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A CEO evolution

Bigger banks drive C-suite changes

Banks in New Jersey and elsewhere are experiencing an unusual evolution: even as they’re getting bigger – thanks in part to regulatory and other demands that drive them to consolidate, spreading rising fixed costs over a larger base – a competitive market is pushing individual institutions to get closer to their customers. This kind of change has driven a shift in CEO activity, tasking them with more responsibilities even as stakeholders want them to operate in a leaner, more-efficient manner.

First Bank President and CEO Patrick Ryan.

First Bank President and CEO Patrick Ryan. – FIRST BANK

“When community banks were smaller – before increased regulations and operating costs led to more consolidation and larger-sized community banks – the CEO was the chief lender and banker, spending the bulk of his or her time with customers, helping them to build and grow their business,” said First Bank President and Chief Executive Officer Patrick Ryan. “Ten or so years ago, a CEO spent about 75 percent of his or her time as a banker, and 25 percent on regulatory and administrative functions. Now that’s flipped, and CEOs are spending much of their time on risk management matters, audits, and working with regulators.”

Ryan, who was part of the group that led a $19 million recapitalization of the bank, and has held the top spot since 2013, still tries to be hands-on, but he’s also comfortable giving more responsibilities to employees, at least to some degree. “As a bank grows, it’s subject to more anti-fraud and other centralized regulations,” said Ryan. “We try to give our managers and other employees more discretion so they can get things done in an efficient, expedited manner. But we still have guardrails in place to ensure compliance.”

Today’s bank CEOs are also more aware of the need for a diverse workforce, he added. “There’s more attention being focused on this, as part of the drive to field a high-quality workforce,” Ryan explained. “It’s important to continue to recruit top-quality people, so you want to make sure there’s no implicit or explicit bias in your hiring and promotion decisions.”

The role of the banking CEO will “continue to evolve. We will continue to spend time with customers, but we’ll also be pulled to spend more time on administrative tasks, more time with shareholders, and will continue to work closely with the management team to ensure that operations are maintained in an effective manner. I think you’ll see that evolution will continue away from a banker who happens to be a CEO to a CEO who happens to be a banker.
– Patrick Ryan, First Bank President and CEO

Despite the added initiatives, First Bank has been able to maintain a lean HR department, “because a lot of our hiring is done by word of mouth,” he noted. “Our employees act as ambassadors,” providing a built-in layer of screening. “When we do work with recruiting companies, we make sure they’re aware of our diversity goals.”

The role of the banking CEO will “continue to evolve,” Ryan said. “We will continue to spend time with customers, but we’ll also be pulled to spend more time on administrative tasks, more time with shareholders, and will continue to work closely with the management team to ensure that operations are maintained in an effective manner. I think you’ll see that evolution will continue away from a banker who happens to be a CEO to a CEO who happens to be a banker.”

Valley Bank CEO and President Ira Robbins.

Valley Bank CEO and President Ira Robbins. – VALLEY BANK

Ira Robbins — who has been at Valley National Bank for about 25 years, and has served as CEO for the past two years — said that the CEO’s focus has gotten wider. “Many used to concentrate on growing revenues and on customer development,” he observed. “But today, a CEO needs to have a broader, strategic perspective that encompasses issues like employee empowerment, technology, and a deep understanding of customer needs and how to engage and help them.”

As banks develop diversity initiatives, CEOs are also drawn in, he added “We’re taking a much more active role,” according to Robbins, who also serves as Valley Bank’s president. “Instead of simply reporting on diversity efforts, CEOs are helping to establish proactive recruiting and development strategies, mentorship and other initiatives.”

At the same time, CEOs are helping to mold employee empowerment strategies. “Banks tried to give more responsibilities to employees, but there was a lag in giving them the information to make efficient decisions,” he said. “For example, how can a front-line employee decide whether to cover a customer’s overdraft? But now, thanks in part to better training and to technological advances, they’ve got the necessary background and information to take on more responsibilities.”

