J. Scott Petty is a Partner in the Dallas office of Chartwell Partners and leads the firm’s Financial Services Practice serving bank, mortgage, wealth management and real estate clients across the country. Scott has an established 30-year track record advising boards and CEOs on making key leadership decisions for small- and mid-cap public and closely-held private companies. Prior to joining Chartwell in 2009, Scott spent over a decade between his tenures with Heidrick & Struggles and Spencer Stuart. Over the course of his time with each firm, he led search practices in banking, real estate, and broad financial services. Scott is a graduate of The University of Texas at Austin with a bachelor’s degree in psychology and minor in business management.
Building a Future-Ready Succession Plan
Proactive succession planning ensures smooth leadership transitions and ongoing organizational success.
Brought to you by Chartwell Partners
The financial services industry is currently navigating a significant succession challenge with a steady turnover rate of 50% among board and senior management roles. This shift is driven in part by an aging workforce and the challenges posed by increasingly complex banking operations. Together, these factors create a highly competitive talent market and place immense pressure on banks to identify and prepare future leaders capable of navigating the rapidly changing financial landscape.
Understanding the Leadership Landscape
The need for experienced senior leadership is projected to stay elevated, reflecting an exceedingly competitive talent market and the escalating intricacies of banking business models. Is your institution prepared with the right leadership team to guide it successfully over the next five years?
Chartwell Partners has relied on a structured approach to help banks align their board and senior leadership with strategic objectives. This four-step process ensures informed leadership decisions and includes the following:
Step 1: Initiate
The hardest part is getting started! To begin, appoint a director or engage a third-party facilitator to lead the succession planning process. The individual spearheading the process can join with a select group of people to form a CEO selection committee. Key stakeholders, such as the chair, lead director or CEO, should be consulted to understand the organization’s strategic goals, leadership dynamics and cultural nuances. An indicator of a successful intake conversation is the creation of an ideal position profile for the CEO at the time of succession. The aim is to ensure leadership decisions support the institution’s future objectives.
Step 2: Plan
According to Bank Director’s 2024 Compensation & Talent Survey, sponsored by Chartwell Partners, 82% of banks lack a wholistic succession plan. Develop a customized plan that defines expected outcomes, detailed actions and a timeline. This phase may involve testing existing succession plans or conducting leadership assessments to provide insights for potential changes in board or management composition.
Step 3: Assess
Use a combination of in-person executive evaluations and data-driven online assessments to gain a comprehensive understanding of the leadership team’s capabilities. Consider utilizing 360-degree reviews to gain insight on your existing executives’ leadership style. For example, it would be pertinent to know if any one leader lacks followership of the broader organization despite having earned support from the bank’s board. Additionally, comparing internal leadership with external candidates can provide valuable perspective, ensuring decision-makers have a thorough analysis of available options. Your bank will benefit from being able to decide, not default.
Step 4: Report
After the assessment, compile a report tailored to the organization’s specific needs. This report may outline a detailed succession plan or offer guidance on internal leadership selection processes. Consider outlining an emergency succession plan in addition to a long-term succession plan. Clear, actionable recommendations enable stakeholders to make confident decisions about the institution’s leadership.
Maintaining Momentum
After completing these steps, it’s vital to clearly communicate the plan to the organization and instill confidence in the board. The board must hold the CEO accountable for nurturing a robust leadership pipeline. Additionally, it’s imperative to maintain oversight of the succession process through the designated committee. Regular evaluations should ensure that leaders align with the strategic plan and foster the development of future leadership.
Proactive succession planning is essential for banking institutions to ensure smooth leadership transitions and continued organizational success.
Scott Petty
J. Scott Petty is a Partner in the Dallas office of Chartwell Partners and leads the firm’s Financial Services Practice serving bank, mortgage, wealth management and real estate clients across the country. Scott has an established 30-year track record advising boards and CEOs on making key leadership decisions for small- and mid-cap public and closely-held private companies. Prior to joining Chartwell in 2009, Scott spent over a decade between his tenures with Heidrick & Struggles and Spencer Stuart. Over the course of his time with each firm, he led search practices in banking, real estate, and broad financial services. Scott is a graduate of The University of Texas at Austin with a bachelor’s degree in psychology and minor in business management.