Ten Lessons Learned Over Twenty Years

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The occasion of the 20th anniversary of the founding of Kaplan Partners this spring has made me think a great deal about leadership and talent. So, when a longtime client and friend asked the simple question “what have you learned after all this time that would be helpful for my business?”, the answers started flowing. After all, with twenty-seven years in the executive search business, and two decades now leading this firm, I have experienced quite a lot of human dynamics. Here are Ten Lessons Learned over the past twenty years. I hope you find them useful!

10.You never get a second chance to make a first impression.
Early impressions occur across both sides of the table and can be overly impactful. While they are not and should not be the ultimate determiners of a hiring decision, it is important to be mindful of the dynamics of early impressions from all angles. Be sure to peer beyond first impressions and singular observations when looking to make a key hire.

9. Succession planning = planning for success.
We never cease to be amazed at the lack of leadership succession in many of our client companies—despite speaking out on this subject since the early days of our firm. The continuity of leadership promotes the continuity of strategy, which is usually beneficial for the business. Moreover, the lack of good succession management can cause issues in unexpected ways, and in the worst case can spell the end of a firm as an independent organization.

8.Good onboarding significantly reduces the risk of executive organ rejection.
Do not underestimate the collateral impact of bringing a new senior executive into your organization. It’s just as important to help the team adjust to its’ new leader, as it is to help the hired executive adapt to the new organization. Such proactive onboarding, ideally in both directions, can make a significant difference in a new leader’s survival and long term success.

7.In an effort to give everyone a fair shot to succeed, clients are often slow to take action on a poor performer.
This may sound self-serving coming from a recruiter, and does not mean that every weak contributor should be fired. However, history has shown that Boards and CEOs almost always know when a situation is not salvageable, and spend valuable time deliberating or delaying the inevitable. And in business, time is never your ally.

6.Coaching is not an indication of weakness.
Few great leaders become great without some outside support. Most top leaders have been coached at some point, many on an ongoing basis, and it can be a huge aid to success. Investing in your new leaders and highest potential players nearly always pays off. Good coaches are a privilege and valuable asset to be fully leveraged for the good of the executive and the company.

5.Communication skills are in fact a key aspect of successful leadership, but continue to be underdeveloped, especially in the up-and-coming generations.
This is compounded by the broader array of channels through which we are required to communicate today. These skills must be honed, and it does not happen on its own. After all, in my twenty-seven years in the executive search arena, I’ve never had a client ask for a candidate with poor communication skills.

4.As they say, past performance is no guarantee of future results.
Put another way, a track record of success is no longer sufficient to label someone a promising leader. It’s the combination of past experience and future potential that successful leaders must embody today. Adaptability and flexibility are new buzzwords with great relevance. The ability to synthesize and respond to disparate data from a wide array of sources over multiple channels is critical for leaders to succeed in today’s globally interconnected business climate. Competence is the minimum requirement, and a leader’s potential ability to adjust to change and constructively evolve will be the determiners of great executive performance going forward.

3.Culture is, as everyone knows, quite important; and all firms say that their culture is really unique.
But when trying to determine culture fit within a company, dig deep to understand what culture truly means within that particular place and time. And, be mindful that the culture within a company’s boardroom is often a distinct subset of the overall organizational environment. A candid understanding of your culture provides context to evaluate executive fit in a much more meaningful way. You must be honest with yourself about culture, which is not always as easy as it sounds.

2.Talent truly matters.
Differentiation thru strategy is hard, so more often differentiation is determined by a company’s relative performance—and the variable on performance always comes down to people. “A” players move the needle, and “B” players almost never do; and the cost savings by dropping from an A to a B player simply never equals the difference that an A player’s enhanced performance generates over time. Real talent makes a difference.

1.Everything about leadership begins with integrity.
Without trust, honesty, and ethics at the top, the authenticity of leadership becomes compromised, and a degradation of performance usually follows. A breach of integrity erodes individual and institutional credibility from the outset, and must be dealt with sooner rather than later, and the sooner the better. Boards and CEOs get to sit in those big chairs, and must sometimes make the tough call. Leaders are paid to, and expected, to lead from the front lines. The best CEOs and business leaders—and there are more than a few in the room this evening—really do set the tone at the top in every way. It all begins and ends with integrity.

Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search and talent advisory firm focused on serving community banks. Based in Philadelphia, Kaplan Partners is a longstanding member of the PACB, and the country’s only retained executive search firm member of the Independent Community Bankers of America. You can reach him at alan@kaplanpartners.com.

Banking on Leaders

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Few senior community bankers today would disagree that despite the banking industry’s continued consolidation, the need for strong banking leadership is more important than ever. The true drivers of value for customers and institutions are employees. In the battle to remain competitive, some community banks are increasingly finding that without the sufficient talent, they cannot win in the marketplace.

What can community banks do to ensure that they have the necessary management leadership talent?

It comes down to becoming a learning organization and developing a strong internal pipeline of future potential leaders. Some community banks think they cannot afford to develop future management leaders. But the reality is that all banks cannot afford not to invest in the future leadership of their institutions. Thankfully that investment does not need to be costly.

