The document discusses succession planning for bank CEOs and senior leadership. It outlines a best practice approach for boards of directors to ensure effective succession. The approach involves 4 phases: 1) understanding business strategy and desired CEO competencies, 2) assessing and developing internal candidates, 3) optional executive coaching, and 4) an external search if needed. It emphasizes starting the process early, developing internal candidates, and ongoing leadership development.

1. 2010
PERFORMANCE
MANAGEMENT SUCCESSION PLANNING FOR BANK CEOS AND
PARTNERS, SENIOR LEADERSHIP TEAMS
INC .
A Board of Directors Best Practice | "Start Now"

2. THE BOARD'S ROLE IN SUCCESSION PLANNING
CEO and leadership succession has become a main priority for the Board of Directors at
financial institutions. Ineffective CEO succession will attract intense shareholder scrutiny and
result in lost shareholder value. Attracting and retaining the right talent continues to get more
difficult because of increased complexity brought on by continued government intervention in
the banking industry.
CEOs and Bank boards of directors have a clear responsibility to ensure that strong, competent
managers are running their institutions. Not only have regulators made it clear where the
ultimate responsibility lies, but the transition from one CEO to another is a critical milestone in
a bank's history. What is your Board doing to ensure a smooth transition and maintain the
confidence of your investors, customers and employees? Do you have confidence that you will
pick the right, "next" CEO who has the skills and talents that match your future strategic plan?
Will your incoming CEO have a solid foundation for a successful transition?
Successful succession requires you to assess the "favorite" talent and the "right" talent. One of
the most difficult decisions for a CEO or Board is to recommend a CEO successor that is not the
heir apparent. Going forward is your bank going to embark on an M&A strategy or focus on
aggressive organic growth? Does the selected successor have the skill set to execute the
strategic plan in an increasingly complex environment? Do internal candidates need additional
development and coaching to prepare them for the CEO position? These are tough questions to
answer, and even more so, tough questions to ask.
According to the NACD Public Company Governance Survey, CEO succession planning and
leadership team development has been rated the most important issue for boards and the
number one weakest area within organizations. Many boards and CEOs put off succession
planning since it can be uncomfortable, awkward and threatening. Establishing CEO
succession planning as a regular, structured process will make it a universally embraced
strategic process related to overall corporate performance.
It is critical to start Leadership Development and CEO Succession Planning now.
• Immediately address emergency successor and process ‐ What happens in the first 24
hours after an emergency event (termination, illness, death or disability) that affects
your CEO or other key leader? Who leads the charge to replace the CEO? Who leads the
Bank?
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3. • Start planning 2‐5 years prior to a planned retirement of your CEO or key leaders ‐
Assess and develop bench strength. Groom the future leadership team. Identify future
leaders. Benchmark leadership skills and ensure they match your strategic plan.
SUCCESSION PLANNING EXPERTISE
At Performance Management Partners, Inc. our team has the unique combination of banking
and executive development experience to help answer these tough questions. For seven years,
President and founder, Sharon Randaccio, served as a Director of First Niagara Bank, a $20
billion publicly traded company, where she also served as the Chair of the Compensation
Committee, Chair of the Finance Committee and as a member of the Executive Committee. She
has since assisted several smaller regional and community banks with their leadership
development and CEO succession plans.
Sharon has over 20 years of senior management experience at high performing regional retail
and commercial banks. She had divisional responsibilities in retail banking, strategic planning,
mergers & acquisitions, accounting, human resources and sales and marketing.
In fact, our team has over 60 years of senior level financial services experience and extensive
executive coaching experience as well.
We have made the decision to focus on Leadership Development and CEO succession planning
at community and regional banks. We have completed a number of engagements with highly
successful results and feedback we can share with you.
OUR APPROACH
Succession planning is finding the CEO who is best suited to lead your company to future
growth. The first step is to look at internal candidates. External candidates for the CEO
position have a 50% likelihood of success due to poor job "fit" and lack of coachability versus
80% for internally developed candidates. CEO succession planning must be an ongoing process
with leadership development an important component. Our proven approach was developed
specifically for regional and community banks.
