October 25 2007 - Top-level financial executives are leaving their jobs at a higher rate
than other employees, according to a new compensation survey conducted by Crowe Chizek and Company LLC - and the timing couldn't be worse for the banking industry.
The Crowe 2007 Financial Institution Compensation Survey Report states that voluntary retirement for CEOs and other officer-level employees is at four percent, while the rate for all employees is 2.6 percent. Meanwhile, turnover for these high-level positions has increased from 5.2 percent in 2005 to 6.5 percent in 2007.
This comes at an especially bad time for the banking industry, which is experiencing heated competition. The situation is compounded when organizations fail to actively look beyond their current set of leaders and fail to engage in strategic succession planning and formal leadership development. This does not mean just planning for who will be the next CEO. All financial services organizations have leaders in key positions throughout the company whose unplanned-for departure can significantly interfere with success and derail plans for growth.
Crowe Chizek and Company LLC offers best practices on how to develop a successful succession planning program:
- Establish and demonstrate a talent mindset at the top. Executive involvement and support for development efforts are critical. Managing job assignments and demanding accountability help demonstrate that commitment. Employees with high potential should be assigned "stretch goals" that develop their skills and broaden their prospective.
- Accountability is equally essential. Current leaders should be both responsible for developing others and accountable for developmental progress or lack thereof. These actions show employees the bank is genuinely interested in internal leadership development and that current leaders do not fear the creation of new leaders.
- Cultivate a feedback-rich environment. High-potential employees usually crave performance input. A bank must institute a process for establishing performance expectations and providing employees with regular feedback on their performance and progress.
- There's no time like the present. Succession planning and leadership development are long-term, and payoffs usually come over time. Developing a high-potential employee into someone who can assume a senior leadership position can take as long as 10 years. So now is the time to launch a strategic succession planning and leadership development planning program.
Through succession planning, financial institutions can reach these goals:
- Preserve business continuity: Through this type of planning, financial institutions identify and address leadership gaps and risks before they become crises. Planning also helps maintain the continuity of an organization's culture, a challenge that can prove difficult during leadership changes when there is an influx of new hires.
- Control costs: Developing internal talent is far less expensive than hiring from the outside, where the costs of recruitment, relocation, salary competition and training compound quickly. Internal promotions also minimize lost productivity of new employees.
- Foster a positive workplace: Leadership development programs and strategic succession planning provide challenging growth and career opportunities, which produce a more attractive work environment for current and potential employees.
For additional information on succession planning or for further results on Crowe's compensation study, please contact Angela Andreae Tuell, 317-208-2578, aandreae@crowechizek.com.
About Crowe Chizek and Crowe Group
Crowe Group LLP, the parent company of Crowe Chizek and Company LLC (www.crowechizek.com), is one of the top 10 public accounting
and consulting firms in the United States. Under its core purpose of "Building Value with Values®," Crowe assists clients in reaching their goals through services ranging from assurance and financial advisory to performance, risk and tax consulting. Crowe professionals provide public and private companies with thought leadership to clients in the financial services, healthcare, government, private equity sponsored, inventory based and not-for-profit industry sectors, among many others. With 22 offices and more than 2,300 personnel, Crowe has been recognized by a number of organizations as one of the country's best places to work. Crowe serves clients worldwide as the leading independent member of Horwath International.
Contact
HRM Guide Network