Here is a quick list of some steps any community bank can take to start developing future senior management leaders:

– Evaluate where you are.
Take an honest assessment of the talent throughout your community bank, even if this means using an outside resource to provide an objective perspective. Start identifying who has upside potential and is worth investing in.

– Get your board involved.
Directors should interact with your bank’s potential, but not with every employee who attends a training seminar. Allow exposure to each other, and for the board to provide selective mentoring where appropriate as well.

– Find training.
Research the leadership training programs with ICBA and your state banking association as well as local college and continuing education courses. There are plenty of reasonably priced classes and online seminars, which is a great way to get started.

– Start mentoring.
The personal involvement in leadership development by top management (particularly the CEO) is a great motivator and retention tool for your community bank’s up-and-comers. Also consider a cross-mentoring program where senior executives in one area mentor high potentials in another department. This is easy—and free!

– Mix it up.
Rotate your community bank’s better people into new areas of responsibility. Not every position change for leadership development requires a step up—many productive career moves are lateral. Give people meaningful exposure to other areas of your bank if they are really contenders for a future top job. You can’t afford not to, even if it means moving someone out of an important role and allowing someone new to step up in their place. Well-rounded banking skills are crucial for future leaders, and getting harder and harder to find.

– Hire experts.
Consider outside coaching for your true future leaders—the handful of folks who could someday run your community bank. At some level, managing succession planning and leadership development becomes less about technical competency and banking knowledge, and more about how people manage and lead others.

– Send staff to conferences.
Send your top people to industry conferences, whether national, state or private organizations. There is not only strong content at many such gatherings, but the development of peer relationships with non-competing fellow bankers is vital.

Some community bank boards and CEOs worry that they might make the investment of time and money in their rising stars, only to have them poached by rival banks. This risk cannot be ignored, but can be mitigated by several key actions:

– Meet in the middle.
Train your community bank’s managers how to lead and develop up-and-comers. People join organizations and leave managers, according to an old adage. If your middle managers are not on board with developing future leaders, your bank’s human capital investment may indeed be at risk.

– Challenge people.
Stretch and challenge your best employees. Those “young whippersnappers” have broad shoulders, technological savvy and intelligence, which at times can rival their predecessors’. What they lack is experience. Challenge them and they will rise to the task.

– Pay them.
Your best employees should be the most highly rewarded. Many community banks continue to give everyone the same percentage raises and incentive pay in the name of internal equity. This is counter to a primary tenet of performance management: The 20 percent of your bank’s employees who perform the best and drive the most value must be retained; give them the lion’s share of rewards, and they will be more likely to stay. Paying more to average performers who are unlikely to leave anyway is not a savvy investment.

The truth is that these talent initiatives do not need to be big or fancy. And for community bank boards and CEOs who accept the premise that “people are our most important asset,” investing in the future leadership should come naturally.

Alan J. Kaplan is founder and CEO of Kaplan Partners is a retained executive search
and talent advisory firm in Philadelphia that focuses on serving community banks.

The Real Risk in Banking’s Future

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In my 30 years of association with the banking industry, I have never heard a CEO or Bank Director disagree with the old saying that “people are our most important asset”. However, too many CEOs and Board Members pay lip service to this cliché and fail to deliver on this imperative for the bank’s future.

There are roughly half as many banking institutions in the U.S. today than there were when I joined the First Pennsylvania Bank Management Training Program in 1984. Yet few bankers or Directors today would disagree that despite this significant industry consolidation, the need for strong banking leadership is more important than ever.

A Bank Board’s singularly most important responsibility is the selection and oversight of the bank’s leadership. Making sure that the CEO sets the tone at the top, and selects a great team, are vital to long term success. Along these lines, it is the Board’s responsibility—not simply the incumbent CEO’s—to focus on leadership succession in a pro-active way. Simply allowing the “next in line” to be presumed as the best successor may be selling the institution short. The Board’s management of the complexities of leadership succession requires pro-activity, strong communication, and sometimes dealing with the elephants in the room.

Community Bank Boards are accountable for ensuring that the bank’s leadership builds a talent pipeline not only to successfully compete in the market, but to survive and thrive for the long term. Some community banks, especially smaller institutions, may immediately respond by saying that they cannot afford such an approach. My reaction would be “you cannot afford not to invest in the future leadership of your institution”. Investing does not need to cost big money, but failing to develop the next generation of leaders, in a worst case situation, could put the institution itself at risk.

