Many aspects of industry consolidation are lamentable: Reduced access to services in sparsely populated areas and the diseconomies of scale (i.e., lack of personal service) are two that come to mind quickly. But what should we make of a changing landscape where there are fewer and fewer family-owned institutions? I sure hope family banks aren’t going the way of the family farm.
During my conversation with Howard Hagen for a recent story, he raised concerns over bank succession. Hagen called succession the greatest challenge for Iowa banks because of where we are in the demographic cycle. The problem is especially acute in rural areas all over the heartland. The next generation is increasingly uninterested in stepping into banking because they want to experience life differently. And elsewhere.
They shouldn’t be faulted. This happens at all types of family businesses. Two of our Amazing Outside Directors — Jeff Halloin and Mark Guetzko — took a post-college path that led them in the opposite direction of home, despite ready-made opportunities at a family business. Yet both eventually reached a point in life where the value of proximity to family eclipsed their desire to achieve on their own merits. Both men returned home and both have found ways to imprint themselves into a legacy started a generation ahead of them. The pull of family waxes and wanes throughout a lifetime.
Of course, the story doesn’t always end this way. Many family-owned banks raise up their own next-gen leaders with non-family by giving promising professionals the training and experiences they need to move everyone forward. You read a compelling example of how this process can be effective in our January cover story on our 2019 Banker of the Year, Mary Kay Bates.
But what if you have neither interested offspring or the right internal personnel to take the mantle of leadership? Then you have to look outside the bank, and probably your town, to recruit the right talent. This is tricky if you only consider a prospect’s resume and qualifications and not the demands of their family, which might include schools, but most certainly will include a professional opportunity for their spouse.
It’s a complicated equation to be sure, but a successful succession plan requires you to look at not only the opportunity you provide, but what else about your town might be attractive and rewarding to a person who just happened to fall in love and marry a banker.
I know a few trailing spouses whose careers stalled because professional opportunities for them were limited to low-paying jobs despite academic credentials and rock-solid experience. It shouldn’t be this way.