Sandy Spring Bank

Building the Leadership Pipeline Stonier Capstone Project

Sandi Maxey 3/1/2019

Contents

Executive Summary ....................................................................................................................................... 0

Introduction and Background ....................................................................................................................... 1

Strategy and Implementation ....................................................................................................................... 4

Financial Impact .......................................................................................................................................... 12

Non-Financial Impacts................................................................................................................................. 15

Conclusion ................................................................................................................................................... 20

Executive Summary

Summary Statement

A talent pipeline refers to an approach to talent management and succession planning

whereby talent is built from the bench of existing people in an organization. These talent pools

are fostered and nurtured to assume future leadership positions. In the modern business world, all

organizations are challenged with attracting and retaining the best talent. In the current era of

record low unemployment and a growing skills gap, identifying and developing an internal talent

pool offers many advantages to Sandy Spring Bank. These include the opportunity to fill key

roles with internally developed leaders, to protect its cultural legacy with leadership continuity,

and to position itself as an “employer of choice” in its marketplace.

Sandy Spring Bank’s current talent management processes are decentralized. Talent

decisions are made in the business unit, in “silos,” without a consistent structure. In this

environment, managers identify their own future leaders with no objective criteria. Development

opportunities are awarded based almost solely upon the amount of exposure the individual has

been afforded to leadership. The same names are brought forward time and time again for stretch

assignments or development opportunities. The end result is the perception of favoritism from

those outside of the advantaged status, the lack of a diverse talent pipeline to fill key leadership

positions, and an inconsistent, unstructured, and ad hoc process for identifying and developing

the Bank’s high potential talent.

It is acknowledged that this current approach was sufficient when the company was

relatively small and the labor market was less competitive than it is today. It may have even

offered a certain measure of nimbleness by providing the ability to fill roles quickly. Today,

however, the Bank assumes considerable risk by limiting talent decisions to subjective criteria in

insulated pockets of the organization. This project advocates for the implementation of a

structured talent review process to ensure a bench of “ready now “talent for succession

management purposes.

Analysis

If not addressed, the current narrow view and subsequent promotion of talent is in danger of

becoming a liability to the bank’s overall corporate health. This approach restricts the Bank from

identifying and nurturing internal talent to the extent it could with a more broad-based process.

Drawing upon a wider pool of talent to fill roles across the organization will add diversity and

strengthen the Bank’s leadership capabilities. A leader who has been developed with strategic

business intent and steeped in the company’s culture will be best positioned to continue the

Bank’s legacy. In addition, establishing a structured, consistent succession management process

can be leveraged to attract young talent to the company. This could represent a significant

advantage to the Bank to establish itself as an, “employer of choice,” in the very competitive

employment market it operates within.

Research into talent management best practices indicate a leadership pipeline process as the most

effective approach for organizations to fill their future leadership roles. This process ensures a

consistent and structured approach to hiring, identifying, and developing talent for future

business needs. It assures a repeatable, sustainable, and objective practice that is defendable to

internal and external examination. The details of a typical process are provided for review in

Appendix 6-9. In summary, the key attributes of a leadership pipeline process provide for:

Identification of objective criteria for assessing individual performance and potential;

Implementation of an inclusive talent review process for assessing and categorizing

individuals on a performance-potential grid;

Establishment of a talent development roadmap for individuals identified as “high-

potential;” and,

Evaluation of the program’s success based on pre-determined metrics.

Recommendation

It is recommended that Sandy Spring Bank undergo a full implementation of the talent

management process outlined in this document. In this process, cross-functional groups of

business line leaders and functional managers participate in regular talent reviews. These talent

reviews are intended to be inclusive of all employees in specific job bands. Employees are

assessed on performance in the current job as well as potential for future leadership roles. The

output of these meetings is a 9-box grid that categorizes employees based on those two factors.

Managers are responsible for ensuring that all employees have appropriate development plans to

help them achieve their potential, remain successful in the current role, or transition to a more

fitting role. This is designed to be an on-going process administered and facilitated jointly by the

Human Resources and Learning functions. The process is evaluated annually against its target

goals for bench strength and diversity.

In summary, the benefits of this recommendation are:

To reduce the reputational and operational risks associated with subjective talent

promotion;

To ensure a pool of “ready now” talent to fill critical business roles and ensure business

continuity, i.e., for leadership succession;

To retain “high-potential” employees by providing growth and development

opportunities;

To motivate existing employees with a transparent process for identifying and developing

talent; and,

To attract the best and brightest talent in its market by becoming an “employer of

choice.”

