June 15, 2017
FMS Quick Poll: Succession Planning
By Financial Managers Society

What will become of your community institution when the current senior leadership decides to call it a career and head to the golf course? Is there a CEO-in-waiting ready and able to take the reins in a seamless transition? Is your next CFO just down the hall? Will you have to go outside your bank or credit union to find the talent needed to keep the institution growing?  

Those are the questions we had in mind when we went out to the FMS membership with our latest Quick Poll. Among the almost 140 responses received, we found that succession planning is certainly an item on the agenda at most institutions, but where it ranks on that to-do list – and why – varies quite a bit.   

Of the 137 respondents in the poll – 117 from banks and 20 from credit unions – 49% characterize the level of concern around succession planning at their institution to be “significant,” viewing it as one of their top concerns in the near term, while 13% see it as a “critical” issue in need of immediate attention (Figure I). Meanwhile, 28% have succession planning on their radar, but only as a lower-level priority for the coming years, and 10% of poll participants see it as a lukewarm issue that can fall in line behind other more pressing areas of concern.  

FMS Quick Poll

So how much work do they have to do to address their succession planning issues? That is, where do their efforts currently stand? Most respondents are at least headed in the right direction, with 60% reporting they have a strong plan in place already and another 31% noting they’re in the process of formatting a plan; the remaining 9%, however, don’t have in a place and have yet to take steps toward getting started (Figure II).

FMS Quick Poll

These results align closely with the responses from 400 community institution leaders in “Community Mindset: Bank and Credit Union Leadership Viewpoints 2017,” a recent FMS research survey of the industry. Responding to the same question, more than half of respondents (57%) said they have a strong plan in place for succession, 33% noted they were working toward a plan and 10% reported that they did not have a plan.

Those 52 institutions in the Quick Poll still in the early stages of trying to pull a plan together are encountering a number of challenges, including a lack of qualified internal candidates for leadership positions, the absence of an in-house program or track for grooming such candidates, a lack of urgency from the board to get a plan in place and, most of all, a lack of time and resources, as other priorities take precedence (Figure III).

FMS Quick Poll

When they do find the time and motivation to get down to the serious business of putting together a plan, those institutions can take a lesson from the 82 respondents who are further down the road as they hone their efforts. Among those institutions with a strong plan in place, having a clear process for identifying and cultivating internal talent and having a solid written plan both ranked highly as key elements toward a good succession plan, while buy-in from leadership and the board also came into play (Figure IV).

FMS Quick Poll

Thanks again to everyone who participated in our latest FMS Quick Poll. If you didn’t have a chance to complete the poll, be sure to weigh in with your views on social media or on FMS Connect!