We’ve all had that moment of “surprise” when a banking executive suddenly announces their resignation. I put “surprise” in quotes because in most cases, it’s easy to see coming: they were nearing retirement age, a recent M&A deal went through, or the company had begun talking more about “strategic changes.”

Whatever the circumstances, our industry is notorious for taking a reactive approach to executive hiring. Though, to be fair, it’s a challenge that other industries face as well. The problem with this approach, especially now, is that it creates unnecessary stress and confusion.

Banks and finserv institutions pay for these choices in strategic stagnation, enterprise volatility, and potential talent exoduses. If you want to grow, innovate, or achieve long-term stability for your organization, it’s critical to take a proactive approach to executive hiring.

Key Takeaways

• Executive turnover is a certainty. Banks and financial institutions that wait until a resignation lose precious time, momentum, and stability. Proactive succession planning keeps strategy on track.
• “Upgrading” your leadership bench can pay off, if you do it right. Hiring for new challenges, like post-M&A complexity or digital transformation, can strengthen your organization. But cultural fit and internal alignment matter just as much as skill set.
• A true search partner does more than fill gaps. The right executive search firm helps you plan ahead, identify emerging talent, and set a roadmap for leadership transitions before vacancies happen.

Why Does Executive Hiring Take Banks & Financial Institutions by Surprise?

Executive resignations shouldn’t take people by surprise. However, organizations from all sectors struggle to find high-quality talent to replace their outgoing leadership.

But there are a few aspects of our industry that make this widespread problem more acute. One is the looming retirement “cliff,” as many long-tenured banking executives chose to stick it out longer than expected in response to rising inflation. When an executive shows no signs of leaving anytime soon, the natural response is to deprioritize succession planning.

Another challenge is that people often think of succession planning as applying just to CEOs. And yes, you should have a plan to replace these leaders, but the same applies to CFOs, chief legal officers, chief risk officers, chief lending officers; basically, leadership across the board.

And then there’s the multi-billion-dollar elephant in the room: increased M&A activity. This has led to a good number of executives, many of whom are perfectly competent and effective, on the street. No surprise there: when you have two seats combined into one, someone is going to have to move on.

Whether it’s long tenures, a typical lack of planning, or a big merger, executive hiring often takes banks and financial institutions by surprise. If you choose to take a more proactive approach, you’ll avoid the lags and shortfalls that your competitors will be dealing with.

The “Upgrade” Mindset: Is it the Best Executive Hiring Strategy?

Once you decide to take a proactive approach to executive hiring, the natural question that comes up (and one I hear from clients all the time) is whether to treat current or future vacancies as a chance to “upgrade” your leadership bench.

For example, a mid-size bank may have acquired a number of other groups over the course of the last 12-18 months, and as a result dramatically increased its size. Not only does this often move the bank into a new regulatory tier and increase their administrative and legal workloads, it also creates demand for more advanced technology and data leadership to integrate, manage, and maintain the new IT infrastructure.

In that instance, the organization in question may need to “upgrade” its leaders: a new chief administrative officer or chief legal officer to handle compliance, a new CIO or CTO to handle technology, or a new chief risk officer or chief lending officer who is more familiar with larger, more complex processes.

While change can be a good thing (and, when managed correctly, often is), it also creates disruption within the business, which can be uncomfortable for some people.

Let’s say a board comes in and surprises a bank’s team with a new C-suite person or two and sells it as an “upgrade” or “new direction” for the company. That can be unsettling and make people nervous. No one wants to work for a fair-weather employer. And so you start to get people asking whether they’re good enough for the role, and resentment can start to build. Then again, there’s an upside to rooting out complacency. It makes them push and strive and want to learn and become greater and better.

All in all, there are challenges and benefits of getting an “upgrade” in your bank’s C-suite. But in the end, the benefits of a stronger, more productive organization and firmer strategic direction are worth it. It also shows your stakeholders a certain level of dedication, that you’re out there doing the best you can to get the best you can.

Another thing to consider: if you really do need an “upgrade,” what does that mean for your succession plan? If your C-suite is insufficient, odds are the person who’s two steps removed from them isn’t either. When looking for your “upgrade,” you need to find someone who doesn’t just have these in-demand skills themselves but can also help to mentor your people and grow your overall team capacity, two- or three-deep.

Of course, this is all predicated on the fact that the person you get is actually an “upgrade.” That’s not always the case, especially  if your internal recruiting team doesn’t have the deep network and expertise to spot best-fit candidates. Which is one reason why having a search firm who has experience finding top performers, weeding through resumes, and spotting red and green flags is advantageous. That way, the person you place gets you closer to your goals.

How an Executive Search Partner Can Help

Often banks or financial institutions will see an executive search partner as someone who comes in and fills in the gaps when no succession plan is in place. While that does happen—no denying that—search partners can help you take a more proactive approach to executive hiring:

• Setting expectations around who to hire and how that’s working in the broader market
• Sourcing candidates who meet the organization’s qualifications and strategic objectives
• Going beyond resumes and screening for intangibles (culture fit, soft skills, etc.) based on decades of specialization in search
• Partnering with internal HR functions to potentially find internal talent (this can be helpful for larger or newly merged firms)
• Setting a strategic roadmap for succession and starting the search process before someone resigns, retires, or otherwise leaves a vacancy

The truth is, at some point a leader is going to leave. The question you have to ask yourself is: how ready are you for that departure? Are you waiting until the last minute to have a replacement lined up? Or are you proactively looking for people to fill that role?

If you need support in building your executive succession plan, reach out to AJ Consultants and we’ll help you get started.