How to Raise Homegrown Talent

Succession planning is crucial for community banks, but they need leaders with skills not easily found in the general job pool. The answer could be an in-house leadership development program

By Judith Sears

Developing future leaders is the essence of planning for a bright future. But often, it’s not until a key player retires or a position proves difficult to fill that community banks spot a leadership gap and take action.

Ideally, banks won’t wait until it’s a crisis to address succession planning. But that could be easier said than done, because candidates suited for the community banking sector can take time to unearth.

“Most of the finance and accounting curriculum in colleges and universities focuses on Wall Street and asset management, not banking,” says Lawrence Dunford, director of leadership and development at EagleBank in Bethesda, Md. “Community banks need to implement a strategy to recruit, identify and develop talent to continue to compete in the marketplace.”

Independent Banker talked with representatives of three community banks who are guiding homegrown leadership development programs. Their ideas, experiences and programs, adapted for their institution’s size and circumstances, may provide other community banks with insight into how to meet the leadership development challenge.

Growing talent in the Bluegrass State

Farmers Bank, a $120 million-asset institution in Princeton, Ky., has created a formal succession plan for the senior management team for every department in the bank. Every July, Jeff McDaniels, president and CEO, gathers other senior executives to review the bank’s staff and forecast employment needs for the next 18 months. The senior executive team reviews the most critical positions in the organization and asks, “What if we lost this individual?”

In consultation with supervisors, Farmers Bank’s human resources manager extends that same review to each position within the organization. As potential gaps are identified, training plans are created so that others will be ready to step up if necessary.

Since the bank started its succession reviews roughly five years ago, the majority of its 35 employees have participated in some kind of training. McDaniels expected half of the bank’s employee roster to have done so by the end of 2017.

In 2014, in a bid to nurture its own talent, Farmers Bank also developed a formal internship program. “We’ve not had a lot of success in bringing people not from the area into our organization. We lost them back to their hometowns,” McDaniels explains. “We’ve refocused and are going to try to grow our own now.”

Each year, Farmers Bank offers a paid summer internship to the highest-performing local high school graduate who plans a business major in college. The bank also invites the interns to return each summer while in college. The tasks for first-year interns include duties such as handling routine teller responsibilities. In the second and third years of the program, the interns’ responsibilities expand to handling credit analysis, operational analysis or other, more complex assignments.

To date, each of Farmers Bank’s three interns have returned during their summer college breaks to work for the bank. In effect, the internship program has constructed a talent pipeline. An intern who works at the bank during a four-year university degree program will have the equivalent of a year’s work experience with the bank.

“We have a candidate who already knows us very well,” McDaniels says.

“Community banks need to implement a strategy to recruit, identify and develop talent to continue to compete in the marketplace.”
—Lawrence Dunford,
EagleBank

Committed to employee education

In 2012, Reliabank Dakota in Estelline, S.D., had no formal leadership program when both its president and chairman of the board announced they were considering retiring. The bank did, however, have an underlying culture supporting employee education.

Over the years, Reliabank Dakota has sent seven employees to graduate banking schools in Colorado and Wisconsin, providing tuition support and time off for attendance. “We’ve had a longer-term goal of keeping education going among all our staff, and especially those we identify as having that leadership potential,” says David Ebbers, president of the $315 million-asset community bank.

Reliabank also takes strategic planning seriously, a process involving 25 of its 76 employees. As a first step in growing its leadership development program, the bank expanded employee participation in strategic planning. Employees at the line- or mid-management level now run the projects spawned through the strategic planning process.

For example, in 2013, Reliabank Dakota acquired a few new branches. Rather than have senior executives lead the merging of the new branches, the bank assigned three operations employees—a cashier, an operations manager and an IT associate—to lead various parts of the transition. Ebbers notes that back-room operations are the first thing a new branch will be exposed to, so it made sense to have operations employees lead the project.

“It allowed for a smooth transition,” he says.
In addition to greater involvement in strategic planning, more employees—and younger ones—are included in the bank’s committees, such as asset-liability management, marketing, and monthly management meetings. “They ask good questions and they absorb information,” Ebbers observes. “The best part is their willingness to take an active interest.”

Rapid-fire growth

Fast growth put the spotlight on leadership development at EagleBank, a $6 billion-asset community bank. In 2013, it acquired Virginia Heritage Bank, increasing its workforce by roughly 20 percent in less than a year.

Lawrence Dunford, who has a master’s in organizational development and joined the bank shortly before the Virginia Heritage acquisition, set to work creating two highly structured leadership development programs. One, dubbed L.E.A.D (for Lead, Empower, Achieve, Develop), was targeted at developing succession plans. To establish performance criteria, Dunford reviewed the bank’s strategic plans and interviewed senior executives about how they define leadership.

Currently, 14 employees—eight mentees and six mentors—participate in L.E.A.D, which includes 360-degree feedback, twice-monthly mentor-mentee meetings, and membership in a project team that proposes solutions for bank problems.

25%

of Reliabank’s employees are part of its strategic planning program

Dunford also developed an in-house Commercial Banking Development Program (CBDP), primarily aimed at recruiting and developing candidates for the bank’s commercial real estate and lending business. The bank was particularly interested in developing commercial loan portfolio managers, which can be a challenging position to fill.

Dunford launched the CBDP first by gathering information on what a portfolio manager would need to know about each bank department, and then by designing core learning objectives and instigating learning opportunities. Today, CBDP is a 12- to 18-month program that includes classroom instruction, self-study and on-the-job training. Participants, of whom there are five currently, rotate through nine different departments to give them strong operations knowledge.

Both the L.E.A.D and the CBDP programs are on their first runs. Quantitative results aren’t yet available, but Dunford notes that employee interest and support for both programs have been high. “I have also noticed that cross-departmental communication and collaboration has improved in some areas of the bank because the mentors’ and participants’ relationships are growing,”
he says.

Not every community bank will have the resources or the need to institute elaborate employee development programs. But even banks with modest resources can incorporate techniques such as widening employee participation in committees or pairing promising employees with mentors. (See “How to build a pipeline of future leaders,” below.)

The most important takeaway from the leadership development efforts of these three community banks may simply be that as banks plan for the future, they are also enriching their current cultures. As Dunford says, “With these programs, employees see that there are possibilities to grow at EagleBank.”

12 ways to build a pipeline
of future leaders

The experiences of Farmers Bank, Reliabank Dakota and EagleBank offer clues about how to create the elements of a successful leadership development program. Here are a few ideas to consider when embarking on your own initiative.

  1. Support graduate training in banking for promising employees.
  2. Regularly evaluate staff skills and interests.
  3. Prepare and regularly review a staff succession plan.
  4. Create an ongoing internship program to support recruitment.
  5. Rotate employees through departments for wider experience.
  6. Involve more employees in strategic planning.
  7. Involve more employees in bank committees.
  8. Delegate projects that develop employees’ skills.
  9. Give performance feedback through tested instruments.
  10. Create mentor-mentee programs.
  11. Create ongoing Lunch and Learn meetings or
    the equivalent.
  12. Create project teams to address specific bank challenges.

Judith Sears is a writer in Colorado.

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