Author: John Sneed, Chairman and Retired CEO, FMS Bank, Fort Morgan, Colorado
Imagine being the Chairman of the Board of a bank and receiving that call: the CEO has unexpectedly passed away.
After the initial shock, questions flood your mind. Who will take over on Monday morning? How will the bank function without its leader? Should we promote someone from within or recruit externally? How long will it take to find the right candidate? Where do we even begin the search?
Thankfully, we had answers to these questions, thanks to an up-to-date succession plan. But it wasn’t always this way.
A Lack of Planning
When I was promoted to President of our bank, there was no succession plan in place. The board had no idea who could step into the role of CEO. At the time, I was serving as EVP and assured the board the bank would manage until a new CEO was found. I also made it clear: “Oh, by the way, I would like the job.”
The board didn’t know my background, my capabilities, or what kind of leader they needed. They were an unsophisticated group of directors, heavily reliant on the CEO to guide them. While they had a solid grasp of the community and its lending needs, they lacked understanding of key banking concepts like ALCO, liquidity, and capital ratios.
The process of my appointment as President was rudimentary. They asked about my vision for the bank’s future and whether I thought I could handle the job. By the time I was formally interviewed, they had at least reviewed my résumé.
A New Chapter in Succession Planning
Fast forward 20 years to my planned retirement. The board had become far more knowledgeable, engaged, and effective. They were ready for a more structured and deliberate transition process, one that I was determined to lead effectively.
Eighteen months before my retirement, I hired a candidate as EVP/COO based on the recommendation of a trusted advisor. I shared his qualifications with the board and we had ample time to observe his performance. I assumed the board was aligned with my choice for successor.
But as the saying goes, never assume.
When it came time for me to step down, the board was divided over my candidate. This disagreement caused significant dissension. While I believed the concerns of the dissenting directors would prove unfounded and felt confident in my choice, I learned a hard lesson. The outgoing CEO should not unilaterally pick their successor. This decision must be made collectively by the board, as they bear responsibility for its consequences.
A Sudden Crisis
Three years into my successor’s tenure, he was performing exceptionally well, achieving remarkable earnings, driving growth, and unifying the bank’s culture. Then, tragedy struck. The CEO passed away unexpectedly.
As Chair of the Board, I implemented our succession plan, which designated me as interim CEO due to my prior experience. My primary role was to reassure the staff, regulators, and board that the bank would continue operating seamlessly. My second priority was initiating a search for a new CEO.
A Deliberate Approach
To avoid repeating past mistakes, our board development a committee, a group of four directors tasked with governance and training, and launched a comprehensive search for the next CEO.
While I had candidates in mind, including internal leaders and a highly capable external prospect, I reminded myself that hiring a CEO is a board decision, not a personal one. The committee decided to engage a professional search firm, ensuring a thorough and impartial process.
Retained vs. Contingency Search
After careful deliberation, we selected Travillian, a retained search firm, as our partner in this critical process. From the outset, it was clear that Travillian’s approach was more comprehensive and aligned with our goals than anything we’d experienced before.
Contingency firms typically present a broad pool of candidates, leaving the board to conduct extensive interviews to determine alignment. Travillian’s retained model, however, was more strategic and personalized. They began by interviewing our board collectively and individually to gain a deep understanding of our culture, vision, and expectations. This discovery phase alone brought clarity to our mission and direction in ways we hadn’t anticipated.
Travillian’s team didn’t just stop at understanding our needs. They helped us articulate them better than we ever had before. Their method ensured the search started on the right foundation, with every candidate evaluated against criteria we had defined together. It was a partnership, not just a service.
The Selection Process
Over two months, Travillian presented a mix of internal and external candidates, providing detailed evaluations of their qualifications and fit. The development committee conducted initial interviews via Zoom and narrowed the pool to three finalists. After one candidate withdrew, the remaining two were interviewed by the full board.
Travillian’s meticulous process ensured that every candidate brought to us was qualified and aligned with our goals. Their commentary on each candidate’s strengths and potential challenges provided invaluable insights, helping us make informed decisions at every step.
In the end, the board unanimously selected one of our internal candidates as the next CEO.
The Honeymoon Phase
We are currently in the “honeymoon” phase of our new CEO’s tenure, and it remains to be seen whether the board made the right choice. However, I firmly believe the process was sound.
The benefits of our approach, with Travillian’s guidance, was clear:
- The board reached a unanimous decision.
- The board gained sharper clarity about the bank’s mission, purpose, and vision.
- The bank’s culture was preserved with minimal disruption.
- The board was fully engaged and confident in the selection process.
Would I recommend a retained search model again? Absolutely. Travillian’s expertise, professionalism, and strategic approach gave us the greatest confidence that we made the right choice. Of all the succession processes I’ve been involved in, this one stood out as the most comprehensive and effective.
Time will tell if the new CEO fulfills our expectations, but I remain optimistic.
