Banks face growing need for leaders, lenders
When it comes to talent, withdrawals are outweighing deposits.
There is a talent drought at commercial lenders and a leakage of top-level bank executives across the nation, according to a recent study by the financial information resource Bank Director.
According to Bank Director’s 2016 Compensation Survey, released in May, 43 percent of those responding say there aren’t enough talented commercial lenders in their markets, and 60 percent of respondents expect their bank’s CEO or other senior executives to retire within the next five years.
At Mercantile Bank Corp., real life reflects the findings of that survey, with president and CEO Michael Price announcing he will step down on New Year’s Day 2017. Current executive vice president and COO Robert Kaminski Jr., named Price’s successor, said the bank has had a succession plan in place from the time it was founded in 1997.
“In our situation, the succession plan is something we’ve been doing for a long time. It’s an active and vibrant document, and we have a formal review with the board every six months to a year,” he said. “It’s something you have to have in place because whenever the CEO or top positions decide to retire, you can’t expect to address that adequately without one.”
The survey revealed that while 45 percent of banks say they have both a long-term and emergency succession plan in place for the CEO and other senior executives, 21 percent said they had an emergency succession plan but no long-term plan, and 14 percent said they needed to do a better job of succession planning as a whole.
Kaminski said in Mercantile’s case it was important to devise a succession plan that would implement a leader who could carry out the full range of duties of the position.
“That includes continuing to do the things that are working well and doing those things the right way, as well has having the foresight to continue innovative ideas a little outside of what are being done,” he said.
While Mercantile is well-positioned to succeed following the implementation of its succession plan at the top, it also is dealing with some of the same issues other banks are reporting. The dearth of talented commercial lenders is no myth, Kaminski said.
“There seems to be, and has (been) for some time, a smaller number of college students and graduate college students going into financial services,” he said. “There’s still great talent, just not the numbers. And if you carry that trend line forward, the numbers of people ready to go into commercial lending will dwindle.”
The compensation survey revealed that 40 percent of respondents indicated that recruiting commercial lenders is a top challenge in 2016, and 34 percent said their bank is actively trying to recruit millennial employees — defined in the survey as 18-34 years old — yet having trouble attracting them. The two statistics are not unrelated, Kaminski said.
“It’s something we see, as well, and it goes back to the numbers of college grads going into financial services,” he said. “That means there’s fewer numbers of people in that pipeline to continue to provide commercial lending. And I think what we’re trying to do, and what other organizations are trying to do, is reverse it.”
There’s no easy fix, but Kaminski believes it starts with educating the next generation about the possible careers that could lead to commercial lending. Additionally, he said companies need to understand what is important to millennials to make their company a more attractive employer.
Part of Mercantile’s strategy is to go back to even high school students and try to bring those future workers into the picture at a young age through an internship program.
“I think there’s a lack of familiarity about what bankers do in 2016, and they’re unaware of how banking has evolved with technology and the like,” Kaminski said. “There are lots of good opportunities there, so we’re hitting them and connecting at a young age, creating interest in all careers including commercial lending. And I think that will continue to gain us some traction.”