Who Sits on Your Board of Directors?

As companies large and small grapple with the business impacts of the Covid-19 pandemic, CEOs and their executive teams need all the help they can get. The Board of Directors or Board of Advisors should be one of the primary resources for organizational leaders.  But what if that board is not up to the task of providing strategic insight and offering the kind of valuable perspective needed to help the company navigate the new world order?

From our vantage point as strategic human capital advisors, we have had the opportunity to see hundreds of boards up close and personal.  Some are incredibly impressive and impactful.  Some other boards, unfortunately, are full of well-meaning people with homogenous thinking, dated skills, or business acumen that does not lend itself to great governance and strategic input.  Among the most critical roles of a board of directors is to: 1) decide who leads the organization and; 2) provide valuable oversight of business strategy and risk.  Directors whose own experiences do not align well with these vital responsibilities should perhaps be reevaluated for continued board service.

Now more than ever, organizations need board members who are not just great business leaders, but who also represent a diverse range of perspectives along with strong skills in key areas.  For example, as companies revamp their business models, directors with strong financial competency may be especially helpful.  Many firms have had to ramp up their work-from-home or online technological capabilities, and thus a strong digital director would be very useful at this time.  Executive compensation plans are under scrutiny as business forecasts evolve, and board members with relevant skills in this area might be particularly valuable.

Both the skills and life experiences of your board members really do make a difference.  It has been well documented that the more diverse the perspectives sitting around the board table, the more likely better decisions will be made.  A group of board members who think alike, look alike and see issues from a similar viewpoint are missing the opportunity to cast decision-making in the broadest possible light.  Considering this, how can a more diverse board not be beneficial?

According to Carol Johnson, a Director who sits on four corporate boards, “The CEO role has never been more challenging.  Board support and input, in partnership with the CEO and leadership team, should help the organization to think through strategic solutions, fresh opportunities, and how life will be different.  This is more important today than ever.”

The saga of the Board of Directors of Theranos, a now defunct blood testing startup founded by one-time Stanford student Elizabeth Holmes, is quite telling.  Holmes recruited luminaries including Henry Kissinger, George Schultz, William Perry, Sam Nunn, Bill Frist, Dick Kovacevich and Jim Mattis to her board with the promise of revolutionizing blood tests.  While this was a board of intelligent and accomplished leaders, they likely viewed the world similarly, and simply did not govern appropriately, ask the right questions, or properly assess the company’s risks.  And equally important, most of these big name directors did not have relevant experience with the company’s core business of blood testing.  As a result, the company is out of business and Holmes is awaiting trial.  Names alone do not make a great board.  It is the collective skills, nuanced insight, diverse backgrounds and perspectives, the courage to tackle tough issues, and the ability to present opposing views in a constructive manner that are the hallmarks of the most effective boards.

Needless to say, directors are expected to do their homework and prepare for board meetings beforehand.  Shockingly,  we see too many directors who do not review materials ahead of time, often belaboring discussions and sidetracking conversations, which wastes valuable board time.  The average public director now spends roughly 20 hours per month on their board duties, and advance preparation to optimize board time together remains critical to being a high performing board.

Companies with lesser skilled directors, or a board lacking in diversity, need to take a hard look at who is truly contributing and adding real value.  Perhaps it is time to have a difficult conversation or two regarding the need for current skills, along with the expectations of board performance.  As Bill McNabb, the former CEO of Vanguard has stated “Having the right directors on the board is the single most important factor in good governance”.  Well said.

Alan J. Kaplan is Founder and CEO of Kaplan Partners, a retained executive search and board advisory firm headquartered in suburban Philadelphia. He can be reached at 610-642-5644 or alan@KaplanPartners.com.

 

 

 

 

Crisis Leadership 101

To view this article in its published format click here <PACB April 2020 – Kaplan (1)>

The global pandemic has struck terror into the hearts of nearly everyone.  Business leaders and board members are reeling from the rapid impact on their organizations, across public companies, small businesses, non-profit organizations and more.  Everyone has been affected.

One of the less discussed impacts, which is shaking boardrooms and executive suites, is the issue of leadership succession.  Deciding who leads is a board’s most critical responsibility.  While proactive succession planning has long been a best practice, too many institutions still do not emphasize leadership succession seriously enough or review their plans often enough.  And now, with the scourge of Covid-19 upon us, organizations and boards are quickly taking a long, hard look at the quality and quantity of their succession plans.

