By J. Keith Hughey, Senior Consultant
Regulations, cyber security, EMV migration, low interest rates, technology and competition. These are just a few of the issues concerning community-based financial institutions as they strive to be competitive or make the transition to becoming a larger institution. With all of that on their plates, I am nonetheless dismayed that one crucial area that lacks attention in an organization’s quest for success is how to maintain a level of leadership that is capable of guiding it for the long-term.
Don’t get me wrong, there are countless examples of financial institutions that put a lot of time and effort into searching for and recruiting individuals with certain qualifications to fill specific roles when there is an opening due to a retirement or resignation. But when it comes to effectively distributing leadership throughout the organization consistently – and having a plan to ensure a legacy of long-term leadership – the anecdotes are more difficult to uncover.
The precedent begins at the top
Let’s begin at the very top. In today’s rapidly changing business and regulatory environment, financial institutions need strong leadership that represents the account holder base, is knowledgeable about key issues that are concerning to regulators and is committed to the institution’s long-term strategic direction. While maintaining leadership with this level of expertise and involvement takes a commitment and on-going planning by both existing internal and external leadership, failure to do so can result in costly consequences.
My advice to financial institutions of all sizes is to look at the existing roster and determine if this important leadership segment reflects the current account holder profile or represents who the organization served 20 years ago. Does the leadership have a thorough understanding of the technology and compliance issues facing the organization? Do they have the financial knowledge and skill necessary to make prudent business decisions that can affect long-term viability? Do they have an appreciation for the next generation of account holders and the solutions they are likely to see as valuable?
Depending on how you answer these questions, it may be time to think about how leaders are evaluated, what educational opportunities are available or need to be provided, and whether or not it may be time to think about instituting necessary changes in order to maintain strong leadership at the top.
Are the folks that “got you here” capable of “getting you there”?
A common dilemma I frequently see when counseling clients is when the leadership needs of an organization gradually exceed the capabilities of its current management. For instance, while an entrepreneurial CEO, budding CFO or capable controller did an outstanding job of getting a new start-up on the map, as the organization grows the skills that were effective in the beginning are no longer applicable or scalable as the challenges increase and the risks become greater. This can be especially troubling if existing leadership is entrenched in the idea that their way of doing business or their vision for the organization’s future is the only one that matters.
If allowed to continue, this situation prevents the creation of a more productive work environment, hinders talented staff from reaching their potential and creates unnecessary attrition – which can ultimately lead to a loss of account holders if the level of service declines or the organization fails to keep up with service options provided by competitors.
Strengthening the chain of command
Another – and perhaps longer term – dimension of the equation is the need for leadership development beyond the C-Suite as a bank grows. Maintaining a strong presence in the market or fulfilling a strategic goal of growth occurs more organically when leadership talent is developed internally with people who are familiar with the organization and its account holders. This includes people in middle management – along with others who possess leadership potential – who are working “in the trenches” every day, who are committed to the mission, vision and values of the bank, and who can effectively serve as examples to those employees who are in contact with customers on a daily basis.
When working with clients who are interested in building collaborative environments, I tell them it is their responsibility to actively share what they know, communicate what they expect and in every way possible instill their vision for the organizations future in the people who are likely to pass it along to their co-workers. Otherwise, management becomes the bottleneck that stifles leadership development, blocks the flow of ideas from the folks who are most connected to what account holders are saying and slows the organization’s ability to be nimble in an ever-changing environment.
There will be times when allowing less experienced managers to make leadership decisions will lead to a mistake or two. However, you have to be able to trust your people to take actions based on the organization’s mission, vision and values to serve your account holders’ needs.
Two heads are better than one
So the next time you find yourself in a situation where a decision needs to be made – whether the situation is beyond your span of control or comfort zone, or requires more time than you have available – I encourage you to consider involving others in the decision-making process. As the old saying goes, two heads are better than one; especially when both of them are well-informed.