Diversity AND Inclusion in PACB Leadership…it’s About Time!

Someone once said that “diversity is being invited to the dance; inclusion is being invited to dance”.  If this is true, than PACB is finally dancing!

After over 140 years serving community banks throughout the Commonwealth, PACB has its first woman Chair, Lori Cestra, EVP & COO of Enterprise Bank in Pittsburgh.  This milestone has been a long time coming.  Hats off to Lori for her willingness to commit to the role and to supporting community banks across the state.  And, to their credit, Lori’s peers on the PACB Board recognized her energy and talent, and welcomed her into the inner circle of PACB leadership.

However, the question remains:  how do we rectify this severely unbalanced situation, so that the next woman or person of color to serve as PACB Chair will simply be part of the normal course of events, rather than an outlier event?

On a basic level, while diversity means different things to different people, a desired outcome is often to broaden the range of thought, perspective and experience—while leveling the playing field and seeking to optimize business decision-making.  That being said, in order to achieve this broader perspective, organizations need to recognize the importance and value of a wider representation of diverse talent in both senior leadership positions and on their board of directors. After all, your bank’s customer base and growth markets are all getting less homogenous, as is your future employee base.  Customers in the important Gen Y and Gen Z demographics are now buying homes and starting to save for their young kids’ college education.  This important demographic typically cares a lot about diversity, ethical and responsible corporate citizenship, and equal opportunity.

Sadly, too many community banks fall short here, victims of their own unconscious bias and preconceived demographic perceptions.  We have to do better!  Not to mention that our regulatory agencies have begun moving “diversity” onto their front burner agendas.  For publicly traded companies, the risk of criticism for a lack of diversity is even higher.

There is no secret sauce that will solve this systemic challenge for the industry, especially since this is a long term issue. However, there are a few basic steps which can begin to help move the banking industry along on this journey, and create an organization where inclusion has real meaning:

  • Start by really listening to your colleagues who are black, brown or women, to better understand their experiences inside the organization, and where the bank can evolve to make it feel more welcoming to all future employees. The lack of real inclusion is where many firms fall short, despite good intentions.
  • Address the very real challenges of unconscious bias. To be sure, we all have our own internal biases, and they affect how we might approach people—whether a current or future employee, or a bank customer.  Education in this arena is an absolute must—across the organization.
  • Take a hard look at your leadership team and board of directors. If these groups are homogenous (either in gender or ethnicity), the message being sent is not helping.  Potential diverse employees will not see the role modeling at the top which would indicate that the bank is serious about equal opportunity, diversity and inclusion.
  • Consider partnering with local high schools, community colleges and other educational institutions in your markets to better inform students about the opportunities in banking. Take a ground floor approach to developing a more diverse workforce.

As part of this, consider how your bank goes to market for new employees in general, especially for entry level jobs and new graduates.  Instead of the traditional boring job advertisements that banks are known for, we need to focus on what resonates with younger Gen Y and Gen Z.  Something like “if you want to work for a technology-driven business that cares deeply about its customers and gives back to its communities…come talk with us!”  These aspects of a potential employer—technology, customer-centricity and a focus on communities—are very meaningful to rising generations.

It is indeed laudable that Lori is PACB’s first woman to serve as Chair.  For added perspective, the state’s other bank trade association, PA Bankers, has had only three women serve as Chair in its 125 year history.  The PACB Hall of Fame has six women members out of a total of 117 (5%).  The PACB Board is better, with 4 women out of 28 bankers serving (14%).  Nevertheless, in a state that at one point had many hundreds of community banks, 4 female Chairs between the two organizations in over a century leaves a lot of room for improvement.   We have an obligation to do better!

Lori’s elevation to PACB Chair is not the end of the journey but the beginning.  If community banks in PA and elsewhere are going to continue to thrive and survive, then grappling with the challenges of equality, diversity and inclusion must be more than a project.  It must become an integral part of how banks do business every day.

<To read the article in its published format, click here  https://hometown-banker.thenewslinkgroup.org/diversity-and-inclusion-in-pacb-leadership-its-about-time/>

Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search

and board advisory firm headquartered in suburban Philadelphia.   You can reach

Alan at 610-642-5644 or alan@KaplanPartners.com.

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.