One only needs to review the headlines to know that the issue of succession reared its ugly head due to Covid-19.  The CEOs of Altria, Morgan Stanley, British Telecom and Madison Square Garden all confirmed that they had been infected.  British Prime Minister Boris Johnson was infected. Sadly, Jeffries & Co. CFO Peg Broadbent died from his Coronavirus infection.  Even before COVID-19, consider that JP Morgan CEO Jamie Dimon returned to work earlier this spring from a month-long absence, after emergency surgery for a major heart condition.  Succession is always a serious matter, and never more so than in 2020, when a random and unseen enemy could impact anyone at any time.What is a board or incumbent leader to do, particularly in more entrepreneurial organizations without a deep bench of talent?  Here are a few key strategies:

  • Designate an emergency successor immediately. There should always be someone appointed to keep the train on the tracks in times of crisis.  This also allows those in control (owners or directors) a bit of time to formulate a long term leadership strategy.
  • Review succession plans for all C-Suite and Key Executive roles (CEO, CFO, COO, etc.) with regular frequency. Regular means no less than annually on a formal basis, and more frequently if a planned orderly transition—such as a CEO retirement—is coming in the not-too-distant future.
  • Take a good look at existing talent development plans across your organization, especially those 2-3 levels below the top. What is being done to develop, coach, mentor, and strengthen the skills and leadership competencies of high potential talent within the institution?  These employees are your most valuable workers, and the ones with the most career options.  Are you truly taking care of their needs while also serving the organization’s future?
  • Centralize efforts at talent attraction, retention and development across the organization. Succession is a multi-faceted endeavor, and needs some level of consistent oversight to make sure that key players are not falling through the cracks or being shortchanged.  It happens all too often, and perceived greater career upside is the single biggest reason why a high potential often leaves.  Do you have a strategic HR leader to assist with these efforts?
  • Lastly, pay personal attention to those up-and-comers. If you’re a leader, whether the CEO, General Manager, Owner or C-Suite Executive, it’s your personal involvement with high potentials that makes them inclined to stick around.  Let your rising stars know that they have a bright future, and that you have plans for them. Communicating regularly does more than almost anything to keep them in the fold.  Then challenge them with special projects, new assignments, and out-of-the-box opportunities, to test them and to help them grow.

Two-thirds of our recent CEO succession projects arose from unplanned openings at the top—and this was before Covid-19’s full onset.  We see such leadership transitions all the time in our business, and companies should work to minimize the impact of unforeseen leadership changes.  Smooth transitions of power from within an organization are the least disruptive, and are typically most effective when the rising talent has been well prepared.  Unfortunately, unexpected things happen, and organizations need to be ready for leadership succession in good times and bad.  Hopefully one of the lessons from this global pandemic will be that more institutions will strengthen their succession planning efforts, to better protect themselves in the future.

<To read the article in its published format, click here  PACB April 2020 – Kaplan (1)>

Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search and talent advisory firm headquartered in suburban Philadelphia. Kaplan Partners is the country’s only talent advisory firm member of both the ABA and ICBA, as well as a longstanding partner of Bank Director. You can reach Alan at 610-642-5644 or alan@KaplanPartners.com.

Board Governance For The New Year

<To view the article in its published format, click here Governance For The New Year>

Business conditions, financial markets and competitive landscapes are always changing. But perhaps there is no arena of business undergoing a more significant transformation at the moment than corporate governance.

Whether driven by activists investors, regulators, institutional shareholders, governance gadflies or best practices, corporate governance is in the crosshairs for many organizations today. And in the banking sector — where some in Washington have placed a bullseye on the industry’s back — an enhanced focus on governance is the order of the day.

Bank boards today would be well served to pay close attention to three important aspects of governance: board composition, size and director age and tenure. When left to their own devices, too often inertia will set in, causing boards to ignore needed enhancements to corporate governance and boardroom performance. Even in the private company and mutual space, there is room for improvement and incorporation of best practices if a bank wants to continue to remain strong and independent.

<To read the article in its published format, click here Board Governance For The New Year>

Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search and talent advisory firm headquartered in suburban Philadelphia. Kaplan Partners is the country’s only talent advisory firm member of both the ABA and ICBA, as well as a longstanding partner of Bank Director. You can reach Alan at 610-642-5644 or alan@KaplanPartners.com.