Here is a quick list of actions that Boards can encourage on the path to developing senior bankers and potential future leaders of the institution:

  • Start early! Succession and Talent Development are long term programs, not short term projects. Planning 3, 4, or even 5 years ahead for succession provides plenty of time for alternatives to develop.
  • Take an honest assessment of the talent throughout the institution, even if this means using an outside resource to provide an objective perspective. You need to start by knowing who has upside potential and is worth investing in.
  • Explore mentoring. The personal involvement of their boss (often the CEO) is a great motivator and retention tool. Wherever possible, consider a cross-mentoring program where senior execs in one area mentor up-and-comers in another department. This is easy—and free!
  • Rotate key people into new areas of responsibility. Not every role change requires a step up—many productive career moves are lateral. Give your stars meaningful exposure to other areas of the bank if they are really contenders for a future top job. You can’t afford not to, even if it means moving someone out of an important role and allowing someone new the chance to step up in their place. Well rounded banking skills are crucial for future leaders.
  • Consider outside coaching for your true future leaders—the handful of folks who could someday run the bank. At some level, succession becomes less about technical competency and banking knowledge, and more about how people manage and lead others.
  • Send your top people to industry conferences, whether national, state, or private organizations. There is not only strong content at many gatherings, but the development of peer relationships with non-competing fellow bankers is vital.
  • Get involved! Not with every employee who attends a training seminar, but with the future leaders. Boards and rising stars need exposure to each other, and often the Board can provide selective mentoring where appropriate as well.

Terms like “talent development” and “succession management” may seem like they only apply to or can be afforded by mega-banks. The truth, however, is that many talent initiatives do not need to be big or fancy. For Boards and CEOs that accept the premise that “people are our most important asset”, investing in the future leadership of the institution should come naturally. Failing to focus on “talent” as the differentiator in your bank’s performance and long term viability could put the institution at significant risk of survival.

Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search and talent advisory firm focused on serving community banks. Based in Philadelphia, Kaplan Partners is the country’s only retained executive search firm member of both the PBA and the ABA.

THE NEW TALENT DYNAMIC: Key Questions Boards and CEOs Need to Ask Now!

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In today’s challenging business climate, the most important success factor for every business remains the quality of the company’s leadership team. Even in an uncertain economy, industry leaders continue to reinforce an important message: it’s all about people. Surprisingly though, companies seeking to fill a key executive role often avoid a crucial yet sensitive question: does the pool of known prospects and active job seekers offer the strongest and most comprehensive group of potential candidates to meet our critical talent needs?

Organizations seeking to fill a specific high level position often choose to first look at the talent available through their network or via job posting efforts. The key question for Boards and CEOs is whether the organization is shortchanging itself by not looking at the entire relevant labor force, versus a narrower pool of known local prospects. After all, the ranks of active job seekers still represent well less than one tenth of the entire workforce, and under 4% of the college educated labor force today. The lack of a broad group of highly talented prospects—who are actually willing to consider a career change in this climate—can quickly compromise a company’s plans to add a top player or upgrade a key role.

Thus, while many businesses truly believe that the quality of their leadership will define the future, savvy institutions acknowledge that even in a soft economy there is still a shortage of top tier talent. For companies and Boards willing to reexamine their talent management strategy at this challenging time, here are ten key questions to consider:

1. Do we really have the right leadership team in place at this critical time for our organization? When we take an honest look, do we really have all the horses we need to pull the wagon? Is this an opportune time to upgrade our weakest link?

2. We have a plan of succession, but do we really have capable and ready successors in place if we need to implement that plan? Would our Board and executive team choose to follow the chosen successor?

3. What are we doing to better prepare our leadership for the challenges ahead in this highly competitive and uncertain climate? How is talent development being managed in the organization today, when frequently the budget for “training and development” has been slashed at precisely the wrong time?

4. Why would a star want to come and work for our company? Are we taking advantage of the weaker competition to recruit premier players who can move the needle for our company? How are we truly different?

5. Do we have an appropriate “total compensation” program in place, including incentive plans and equity programs that are competitive? When was the last time we evaluated our compensation strategy?

6. If we are not currently using incentives or equity in some form (including phantom equity), are we inhibiting our ability to attract top talent? Should we be looking at new issues of equity grants (if available), while valuations are down, to help retain our best people?

7. Do we have a performance management system in place to objectively evaluate our leadership, and one that aligns our business plan with the right financial incentives? Is our Board of Directors tuned in to the organization’s talent management and succession efforts?

8. Are we losing our better people and retaining our mediocre ones? If the best people generally have the most career options, what are we doing to provide strong reasons for our key players to remain with the organization?

9. Does Human Resources provide strategic business value, to help optimally align our human capital strategy with business strategy? Or, is HR a classic tactical support function?

10. Does our Board recognize the “human capital imperative” in our business today? Are we shifting the board’s HR focus from a simple compensation emphasis to a broader role as a Human Capital and Compensation Committee? What training can be added for Directors to support the shift towards this orientation?

In the end, a good strategy that is poorly executed will not enhance corporate performance, and savvy business leaders recognize that successful execution is all about having the right people in the right roles. Now more than ever in these challenging times, for firms in nearly every industry sector, the most important success factor in business remains the quality of a company’s leadership team.

Alan J. Kaplan is CEO and Founder of Kaplan Partners, a retained executive search firm based in Philadelphia. You can reach him at 610-642-5644 or alan@kaplanpartners.com