meloy:
It's a process that can be difficult to execute. Where to begin, what messages will be sent. Those are some of the questions and there are a variety of constituencies to consider. The pathway like many is often unclear. So today we hope to help map the journey. I'm joined by two of my colleagues who will introduce themselves before we get our conversation started. Jodi.
Jodi Chandler:
Yes. Thank you Mark. I'm Jody Chandler, the chief human resources officer at First Business Bank. Uh, and I've been with the bank for about 28 years.
Mark Meloy:
Corey.
Corey Chambas:
I'm Corey Chambas, I'm the president and CEO of First Business Financial Services. And I've only been at First Business Bank for 27 years.
Mark Meloy:
Good. Jodi, we'll start with you. How do you define management succession planning and maybe give a few examples of how employers approach this from a process standpoint?
Jodi Chandler:
Sure. Um, I, and maybe we define, uh, succession planning and or succession management as a transition in leadership. Um, and that sounds pretty simple yet the whole process and the planning, uh, is very complex. Um, we approach it in a couple of different ways and that really depends on whether we're, uh, looking to, you know, or we have identified a specific role in the company that we're looking to find a successor for, or if we're just working organizationally on different talent development initiatives and really building our leadership pipeline.
Jodi Chandler:
Uh, if we have a specific role identified, there's a process that we go through to help us understand what the role requires. And then also help us understand the different characteristics and traits of the individual to make sure that we have a good fit for the position that we, uh, are prioritizing from a organizational perspective and the talent development initiatives they're just ongoing initiatives that we're working on year after year after year and kind of fine tuning and evolving those initiatives.
Jodi Chandler:
But it really does start with our strategic plan and looking at what the organization needs to be capable of doing over the course of the next three to five years in order to execute that strategic plan. We also utilize some external partners and or professionals to help us bring some objectivity to our process. And, um, we do a lot of executive coaching and can really tailor development then for an executive around the gaps that we may see in terms of their readiness, uh, for a role.
Jodi Chandler:
And this process just continues to cascade through our organization. Um, and we do other individual development plans, uh, as appropriate and establish performance goals for all of our employees in the company. That again, if you roll that all up, really aligns nicely with our strategic plan. So we've kind of got a two-pronged approach, uh, really kind of tailoring it to a specific role or a specific position. Uh, and then also doing it more broad based and developing around the competencies.
Mark Meloy:
Good, thanks. Corey when one thinks of succession planning, it's easy to think of the case of a company president or a senior leader who's nearing retirement, but talk about other applications of succession planning.
Corey Chambas:
You mentioned two things really there. One is role, another was timing. You mentioned retirement so start with that on the timing, when it's a retirement, that's the more, typically more orderly, you know, what's coming, uh, you should be having those kind of conversations with folks, eh, on a regular basis about what their plans are and what their timeline is.
Corey Chambas:
So if you have, uh, a retirement, that's, that's a, a little simpler in most cases, uh, 'cause you know it's coming, there's also the unexpected situation the... And there you need to have a, in case of emergency break glass scenario, what do you do if something suddenly happens? And that could be an interim or a temporary situation. So for senior kind of positions, you should really have both a thoughtful, oh, and maybe five plus years, this person's going to be retiring.
Corey Chambas:
How are we moving toward an outcome there, but what if something happens suddenly, what would we do? How would we, we fill that role on, on an interim basis? Um, the other part you, you asked about was role because yeah, you think about the, the leader of a company and a succession plan there, but there are a lot of people in organizations who are, uh, critical, um, in, in terms of their specialized role, um, and technical abilities. And so you have to think about that.
Corey Chambas:
And most organizations have that. People who, um, there's one person who does this thing and who has the technical expertise. So you, you really should be looking at those kind of roles in the same sort of way, um, both longer-term planning for a successor. And then what would you do in case of emergency?
Corey Chambas:
Um, and then the other would be people who have a very specialized, unique relationships, client relationships, what would you do, um, relative to the salesperson who has worked with your largest customer for the last 20 years? And they're, you know, they're really tight and that's why you don't ever worry about that client leaving, because they're really close to that salesperson.
Corey Chambas:
Well, what if something happens to that salesperson suddenly, and or what about that salesperson retiring, which, uh, eventually everybody will. So those kind of rules, you also have to be thinking about, um, working in, uh, developing more of a team approach to a secondary, uh, person. And I'm thinking about succession planning and those kind of roles as well.
Mark Meloy:
Can the employee themselves be involved in the process?
