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“You’ve got to have the bench. You have to have the right people. You can’t take it for granted.”  —Jack McGeorge, Needham Bank
“You’ve got to have the bench. You have to have the right people. You can’t take it for granted.”
—Jack McGeorge, Needham Bank

Step-by-Step Succession

By Judith Sears

Needham Bank
Headquarters: Needham, Mass.
Assets: $1.4 billion
Retail locations: Five
Full-time employees: 166
Chartered: 1892
Website:
www.needhambank.com


Prepared for Tomorrow

Two years ago chief executive Jack McGeorge initiated a three-step plan to prepare Needham Bank for his gradual retirement. The plan fits with the Massachusetts community bank’s culture of developing leaders throughout its organization.

“We wanted to know what we had going forward so we could make decisions,” McGeorge says. “We now have a very good idea of what the bank is going to look like in three to five years from my retirement. We understand the lay of the land.”

Changes in executive leadership can prove to be bumpy transitions for many organizations. But Needham Bank in Needham, Mass., hasn’t missed a step in executing its succession plan for replacing Jack McGeorge, the bank’s longtime president, CEO and chairman.

Methodically, the $1.4 billion-asset community bank’s three-step succession plan has been developing in stages since 2012, when McGeorge first proposed it to the bank’s board of directors. The plan reflects the kind of handing over of the executive reins that looks easy, but in practice doesn’t always happen methodically or smoothly.

Here are the plan’s three basic components: 

Step One: Identify and select key future leaders. In 2012, McGeorge relinquished his role as president to Mark Whalen. Whalen, who previously had been president of Dedham Cooperative Bank and joined Needham Bank when the two banks merged, had been serving as the bank’s chief operating officer. The transition has given Whalen time to settle in at a high executive level prior to step two.

In 2015, Whalen will become CEO as McGeorge steps down. Whalen will simultaneously hand over the presidency to Paul Totino, now Needham Bank’s executive vice president. 

McGeorge says that having the succession plan in place also makes it easier for the bank’s board to fulfill its obligations. “Since their job is oversight and managing the CEO and the president, they need to understand who will be managing the bank,” he explains. 

Step Two: Communicate the plan. In mid-April 2014, Needham Bank went public with its succession plan with a press release announcing McGeorge’s retirement and Whalen’s planned assumption of the CEO role in 2015. Two weeks later, the bank issued a press release announcing that Totino would then become the president. 

McGeorge, who has presided over strong growth at Needham Bank, believes that announcing and executing a formal succession plan has demonstrated the bank’s transparency to its customers, its employees and the wider community. That paved the way for broad acceptance of the plan. He says such public acknowledgement gives the bank’s rising leaders more credibility in various ways working on behalf of the bank and makes them more effective. 

“Employees can embrace the change better if they feel informed,” he points out. “The same goes for the customers and our peers at other banks. It’s important for other bankers to know that certain people within our organization are the decision makers. Transparency makes it like a non-event.”

To make the succession plan public, Needham Bank’s executive team prepared what McGeorge calls a “structured word-of-mouth” communication strategy. Bank officers were informed at the bank’s annual meeting in early 2014. Subsequently, the bank sent a letter to all staff members, which was also posted to the bank’s intranet. Department heads held management meetings to discuss the succession plan with employees and answer questions. 

“Employees can embrace the change better if they feel informed. The same goes for the customers and our peers at other banks.”
—Jack McGeorge, Needham Bank

Step Three: Develop future leaders. Needham Bank is making significant investments in employee training. Every year the bank sends six mid-level executive employees to the New England School for Financial Studies, sponsored by the Massachusetts Bankers Association at Babson College, offering full tuition reimbursement. “It helps them become more global in their outlook and understand the broader tenets of banking,” Whalen says. 

McGeorge points out that being able to develop employees and promote from within is less disruptive to the organization. “I’ve known some organizations that bring in a new CEO and have to change their vision and their model. They push everybody down and put in four to six people above them. That may be necessary sometimes, but you can appreciate the upheaval it creates within an organization.”

Benefits of planning 

The lengthy lead time built into Needham Bank’s succession plan has played a constructive role in the plan’s success, McGeorge says. However, that lead time itself reflects a basic attribute of Needham Bank’s internal culture: sustained personnel and leadership development. For example, at the same time the bank’s executives were moving forward with senior management succession planning, they also undertook department-level succession planning. Executives spoke with key employees in various departments to understand their career plans and expectations. 

“We wanted to know what we had going forward so we could make decisions,” McGeorge says. “We now have a very good idea of what the bank is going to look like in three to five years from my retirement. We understand the lay of the land.”

As a result of its emphasis on executive development, Needham Bank didn’t have to scramble to find and promote executive talent when McGeorge’s retirement was first contemplated. This is an absolute necessity in his view. “You’ve got to have the bench,” he stresses. “You have to have the right people. You can’t take it for granted.” 

Whalen adds that Needham Bank is “always recruiting” as a very conscious personnel strategy. Its ongoing recruiting and staff development positions the bank to plan strategically and adjust smoothly to organizational changes, he adds. “The key is to get talent ahead of time and get them used to the culture and to buy into your game plan. It’s much easier to fill the role if you don’t have to also learn a new culture.”

The top talent that community banks need is out there in the marketplace, McGeorge believes, and he urges the banking industry to be more alert in identifying and encouraging strong staff performers. “There are a lot of great people just dying to bring their A-game to somebody,” he says. “We’ve hired a number of people from other organizations. They come here and are extremely happy here because they’re appreciated and feel like they’re adding value.” 

To ensure continuity of leadership at Needham Bank, McGeorge will remain as chairman for the foreseeable future. “I have some great relationships with some very valuable customers,” he observes. “Nobody wants to lose that connectivity.” 

Once more, with the succession plan in place, McGeorge is satisfied he is leaving the bank he has served for more than four decades well positioned for continued growth. “I want my legacy to be better days ahead,” he says.


Judith Sears is a writer in Colorado.