Building a Solid Future


Eight steps to developing tomorrow’s strong team of leaders

By Ed Avis

Community banks are facing leadership challenges like never before. They need to hire smart people to fill gaps in ranks, inspire a multigenerational workforce and use technology to attract future workers.

With open minds, good teamwork and access to outside resources, the best community banks are overcoming these challenges.

Undoubtedly, one of the biggest leadership challenges facing community banks today is making sure their banks will have wise and experienced leaders in the future. For a variety of reasons, the leadership pipeline is not as rich as it once was, bank management advisors say.

Even community banks serving urban areas face this talent challenge. Banking simply doesn’t exhibit the glamour and excitement of so many other industries in this technological age.

“With Generation X and Generation Y, banking is not viewed as an exciting place to be,” says Cathy Ghiglieri, principal of Ghiglieri & Co., a consulting firm in Austin, Texas. “So bank leaders are faced with two challenges: recruiting entry-level managers, and dealing with employees who are close to retirement age.”

What actions are community banks taking to develop future leaders? Here are eight big ones.

1. Tap into the idealism of youth.

Stan Vinson, a professor of financial services at Lander University in Greenwood, S.C., says that in his observations, motivated young people—potential future bank leaders—are not just interested in money; rather, they want to change the world. “This generation has an unusual interest in doing good,” the professor says. “When I ask students in my classes, ‘What does your perfect job look like?’ I’m stunned by the responses. The majority say they want to make a contribution—and not only to an organization, but to where they live. That inspires me.”

So, Vinson explains, community bank executives trying to recruit new, young talent and leaders need to explain and emphasize how their institutions distinctly help their customers and communities. “You should reframe the story [to prospective employees] and explain that the bank is a conduit for social and economic policy that will make a difference in the community,” he says. “Explain that you will make a decent living, be a respected member of the community and do good for the community.”

2. Let young leaders lead.

One career advantage community banks provide is that their young leaders assume a wide range of banking responsibilities and experiences more quickly than their big-bank counterparts. But that does not always happen by itself; wise bank executives today make sure that happens by identifying high-potential individuals and giving them responsibilities and opportunities to develop.

“For young leaders to really develop, they have to experience a number of things,” says Sara Canaday, a leadership consultant and principal of Sara Canaday and Associates in Austin, Texas. “I’m seeing a lot companies focusing on high-potential groups, and having them tackle companywide problems. This teaches them to think critically, be innovative, ask the right questions, and challenge the way things have been done. It is an application of strategic thinking.”

Part of developing young leaders is letting them possibly make manageable mistakes, such as by giving them more leeway in lending decisions, notes Mark Stenson, president of Stenson Management Consulting in Marshall, Minn. “We need to make sure we don’t protect these young bankers to the degree they don’t learn,” he says. “Obviously, we can’t allow them to make a $500,000 mistake, but making a $50,000 mistake wouldn’t be the worst thing in the world.”

3. Find them early.

Young high-achieving individuals may not even consider working in a community bank because they know nothing about them. Bringing them in as interns or recruiting them in college job fairs may be one solution to feeding the leadership pipeline.

“The students coming out of college with degrees in banking, finance or accounting are very well educated, and they’re bright and know how to learn,” Stenson says. “So many community banks are trying to find people who grew up in the community, left for college and may decide that returning back home makes a lot of sense.”

4. Tout technology.

To attract younger employees who will be the leaders of the future, remember that they may value technology more than you do. “You have to recognize that the people coming out of universities are different from you,” Vinson says. “They are much more tech oriented.”

Alan Thompson, senior managing partner of BSG Solutions Group LLC, a consulting firm in San Diego, says a powerful story for a community bank to tell is explaining how they are combining the best technology to build strong, lasting customer relationships. “Bank CEOs are looking at how to use new automation tools but not compromise on service, and it has happened,” he says. “For example, if you look at the loan process at a big bank, it’s all automated, screened non-locally and produces a black-and-white decision.

“At the local bank, on the other hand, the officer sits down with the customer, talks about his employment situation, et cetera,” he continues. “But from that point on the process should be paperless, so the whole process is streamlined. The officer still spends time with the customers, but uses automation to spend less time on the paperwork.”

Ghiglieri agrees that community bank leaders need to embrace technology, but with caution. “It’s important not to be resistant to change, to be open to new ideas,” she says.

5. Keep them motivated.

Training and personal development opportunities keep young potential leaders motivated and prepare them for the future, as do internal programs such as those that allow high-achieving employees to rotate into different jobs. And sometimes personal career coaching is called for.

“It used to be that coaching was reserved for executives or up-and-coming leaders being groomed, but what I’m seeing now is that more and more companies want their leaders at the midlevel to be coached,” Canaday says. “You don’t necessarily need the expensive six-month program of coaching—maybe just a 360-degree assessment followed by one or two hours of interpretation of the results and creation of a development plan.”

6. Sell them on the lifestyle.

The excitement of working on Wall Street or a Fortune 500 corporation lures many youth, but your next vice president may prefer the family-friendly environment of a community bank.

“Some community banks have created wonderful, family-focused cultures,” Stenson says. “We have all heard the stories of the big investment banks that work their employees 18 hours a day. That’s not the community banking environment.”

Vinson agrees: “When those new potential leaders are 22 years old it may be difficult [to sell them on the family-friendly bank], but at 26 or 27, they may want to live in a community like yours. These community banks take work, but the Fortune 500 companies burn you out. So if you can reframe the job in the context of the family-oriented bank, you will get extraordinary people.”

7. Face reality.

Finally, some smart community bank executives realize that every eager 25-year-old won’t settle down to a career at his or her first bank. “Maybe you don’t try to have a goal of X number of years of [employee] retention. Maybe you adjust your retention goals and work within those parameters,” Canaday suggests. “So rather than hanging on tighter, you say, ‘What do we do to get them to the next role?’

“Those employees will be more loyal and more motivated, and they will recommend your bank as a great place to work.”

8. Set the tone.

Finding and developing good leaders ultimately is the role of top bank leadership, and setting the right tone in the organization is key to that.

“The definition of a good leader hasn’t changed,” Thompson says. “The environment has changed, but how leaders deal with it hasn’t. They need clarity of vision and an understanding of what the mission of the bank is. And they need the ability to communicate that to the board and their staff.”

Ed Avis is a freelance writer in Illinois.