Corey Chambas:
Oh, I think they absolutely should be involved in the process. Um, they should understand that this is something an organization should be doing if it's... If the organization is doing their job, if management is doing their jobs thinking about these things and, and contingency plans, just like you would for disaster recovery planning purposes, um, in, in the, you know, what, if something suddenly happens, scenario and then also a more orderly, uh, retirement kind of, uh, uh, scenario.
Corey Chambas:
So that person will often be able to identify who both internal and potentially external candidates would be for their job. So there may not be an internal candidate and, and s- in some cases for some roles, but they may know a peer of theirs who is somewhere else. And so they should be able to provide you a short list of that in case of emergency scenario. Um, they would know what the development plans need to be for those people to be ready. Um, so they absolutely should be involved.
Mark Meloy:
Jodi maybe on the other side of this. Um, sometimes it might be hard for an employee to leave, especially if they've been a long-term employee. So talk about strategies and, and how to approach that.
Jodi Chandler:
Sure. Um, you know, I think it really comes down to having really good communication with the employee. Uh, having some honest conversation, really learning and understanding what's important to that employee as they're departing and exiting, uh, the company, the more we can work together on a plan. I think the better the outcome is going to be for both the individual and for the company, thinking about things again that are important to the individual, what they'd like their legacy to be as they leave.
Jodi Chandler:
Um, finding ways to celebrate that individual and their contributions that they've made to the company as they're starting to exit the company is really important too. Uh, it can really be a positive event. It doesn't need to be a negative event. Uh, and the more you work together on the plan, I think the better, uh, outcome you'll have.
Mark Meloy:
Jodi what's the, what's the timeframe required to properly put a plan in place?
Jodi Chandler:
From an internal perspective if you've got internal candidates identified, if you're fortunate enough to have multiple internal candidates identified, um, they could be at very different points in their careers and their timelines could be very different from one another. Um, but y- y- you really can't start too soon. Um, it takes years of development if you're really gonna execute it, uh, orderly and have the person really be able to get the experiences that they need and develop the competencies that are critical.
Jodi Chandler:
Uh, you really need years to do that. If you're going externally, um, you know, we have found in our, uh, experience that it takes us months, um, and months that add up to more than a year, again, to do, to do a good job, really being able to find the talent that you're looking for, kind of diversify your talent pool and slate. It takes time. And you need to allow that time.
Jodi Chandler:
Uh, kind of going back to what Corey was saying. Um, you know, this, this may be what I'll hold true in the instance of having, uh, a known event and some time to really work with when you end up in an emergency situation, you know, your timeline might change a little bit. Um, but again, from an external perspective, it does not happen overnight. The other thing, uh, reminds me of a panel discussion that I was listening to in the last few years about a CEO that had tried to execute his own succession plan, you know, in conjunction with the board of that particular company.
Jodi Chandler:
And he explained, um, that they didn't get it right the first time with the person that they brought into the organization, and then they didn't get it right the second time. Uh, fortunately for them, third time was the charm. Um, and they did get it right, but as he reflected back on that process and kind of the learning, uh, that took place during that timeframe, it was 10 years from the time they started to work on succession planning until they had found a person, uh, that they were all comfortable with kind of turning the reigns over to.
Jodi Chandler:
So, um, I don't think, you know, 10 years seems like a eternity today. I don't know that we'd have the liberty of taking that much time to do it. Um, so I guess maybe the, the, the moral, uh, to all of my long-winded answer there is, it takes a lot longer than you think, and there are going to be, um, circumstances and things that kind of pop up and the process that you're going to need to be able to pivot around. And it's probably going to take, um, or just add some more time to the whole timeframe of really being able to, to get that successor in the role.
Mark Meloy:
So this is something I'm going to address to both of you, I'll start with you Jodi on it, but let's talk about the viewpoints on how transparent to be to your workforce. In the typical case, employees may know a senior leader is near retirement. Does it comfort those employees to know in advance the company is working on plan or does it cause more concern and chaos?
Jodi Chandler:
Um, I would say yes and yes. Um, certainly the employees want (laughs) to know that you're working on a plan, um, and that there is a plan in place, but it really does create angst, uh, among those especially that are going to be most directly impacted by it. There's a lot of questions. Um, there's a lot of input that you'll get from different individuals throughout the process.