Compensation Committee Rebrand

<To view the article in its published format, click here Why the Compensation Committee Needs a Rebrand >

Publicly traded businesses have long been mandated to have a compensation committee which reviews and sets the pay and benefits for corporate executives, and most non-public financial institutions have followed suit.

Most “comp committees,” as they are affectionately called, spend the vast majority of their time focused on the institution’s pay practices — including establishing competitive salary levels and crafting appropriate short- and long-term incentives that drive performance. While this core function of the comp committee remains relevant, it is time to change the focus of the committee.

The compensation committee label suggests that the focus of committee and board should be on paying executives properly. However, any good human resources leader would point out that compensation is only one piece of the puzzle when it comes to attracting, developing, motivating and retaining top talent. In today’s highly competitive banking talent environment, the board and compensation committees should broaden their focus to reflect this dynamic.

<To read the Article in its published format, click here:  Why the Compensation Committee Needs a Rebrand>

Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search and talent advisory firm headquartered in suburban Philadelphia. Kaplan Partners is the country’s only talent advisory firm member of both the ABA and ICBA, as well as a longstanding partner of Bank Director. You can reach Alan at 610-642-5644 or alan@KaplanPartners.com.

 

Strategies for Winning the War for Talent

Talent Shortage Strategies

<To view the Article in its published format, click here:  Winning the War for Talent-MMG>

A decreasing unemployment rate, an aging baby boomer workforce, and the rise of technology and the gig economy have all been cited as reasons for the current talent shortage. But as the war for talent gets even more challenging, there are strategies that companies and private equity firms can employ to ensure they are recruiting, retaining and developing the right talent for their organization. These strategies were the topic of ACG Philadelphia’s January breakfast briefing, “Winning the War for Talent,” which was moderated by Alissa Moody, a partner at executive search firm JM Search.

Featured speakers included Michael Haugen, partner, ghSmart; Alan J. Kaplan, founder and CEO, Kaplan Partners; and Tish Squillaro, founder and CEO, CANDOR Consulting.

Groom and Develop Your Own Talent
While the talent shortage has caused many companies to work even harder to bring in the best new hires, less attention has been paid to grooming current employees for future leadership roles. Kaplan said that among his clients, he sees “a lot more talk than action when it comes to talent development internally.” Squillaro noted that internal talent development and external talent searches do not fall under an “either/or” construct—by developing internal talent in parallel with your external searches, you are able to better see your talent gaps and fill them effectively.

<To read the Article in its published format, click here:  Winning the War for Talent-MMG>

Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search and talent advisory firm headquartered in suburban Philadelphia. Kaplan Partners is the country’s only talent advisory firm member of both the ABA and ICBA, as well as a longstanding partner of Bank Director. You can reach Alan at 610-642-5644 or alan@KaplanPartners.com.

Why Directors Should Not Fear Board Evaluations

In governance circles today, the conversations about board performance continue to advance.

<To view the Article in its published format, click here:  Why Directors Should Not Fear Board Evaluations >

Governance advocates, proxy advisors and institutional investors encourage varying approaches to evaluating directors, assessing board effectiveness, and raising the bar on expectations for director contributions and performance.

Many community bank directors, however, are reticent to go down the board assessment path, fearing that the process will somehow result in their removal from the bank’s board. The goal of any evaluation, however, should not necessarily be to weed out directors, but rather to highlight areas for board and director improvement, and encourage continual forward movement on good governance.

In our view, there are three general types, or levels, of board evaluation to consider:

Level 1: A general assessment of the board overall and how the group is functioning. This evaluation might include areas such as:
 Do we have the right committee structure, leadership and meeting frequency?
 Are we as a board focusing our time on the correct and critical topics?
 Do we have an appropriate and valuable range of skills and experiences around the board table to govern effectively in today’s industry climate?

<To read the Article in its published format, click here: Why Directors Should Not Fear Board Evaluations >

Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search and talent advisory firm headquartered in suburban Philadelphia. Kaplan Partners is the country’s only talent advisory firm member of both the ABA and ICBA, as well as a longstanding partner of Bank Director. You can reach Alan at 610-642-5644 or alan@KaplanPartners.com.

7 Things Bank Boards Should Focus on

The world of corporate governance today has a brighter spotlight on boards of directors than ever before.

