Jeff Judy

Jeff's Thoughts - March 2 , 2011

Now You See Them, Now You Don't

My auto mechanic is retiring, after having worked on my cars for decades. That means I have to start looking around for someone else to provide those services, someone I can trust the way I did this mechanic.

I'll just add that to the search for a new family physician, since my doctor of many years is also heading out to pasture. Meanwhile, I have been exploring the world of dentistry, since my usual dentist hung up his drill recently.

As customers, or patients, our loyalty is to individual practitioners, not to institutions. That family doctor is part of a clinic, and they would love it if I just accepted another physician in the same practice to take care of my future needs. But I haven't "made a connection" with those other doctors when I have encountered them, and I will be looking not just at other doctors, but at other clinics, to replace this longstanding relationship.

Some of your bank's customers have been there a long time, and you may think of them as loyal customers of the bank. But it is more likely that they are loyal customers of the people within your bank that they encounter visit after visit. And when those familiar faces disappear, when they are forced to deal with new or different employees, those customers become susceptible to being captured by your rivals. They begin to consider other options besides "business as usual."

Naturally, every bank has some turnover. And most customers understand if that happens now and then.

Unfortunately, too many banks are ignoring the possibility that employee stability, going forward, may not be what it has been recently. Indeed, in my consulting and training travels around the country, I often hear bank management at various institutions crowing about how many of their staff have been with them for years, touting that as a major asset that gives them a competitive advantage.

They fail to recognize that all that experience is also a major risk.

With the recession, anyone who has a job has been holding on to it. What's more, a considerable portion of people who were on the edge of retirement postponed it, because their IRA's or other investments had lost so much value.

Now we are seeing a gradual recovery, which is good for business. But as our optimism about the economy increases, it is easy to overlook how this may simply clear a logjam that has been keeping employees in place. Older employees, those ones who have been around forever that you are so proud of, will retire en masse when the time is right, and that right time is getting ever closer. Other employees will start to have more options, at other businesses, as the recovery picks up speed.

How will your customers react when you lose several familiar employees in a short period of time?

What we are talking about here is really "succession planning," but I define that term much more broadly, compared to how it is commonly used. You need more than succession planning just for, say, your CEO. You need it for your bank, you need it for all your stakeholders, from customers to employees to shareholders.

And you need to start working on it right now. In a coming issue of Jeff's Thoughts, I'll have more to say about what succession planning really means, in a successful bank.