Jodi Chandler:
You know, I think it's a lot about managing their expectations too just in terms of the amount of time that it's going to take to fill this role. We do a lot of, uh, conversation around talent reviews, talent pipelines, and then also workforce planning. And we're hoping through getting more comfortable with having these conversations and it becoming more normal, uh, in our organization that just over time, uh, everybody, you know, everybody's understanding we'll build around this topic and it will become, uh, just a much easier conversation to be able to have with people.
Corey Chambas:
I would say, Mark, that one of the, the things on this one is it is a little bit of a can of worms, you, if you bring it up and are, are very proactive about talking about it, you are going to be stirring things up and stirring people's thoughts and concerns up. There's, there's no question about that.
Corey Chambas:
On the other hand, if, if it's a, a, a real thing, somebody may be nearing retirement, people are going to be thinking about it. They're going to be talking about it with each other, and it's better to control the narrative and the discussion, um, than to have it, uh, go on, on its own and, and build, build a life of its own.
Corey Chambas:
Uh, I remember, uh, I was in a small group meeting with some employees, um, kind of a Q&A thing I, I was doing with a smaller group. Uh, and part of that is they can ask me whatever they want to ask me. And one of them asked me, "When are you going to retire?" And boy, did that take on a life in that meeting that it just kept going and there kept being more questions. Well, those, would, would there be an internal candidate or would you look to the outside and et cetera, et cetera.
Corey Chambas:
So the, it was obviously on some people's minds. Um, and I think while I had, no, I essentially had no answers for them. I-I didn't when I was going to retire. I didn't tell them anything about who it would be or what it would be or anything like that. Just talking about it, I think made them feel better.
Corey Chambas:
Um, and it was kind of this like thing you couldn't really talk about. And then one person was bold enough to ask the question and then it was sharks in the w- you know, blood in the water with the sharks. Um, so I think they felt better afterwards. So where it is, where it is a topic that's going to be, um, thought about by people. I think it's better for them to know that there is a process as Jodi was talking about for them to know that you're thoughtful about it, and that there is a process is comforting.
Corey Chambas:
Um, as opposed to, are they planning for this? What will they do? Will they get it right? Will they get it wrong? They feel more like, you'll get it right if you have a process and at least if you're willing to share that aspect of it. And that is something that you think about and work on. So I think letting people know there is a succession planning process. It has a structure, it has a rhythm, you report it to the board on an annual basis, whatever that is, I think is comforting for people to know.
Mark Meloy:
Yeah. I think that's a great point. And I, I don't think it's something that you can completely ignore as, as a senior leadership group. And, but also recognizing that it changes. I mean, I can give... Like personally asked five or 10 years ago. I just said, I don't know that I'm ever going to retire. I'm going to work till I'm in my late sixties. And, but that's changed, you know, life circumstances change and people's, people's timelines change.
Mark Meloy:
So I think open communication with the individual is critical. And then, and then an honest approach to how it's being dealt with at the leadership level across the company, to your point is comforting and, and reassuring to people
Jodi Chandler:
And Mark. Um, I think just as we've gone through, um, a lot of change in the world and, you know, in our own company in the last year with the pandemic, um, I think the remote work options are also going to play into some leaders and executives, timelines, perhaps changing as well.
Jodi Chandler:
So to your point, um, things change with people, things change with companies all the time. And I think the important thing is again, to just be dialoguing and communicating and having those honest conversations with people. Again, it's got to work, you know, not only for the executive, but also for the company too. So that's a considerations on, on both sides of the equation.
Mark Meloy:
I totally agree, Corey, uh, in the case where you've had a long-term successful employee, who's planning to retire, I'm guessing the instinct would be to hire their clone. Talk about that concept.
Corey Chambas:
Yeah. That's definitely the natural instinct. It's, it's the easy way, right? If it's working, if the person's done well, you just want mini me, you want the person that acts and looks and talks just like they do. Um, and that's the easy way to go. Um, so that's natural, um, but it might not be best. Um, I think what you really need to think about there is the future, not the past, cause that person was really successful for you in the past, getting you to the present.
Corey Chambas:
But now it's about what's the present forward look like, and that could be different. Um, maybe, maybe not, uh, if it's just, you know, mind the store and keep, keep it the same, then a clone might be great. But if the idea is that there needs to be, uh, um, some progress made, some evolution, some innovation, then maybe a clone is not the right thing.
Corey Chambas:
You have to think about where you want to go with the business, the business line, the department, whatever it may be, um, and how that all interrelates and think about the skills and the capabilities that are needed for the future 'cause they may not be the same. Are you going to expand? Are you going to grow? Are you going to new markets?