<To view the Article in its published format, click here:  7 Things Bank Boards Should Focus on>

The world of corporate governance today has a brighter spotlight on boards of directors than ever before. While bank regulatory relief has provided a long-awaited respite, bank examiners seem to be zeroing in on governance, director performance and board succession. Here are 7 things directors should have on their radar screens in the year ahead:

1. Defining Innovation. Digitization and innovation are the buzzwords, but truly embracing the transformations taking place all around us can be daunting. Pondering how technology has altered our client relationships and acquisitions means thinking out of the box, which may be a challenge for some directors and bank executives. A refresh of the bank’s website is not an innovation—it is table stakes. True innovative thinking requires more proactivity and planning, and likely some outside perspectives as well. Boards should encourage management to craft a plan to address to these challenges, which are key to remaining relevant.

<To read the Article in its published format, click here:  7 Things Bank Boards Should Focus on>

This Article appeared on September 10, 2018 on BankDirector.com.

Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search and talent advisory firm based in Philadelphia. Kaplan Partners is the country’s only retained executive search firm member of the ABA & ICBA. You can reach him at Alan@KaplanPartners.com or 610-642-5644.

Seven Secrets of Succession Success

A well-orchestrated plan of succession and leadership continuity reassures employees, investors and communities

<To view the Article in its published format, click here: Seven Secrets of Succession Success>

One of a bank board’s most vital responsibilities is overseeing the plan of succession for the CEO. Whether driven by a looming retirement or change in the incumbent’s personal timeline, a well-orchestrated plan of succession and leadership continuity reassures employees, investors and communities. Unfortunately,
too many bank boards still take a passive approach to CEO succession, rather than acknowledging that as directors, they are responsible for the selection and ongoing evaluation of CEO performance.

<To read the Article in its published format, click here: Seven Secrets of Succession Success>

This article appeared in the February 2018 issue of BankDirector.com, copyright 2018.

Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search and talent advisory firm based in Philadelphia. Kaplan Partners is the country’s only retained executive search firm member of the ABA & ICBA. You can reach him at alan@KaplanPartners.com or 610-642-5644.

Does Your Bank Have A Dream Team

Assessing Your Bank’s Leadership Team is the Foundation of Successful Succession Planning

<To View the Article in its published format, click here: Dream Team Article A 8-2017>

Many bank Boards of Directors and CEOs are proud of their bank’s executive team. And rightly so! Yet frequently those feelings of pride dissolve into uncertainty when the bank is faced with the decision to promote a banker into a top executive position or even the CEO role.

How does this happen? Why do well laid out succession plans sometimes evaporate in the face of reality when the time to elevate someone finally arrives? One of the reasons, based on our experience working with hundreds of community bank boards and executive teams, is that directors are often missing context when faced with a promotion decision. The lack of relative perspective on comparative candidates for similar roles may at times impede the comfort level necessary for a board to validate a promotion decision.

<To Read the Article in its published format, click here:  Dream Team Article A 8-2017>

This article appeared in the Pennsylvania Association of Community Bankers Publication in 2017.

Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search and talent advisory firm based in Philadelphia.  Kaplan Partners is the country’s only retained executive search firm member of the ABA & ICBA.  You can reach him at alan@KaplanPartners.com or 610-642-5644.

The Bank Director of the Future: Diversity of Experiences and Skill Sets Matter

<To View the Article in its published format, click here:  <The Bank Director of the Future Diversity of Experiences and Skill Sets>

While the requirements needed in a bank leader today continue to evolve, the same can also be said for bank directors. Boards of directors today are under more scrutiny than ever before, whether from governance advisors, shareholders, Wall Street analysts, activist investors, community leaders and customers. Even mutuals and privately held institutions face more visible scrutiny around corporate governance from their regulators and key constituents. Serving as a bank director today may still have a certain amount of prestige (depending on whom you ask), but the expectations for director performance and engagement have never been higher.

Community banks in particular tend to have long tenured board members—in many cases with decades of service. Continuity can be a good thing, provided the director skill sets continue to be relevant and the board does not become too close to the CEO, compromising objectivity. However, many bank boards have begun to focus more on the “collective skills” represented around the board table, and have started to emphasize a skill-based approach in making director retention and recruiting decisions.

<To Read the Complete Article in its published format, Click here:     <The Bank Director of the Future Diversity of Experiences and Skill Sets>

The article appeared in the February 2017 issue of BankDirector.com, copyright 2017

Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search and talent advisory firm based in Philadelphia.  Kaplan Partners is the country’s only retained executive search firm member of the ABA & ICBA.  You can reach him at alan@KaplanPartners.com or 610-642-5644.