Phase I ‐ Understand your Business Strategy and the Desired Competencies of your CEO
1.) We will review your Strategic Business Plan to gain a thorough understanding of your
business strategy, culture, organizational structure and required leadership competencies.
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2.) We will meet with the appropriate Board Committee to validate our understanding
of your Bank's strategy and desired CEO competencies and ensure the CEO Job Description
accurately reflects the strategies and competencies.
3.) Meet with each member of the management team to review the strategy and
desired competencies.
Phase II ‐ Assessment & Development of Internal Candidates
1.) Interview internal candidates to understand experience, leadership style and values.
2.) Administer online self‐assessments to measure Critical Thinking Skills, Leadership
Competencies, Emotional Intelligence and potential Leadership Derailers.
3.) Facilitate a Leadership 360o assessment with each internal candidate to obtain
feedback from peers, direct reports and others on the defined Leadership Competency areas.
The candidates will choose 12 ‐ 16 individuals to participate, with sign‐off by the CEO and input
from the appropriate Board Committee.
4.) Meet with each candidate face to face to present 360o data and feedback from self‐
assessments. As part of this discussion, we will identify strengths, areas blocking strengths and
talent gaps, as well as new behaviors to increase effectiveness. A development plan will be
created by each candidate as an outcome of this meeting.
5.) Meet with the Board Committee to present findings including strengths and non‐
strengths of internal candidates. Behavioral interview questions that are driven by assessment
results will be provided to the Committee for all internal candidates that are selected as a
potential CEO successor. These questions can be used by the Committee as they continue their
due diligence.
6.) We will work with Human Resources to develop a process that ensures each
participant receives feedback and creates a development plan based in their individual
assessment results. To ensure that the high potential candidates are successful and the talent
management program becomes hard‐wired into your organizational development process, we
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5. will create a semiannual scorecard for the Board that will include such success measures as
percentage of key positions filled internally and retention rates of high potential employees.
Phase III ‐ One‐on‐One Executive Coaching (Optional)
1.) Meet with potential CEO and leadership team via phone or in person, bi‐weekly for
three months. The coach will recommend behavior and skill building techniques, articles, and
books to build knowledge and on‐the‐job assignments to test new skills and techniques. The
meeting is designed to build accountability for change as defined in the development plan.
2.) Provide the Succession Planning Committee with a development summary and
recommendations for future development and coaching for each candidate.
3.) Conduct six‐month check‐ups with all considered candidates to provide the Board
with a status of each candidate's growth and development.
Phase IV ‐ External Search
1.) If a consensus is not reached on a single internal candidate to be developed as the
CEO successor, an external search will be conducted based upon the strategies and CEO
competencies unanimously agreed upon by the Board.
2.) An external search will be conducted beginning with top tier benchmark candidates.
We will also use our extensive network and database for the financial services industry to
evaluate additional candidates.
3.) We will conduct rigorous prescreening and evaluation of candidates. A short list of
3‐5 candidates will be submitted to the Succession Committee for consideration. We will also
provide full assessment data, in‐depth references and customized behavioral interview
questions to facilitate the interview process.
4.) We will assist in the negotiation of compensation and any other outstanding issues.
OUR PHILOSOPHY
We believe that Leadership Development & CEO succession planning should begin the very first
day a new CEO starts with the bank. We believe that overall executive team development is an
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6. ongoing process and a necessity to building qualified internal leadership candidates. We
believe that emergencies can happen at any time and preparedness makes the difference
between investor confidence or turmoil. We believe that it is our job to make ongoing
succession planning a reality for your Bank. We specialize in quantifiable solutions for
community and regional bank talent management issues including leadership selection,
assessment, development and succession planning, as well as overall employee engagement.
The above process is the framework of our overall approach. We understand that each bank,
each Board and each leadership team is different and fully customize all of our engagements for
each individual bank. We welcome the opportunity to help you implement a successful
Development & Succession Plan.
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