Corey Chambas:
Um, all those kinds of things could be different than what you have done thus far. So it's also comforting potentially for the employees to hire a clone. Uh, it's, it's easy. There's not change. People don't love change. Um, people aren't, don't come in every day saying, "Hey, could you change some things on me?" Um, they want things to be the same.
Corey Chambas:
So you will have to overcome that app if you, if you do make a change, if you, if you try to look for something, uh, different in the new person, but kind of the, the other side of that coin with changes people don't, um, gravitate to change. So how they've done things is probably how they will continue to do things going forward. So if the retiring person let's say, um, has built a foundation of doing things in a certain way, those employees are going to keep doing those things the same way.
Corey Chambas:
Even if you bring in somebody who's trying to make change. So it's not like you lose all the good that was built, the foundation that was built, but if you need to, to do something to get to the next level, that person, that new person can, can add that to the foundation that was built from the prior person.
Corey Chambas:
Um, it's a little difficult at times for the employees, if you're bringing in somebody very new and different, um, but it can be very healthy and it can also be very energizing because people can get stuck, stuck in a rut. They can get comfortable doing what they've been doing. Um, and maybe they're, you know, they were performing at their highest and best, and then that kind of plateaued, but somebody new, different ideas, innovative different perspective can take things to the next level.
Jodi Chandler:
Mark, if, if I could also interject on that. Um, and to your point, Corey, really kind of looking at future state and what are we going to need in the next, you know, three years or, or five years out. I recently read that 35% of the skills that are important today won't be five years from now.
Jodi Chandler:
So what's being executed on today, 35% of what we're working on in the skill set required to do that. It's going to change. It's going to be different five years from now. And the other, the other interesting statistic was, uh, 65% of the children that are starting in primary school today. So probably 4k, 5k they're going to be working in jobs that are not yet invented. We don't even know what they are.
Jodi Chandler:
So that just tells you, you know, how rapid things changed and how rapid those skill sets are changing. So while it might be easy, um, to, to put a clone, uh, into a role during a succession transition, I think you really, really, really have to challenge and force yourself into thinking about the future state and what's going to be necessary to lead the company, the department, the business line into the future.
Mark Meloy:
Jodi, I'm sure there are instances where employees self identify that they would like an exit plan or to start working on a succession plan years before they retire. Talk to me about HRs viewpoint on that situation.
Jodi Chandler:
Yeah. Um, you know, I think it's, I-I just think it's rare that somebody is starting to talk about it years before they retire. Um, at some companies there could be monetary benefits, you know, at different points in time in somebody's career. Um, that's not, you know, always the case. So I think it's more rare than common for somebody to really give you a lot of years of advanced warning. Um, and I think, you know, again, that, that goes back to... It becomes a very emotional thing for the employee and, and it's hard to figure out. It's hard to figure out what the right time is. You know, we've had individuals tell us they don't want to be a, a lame duck. Um, so if you give two years notice-
Mark Meloy:
Yeah [crosstalk 00:22:53] being irrelevant.
Jodi Chandler:
Yeah, yeah. Um, so I think that's where it really is on the leadership and, um, the HR professionals in the organization to start those conversations. So, um, appropriate, uh, amount of notice is, is important. And I think that depends on the position and the role in the company.
Mark Meloy:
Jodi you touched on this a little bit before, but when is it appropriate to do it internally versus going outside, uh, with a third party help?
Jodi Chandler:
Again, I think there's probably multiple answers to that question, Mark. Um, if you don't have experience with doing succession planning and succession management in your company, or maybe you just don't have the resources, uh, to really commit the time that's required to work on this, you might look to an external partner or an external professional to help you build the, the plan.
Jodi Chandler:
Um, maybe, you know, you're not getting the results that you want from your internal efforts, for whatever reason, you know, you're not meeting your, your goals or, or the expectations that you've put forth and you need to understand, um, where your gaps are. What do you need to do to augment your process, talking to external parties, consultants, uh, will probably help you identify those.
Jodi Chandler:
Um, and then maybe also we've talked a little bit about finding yourself in a sudden situation or an emergency situation, and you weren't planning on a transition that's taking place now immediately and utilizing an outside party or consultant can really help bring some objectivity to the whole process when emotions can be pretty high in a sudden situation. Uh, so, you know, there's just a variety of different reasons that you could be looking to, uh, partner with somebody with a professional expertise on succession management.
