How A CEO Lets Go
Louise Kelly, CEO & Founding Executive, EnerBank
In less than a month, I will be retiring as CEO of EnerBank USA. This decision didn’t come lightly. I’ve spent most of my life in banking: much of it in the mid-Atlantic region and, for the last 13 years in Salt Lake City, as the founding executive and leader of EnerBank USA, specializing in consumer home-improvement lending. I know it’s the right time to step down. And I have every confidence in the successor chosen by the bank’s board of directors (on which I serve) and in the management team we have built over the years.
How have I conducted myself during this last stage of my career? I have been anything but a lame duck. My days are spent moving the bank forward and satisfying a raft of important constituents: customers, the parent company, my board of directors and senior management.
Here are some lessons I’ve learned about maintaining a strong incumbency during your last days of tenure:
Plan your exit—early and talk about it often. For me the process started about three years ago. Why so far in advance of my retirement? Because if you don’t discuss your plans early and reiterate them, you risk sacrificing critical buy-in from your board about your successor, as well as the opportunity to thoroughly groom the person who will succeed you. If you fill that position from within, as we did, you also create other vacancies. That takes time and planning, too. When communicating about your retirement, be sure to exude a sense of confidence about the future and the abilities of your successor and others who will move to the top of the organization.
In focusing on my replacement, I not only had to keep key players in the loop within the Bank; I had to advise the bank’s examiners and regulators, who have a keen interest in the succession plans of FDIC insured institutions, as ours is. Perhaps you’ve heard of the “CAMELS” rating system, used to assess a bank’s overall soundness. The “M” stands for management capability—and regulators don’t like surprises about openings in key spots any more than investors do. That’s another reason I planned my move well in advance.
Spend time grooming your successor. I like things in black and white. To me an uncertain environment encourages teams and their members to make tentative decisions and to perhaps act more out of individual interest than for the good of the common cause. That’s why I couldn’t look three years down the road without a clear idea of a candidate to replace me. So, my board and I made a list of attributes of what we were looking for, something that amounted to a job description. And the person we thought best-suited to the job was our CFO, Charlie Knadler. Once we’d settled on him (and received his buy in, of course), we had the luxury of preparing him for the role of chief executive. That generally took two forms.
The first was beefing up certain skills. One of them was the ability to resolve conflicts at the highest levels. In our business, the CEO has to have consummate negotiating prowess in dealing with internal matters, board members, major clients, management and board members at our parent company, and regulators and legislators. To acquaint him with the latest tools and thinking, we sent Charlie to Harvard Law School to take its “Negotiation and Leadership” course.
The second was giving him particular challenges. To take just one example, each year we present our strategic plan to the senior executives and board of directors from our investor, CMS Energy Corp., a major S&P 500 company. It can be an intimidating experience. Three years ago, I brought Charlie along when I presented so he could observe the whole process. The next year, I gave him the lead in the plan and we did a joint presentation. This year, it was his baby: He had chief responsibility for developing the plan and getting approval from the parent company.
Don’t focus on your legacy. These days, people constantly ask me, “How can you let go? You built this bank!” True, but I’m ready to step down. Why? Because I accomplished what I set out to do before I retired: I built the bank into a $1 billion (assets) company that has delivered sustainable growth and profitability again and again. The bank has a great reputation and is its own legacy. That makes it easy for me to walk away. I played a part in our success, but so did many other people. There’s a great team in place and they’re ready to take over.
It’s still your watch! As long as I’m in this chair—and I will be until Dec. 31—the buck stops here. I’m a big believer in accountability and responsibility. I’ve been spending a lot of time on the road these days, visiting with customers, solidifying our relationships and showing our appreciation for their business. On the financial side, I need to deliver on the promises we’ve made. And then I’ll let go.
Prepare for the next life. A lot of people ask me what I’ll be doing come Jan. 1, 2016. I’ll still have a connection to the Bank, as a board director. But it will be in a supportive, not a leadership, role. That will take a little getting used to, but I am determined to make the transition successfully and quickly. Meeting with just a few executives nine times a year is very different from interacting with a team on a daily basis. I’m happy to serve as a mentor—but only if I’m asked!
I will certainly spend more time with family and friends. Playing golf, riding horses, hiking, snowshoeing—I plan to be much more active physically. And I have a keen interest in getting involved with women- and minority-owned banks that have challenges more established institutions don’t. How will I contribute? I’m not yet sure. But mindful of my penchant for knowing what’s ahead, I will likely have a pretty good idea soon.
[Image courtesy of Sira Anamwong at FreeDigitalPhotos.net]
About the Author
Louise Kelly, is the CEO and founding executive of EnerBank