Succession planning has been a hot topic of late. However, most think about succession planning only as it relates to senior management and the board. Oftentimes, the compliance department is overlooked in the process of identifying and grooming successors—a growing concern for many institutions, especially those in rural markets. Given the impact regulatory change has on an organization’s operations, product offerings, and, ultimately, bottom line, risk management personnel are integral to the success of an institution. When the time comes to pass the baton within the compliance department, who will be there to accept it?
Assessing the Current Compliance Department Composition
For the next few minutes, think about your compliance department. How many personnel comprise the department? For many it’s 2-3, but for some it’s just 1. Are these veteran employees or are they new to compliance? Some may have gotten their start on the teller line or working in the proof department. If your compliance officer won the lottery tomorrow (or retired), to where and to whom would you turn? While some will turn to a local pool of candidates, others will have to explore potentially costlier out-of-market options. If the latter is the plan, how likely is it to get approval to pay for them? Consider having a serious conversation with your senior compliance officer to gain an understanding of his or her 3-5 year plan. This will hopefully help gauge the urgency of your institution’s succession planning.
“Establishing a culture of compliance within an organization is arguably the first step in succession planning for the compliance department.”
The Employment Pool
More individuals are attending college than ever before. And that’s great! Unfortunately, most (if not all) colleges and universities do not offer a major in financial services regulatory policy (i.e., federal banking laws, rules and regulations). And let’s be honest, if they did, how many students would choose this major? As a result, very few graduates are looking for careers in financial services compliance risk management—most will come about a compliance role unintentionally (and sometimes unaware of what they are getting into!). The takeaway here is that the pool of candidates is small and quite possibly shrinking. As the current generation of experienced compliance professionals exit the workforce, inevitably it will become harder to fill the void.
Succession Planning within a Culture of Compliance
Establishing a culture of compliance within an organization is arguably the first step of succession planning for the compliance department. Here’s why. If it is made clear that compliance is an essential input to the success equation for your institution, compliance professionals consequently will be, and will feel, empowered. Rather than being viewed as a clandestine, back room operation that stymies growth and innovation, professionals will view the compliance department as a place to make a real impact and fuel growth and feed the bottom line. It is true that compliance can be costly, however, it is best viewed an investment from which you can reap returns when done right. It has been said “proper planning prevents poor performance.” What steps will your institution take to ensure someone will be there to accept the baton?
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