"Let It Go, Joe": Management Succession Is Only a Plan, until It Actually Happens

As seen in the original movie, Don Vito Corleone, played by Marion Brando, is sitting in the background while his son, Michael (Al Pacino), issues orders to the Corleone crime family's chief lieutenants, Tessio and Clemenza. subordinates clearly don't like the things are going. address old man, almost as if the new, young Godfather isn't in the room. old don has all but retired. He sees that the lieutenants need to accept the new order. Do you trust me? he asks. nod. Then be friend to Michael. In other words, get with the new Mind you, by that point, the old boss is more than happy to hand off. He's just barely survived hit, and is not in great health. Even in law-abiding companies like banks, succession doesn't always go smoothly. Departing leaders may not really want to go, in spite of factors like regulatory fatigue. Or they may have trouble watching someone else revise, or even trash, their strategies. [ILLUSTRATION OMITTED] Management succession can be found on nearly every conference program, and examiners have been asking for succession plans for years. But having plans and carrying them out well can be very different. Reality versus theory I've never seen any bank score past five or six, on scale of ten, in carrying out succession, says Jeff Gerrish of Gerrish McCreary Smith Consultants and ababj.com blogger. There's always going to be some friction. But how that friction's going to be managed starts with the says Don Musso, FinPro, Inc., chief. it takes little grace from the CEO to let go. Consultant John Szold at Planning for Succession says many banks have a person, but not program. He says he's seen departing CEOs plan to have succession fail, producing what he calls the boomerang effect--they keep coming back. And Musso adds that sometimes even having the successor is false start, if details haven't been thought through. He's noticed disturbing trend in the industry, in which CEOs wind up spending only about two years in bank before they or the board decide it is time to part ways. That indicates a badly arranged marriage, says Musso. Don't forget, Musso adds, management succession is critical component of any strategic If the transition doesn't go smoothly, strategy may suffer, too. Who's really in charge? You can prevent an old CEO's efforts to hold on, says Michelle Gula, succession consultant, by remembering who is in the driver's seat. The CEO should be part of the succession-planning process, but should not lead it, adds Gula, head of Mrae Associates, Inc. She advocates putting much of the succession plan into writing. A key element is to commit to memo the role the CEO is going to play in succession planning. board must be the leader. Directors and trustees will find that even in situations where clearly the time is approaching for change, regulators will ask for succession planning, but won't push the timing of the actual plan. Even in cases where board all but asks its examiners to apply some pressure, that rarely happens, according to David Baris, executive director of the American Association of Bank Directors. The regulators will typically say to the board, 'That's your job', says Baris. They tend to be reluctant about ordering change in management. board has the authority to make the change. It's matter of exercising the will to do it. A written timeline for transition is indispensable, according to Gula. Establishing the CEO's role in the process and the schedule in advance, plus establishing, in writing, what the outgoing CEO's role will be after succession settles fundamental questions, she says. Begin with the CEO's mindset Something that can't be ducked is the current CEO's attitude toward retirement and transition. …