Corey Chambas:
And, and Mark, I would also say that even if you've built a good process, um, which I-I feel very good about our process. Um, but we also are using outside consultants tools as part of our process. We're not using them to build our process, but we've pulled together a lot of the tools that we use in different ways that are very much a part of the succession planning process, the personality profile, screening tool that we use, for example, the cultural competency tools that we use th- tho- that comes from a, a very large high level, um, HR consulting firm. We use their competency model, th- those kinds of tools come from the outside, but are all put together as part of, of a process that, that's our process.
Jodi Chandler:
And Corey you're also making me think too. Um, the executive coaching, uh, that we do, we utilize the tools that they know are very, you know, researched and valid in their whole process of doing the assessment and putting development plans together. So again, the, the consulting partnership can take on many different forms and many different uses, uh, over time.
Mark Meloy:
Yeah. Corey, talk about the, uh, pros and cons of promoting from within versus hiring from the outside.
Corey Chambas:
Yeah. That's, that's probably the, the, the hottest topic o- o- of all this. The pros, um, the, the hiring from within are, you know, what you're getting. So that's the big one and that flows right to culture. Um, because you know, you, if you have culture fit or not, and you probably do, or the person wouldn't be there and wouldn't be a candidate and culture is so important in, I think probably almost any business. Um, and, and for us, we think it's critical.
Corey Chambas:
So, so that's a big, big key. Um, you can get lucky. Um, for example, we, we hired our, our chief operating officer, um, and it was somebody that several of us had a relationship with for probably 10 years. Um, so we knew there was a cultural fit. Um, so when you hire somebody based on a couple of interviews, knowing the cultural fit is going to be there or not there, that's the role of the dice on that one. That, that's the risk of, of going to the outside.
Corey Chambas:
However, you may not have the skillset. Um, and particularly in smaller organizations or smaller, um, business lines or smaller departments, you may not have that skillset, uh, underneath the leader. That's robust enough to, to be at that leader level in that department business line and whatever it may be. Um, and it's just not a large enough to, to be able to afford to have that person waiting in the wings.
Corey Chambas:
Um, so you may have to go to the outside. You may be forced to do that because you're not, you don't want to promote somebody into a role and have them fail. That's, that's not good for anybody. Um, so, so that may be the case that you need to go to the outside at times.
Corey Chambas:
The other advantage is to bring in diverse ideas, um, through diverse experiences. So somebody's only worked at your company, they know how you do things, but if you're at a point with whatever that function is that you ne- you know, you need to, to go to the next level, you need to do things differently.
Corey Chambas:
Somebody who's had experience at a larger organization may be able to bring in, um, expertise and experiences that nobody in your company has. So looking to the outside for a diversity of experience, um, the, the level that you're going to having experienced being larger or broader geographically or whatever it may be there, there's those opportunities to, to bring that in.
Corey Chambas:
Um, and then diversity of all sorts in terms of, uh, perspectives backgrounds, whether those be cultural or ethnic or whatever kind of diversity you can think of, if you don't have what you want in your organization. Um, as far as that goes, when you, anytime you hire, that's, that's an opportunity to broaden that. So, um, that's another aspect that can come into play in terms of looking to the outside.
Jodi Chandler:
And Mark if I could just add again, um, the, the benchmark that, that we're aware of and that we, uh, know is healthy for an organization is if you had three leadership transitions taking place over time, um, kind of the ideal ratio would be that you would fill two of those roles with internal candidates and fill one of those roles with an external candidate. So the healthy balance is that two to one ratio, two internal to one external.
Mark Meloy:
Jodi touch on this, um, kind of throughout the comments, but how does talent management overlap with management succession planning?
Jodi Chandler:
I think they're completely intertwined. You know, you're constantly working on different initiatives and actions within your organization to develop your talent. If you're working on the right things that tie really closely to your strategic plan and the execution of your strategic plan, uh, over time, you should be developing that pipeline of leadership, uh, getting, uh, the alignment in terms of timing are all correct with this is the challenge.
Jodi Chandler:
Um, you know, making sure that you're developing people with the skillset and to the competencies that you really need, uh, at the right time and at the right place is where the challenge of all of this comes to be. So I think they're very much, uh, intertwined and really challenging to, to, to separate,
Mark Meloy:
A lot of great thoughts today, Jodi and Corey, thanks for taking time to share your experiences with our audience today and to you our audience, thanks for listening to this conversation. We hope you found this topic helpful and applicable to your management succession planning process. Let us know if there are other topics or information you'd like to learn about and join us next time on the First Business Bank Podcast.
Speaker 1:
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