This is particularly important now as technology eliminates some functions while opening up new ones. “Bank tellers used to cash checks, but there’s less need for that as more people use their mobile apps,” Robbins said. “But many tellers have developed great customer experience skills, so they’re a great fit for the new ‘universal banker’ approach. Today everyone, from the CEO on down, is getting more involved in the customer experience.”

A flatter organization

Other long-time executives have also seen plenty of changes. “For many years, banks were organized like railroads used to be,” said OceanFirst Bank President and CEO Christopher Maher, who’s spent 35 years in the industry, and about five in his current role. “Many banks had a top-down, authority-driven regime. The leader knew banking, and his or her knowledge trickled down to the rest of the organization.”

Christopher Maher, CEO and president of OceanFirst Bank.

Christopher Maher, CEO and president of OceanFirst Bank. – OCEANFIRST BANK

Today, as companies try to be more efficient, and draw on a wider base of skills to operate more competitively, “high-performing CEOs are more of an orchestra leader instead of a quarterback,” he added. “They’re trying to get the best performance from a wide range of people. They’re also empowering employees so they can take on more responsibilities — as the organization grows, you’re not looking for one person to have all the answers.”

This kind of approach carries some risks, but it also offers benefits. “As people move up into managerial positions, CEOs are confident they know their job, but when a CEO truly delegates responsibilities and authority, he or she has to understand that people may do things differently. So it’s a balancing act when you step back a bit and give people the freedom to be creative. The challenge, of course, is to understand when you should be on the sidelines and when the CEO might need to step across the line a bit and get more involved.”

Upgraded employee training helps to make the decision easier, he added. “At one time it wasn’t unusual to meet employees who had held the same position for 30 years or more, but you don’t see that as much today,” said Maher. “Banks are investing in employee learning so they can take on new responsibilities as the institutions themselves change.”

OceanFirst retrained “more than 500 customer-facing staff so they could understand how to help clients with [money transfer] apps like Venmo, and Apple Pay,” he noted. “To do this, we’ve partnered with NJBankers, and the ABA Stonier Graduate School of Banking Program at the University of Pennsylvania. We run a people-centric business, so we invest in employees.”

New realities

Technology and diversity continue to drive changes at the C-level, according to Lakeland Bank’s longtime President and CEO Thomas Shara. “Technological adoption, especially in the banking industry where we rely on our legacy systems, is a fundamental concern for many CEOs,” said Shara, who has led the bank since April 2008. “Like many companies, in order to remain relevant in the market, deliver shareholder value and meet customer demands, we must evolve how we do business and that means developing a robust digital platform.”

Thomas Shara, president and CEO, Lakeland Bank.

Thomas Shara, president and CEO, Lakeland Bank. – LAKELAND BANK

He’s also pleased with the hiring changes at the bank. “The landscape of our leadership team looks quite different than it did just a few years ago,” Shara said. “We have promoted or hired more women and minorities for leadership positions. And I believe this will continue to be critically important to meet the long-term strategies the bank has in place. Now more than ever companies need to foster a diverse workforce – one in which different perspectives and insights help govern the direction they need to serve both customers and employees.”

As banks grow even bigger, CEOs like Shara are also wading deeper into training and other initiatives. “Lakeland Bank’s workforce has experienced swift growth in a relatively short time,” he noted. “This change has broadened our employee demographic and has required us to make enhancements to accommodate the diverse dynamics of staff and ensure that the professional development of our colleagues is satisfied. The workplace is rapidly becoming a sea of generational, ethnic and gender diversity, and is forcing us to rethink how our company culture needs to change in order for the bank to remain a top-ranked competitor.”

During his tenure, Lakeland’s training department “dramatically shifted its focus on colleague development and has incorporated new programs such as a robust Leadership Development Program (LEAD) for high potential associates,” Shara added. “The nine-month program is based on team-centered learning and mentorships with senior leadership. LEAD participants are provided exposure to the board and other executive committees, work on a strategic capstone project for the bank and complete leadership development courses.”

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