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Introduction and Background

Founded in 1868, Sandy Spring Bank is one of the oldest independent financial

institutions in the Washington metropolitan area. The bank offers full service commercial

banking through 55 community offices and six financial centers located in Central Maryland,

Northern Virginia, and Washington, D.C. The Bank completed the acquisition of Washington

First Bank in early 2018 propelling total assets from 5.1 to 8.2 billion. As a community bank,

Sandy Spring Bank focuses its lending and other services on businesses and consumers in the

local market area. Through its subsidiaries, Sandy Spring Insurance Corporation and West

Financial Services, Inc., the company offers a comprehensive menu of insurance and wealth

management services.

Sandy Spring Bancorp (SASR) is the bank holding company for Sandy Spring Bank.

SASR’s business footprint serves one of the country’s most economically successful regions.

This strength of the market is a result of the significant federal presence and robust growth in the

professional and business sectors. The unemployment rate in the region has remained

consistently below the national average due to the availability of a highly educated and trained

workforce. The attractiveness of this market makes it highly competitive. The Bank’s

competition includes some of the country’s largest financial institutions as well as community

banks, credit unions, and non-bank entities. The combination of the Bank’s strong community

and market presence in an economically advantaged area coupled with a competitive array of

sophisticated products and services provides the foundation for consistently strong earnings and

growth. Appendices 1-4 provide a snapshot of the bank’s outstanding financial performance

across a number of diverse metrics.

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The Quaker farmers who established SASR’s legacy institution, the Savings Institution of

Sandy Spring, wanted to provide an alternative to the large banks in D.C. and Baltimore. Their

vision was for an independent bank to serve the particular needs of the local community and to

ensure its viability and growth. From these humble beginnings, the Institution evolved and

redefined itself to meet the growing demand of local citizens. Today, Sandy Spring continues its

tradition of a strong company culture characterized by community service, family, and history.

The values upon which the Bank was founded remain relevant today and continue to be the focal

point of its Vision, Values, and Principles as seen in Appendix 5. The Bank considers its primary

competitive differentiation to be strong community presence, local decision making, and most

importantly, relationship banking. The three elements are leveraged to achieve the Bank’s eight

strategic objectives:

1. Grow client relationships and resulting revenue.

2. Attract, retain, develop, and reward the right employees to execute the Bank’s strategy.

3. Create remarkable operating processes and procedures.

4. Utilize technology to provide optimal delivery to and access for clients.

5. Diversify revenue stream through growth and integration of fee-based lines of businesses.

6. Maximize net interest margin.

7. Continue the development of an enterprise-wide risk management program.

8. Proactively pursue mergers and acquisitions, bank and non-bank.

To achieve its strategic objectives, the bank relies heavily on a concentrated client experience

(CX) framework. This framework aligns all business decisions with a client centric perspective.

To that end, highly skilled talent and service delivery are the hallmarks of its brand

differentiation. Sandy Spring’s marketing tagline, “From Here, For Here, and Always for You,”

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demonstrates its market position as a community bank. With a client centric differentiation

strategy and a community bank brand, the Bank has a clear focus on differentiation based on

value in the form of personalized, proactive client relationship management.

For much of its history, the Bank pursued organic growth through branch expansion in its

contiguous communities. Only as recently as 1980’s did the Bank begin to venture into

acquisitions to fuel growth. The Bank has completed nearly a dozen acquisitions of banks and

non-bank financial institutions in the last 35 years. With each transaction, the integrity of the

Bank’s culture has been tested. Each acquired financial institution brings with it the vestiges of

its own culture. With each acquisition it becomes increasingly difficult to maintain the “small

bank feeling” that enables the internal team collaboration and clients’ emotional connection to

the brand that are required to deliver a consistently remarkable client experience.

Corporate culture refers to the shared values, attitudes, standards, and beliefs that

characterize members of an organization and define its nature. More simply, it can be thought of

as the personality of the organization. Leadership is responsible for defining the company’s

desired culture and for implementing the necessary systems, processes, and structures to support

and maintain it. It stands to reason that in order to maintain its culture, a company must ensure a

consistent stream of leadership who are ready and able to execute on its strategy.

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Strategy and Implementation

Identifying and maintaining a leadership pipeline is complex and involves numerous

complementary and aligned processes. These include a consistent method of identifying future

talent, conducting on-going talent reviews, engaging potential leaders in intentional individual

development plans, measuring success against established objectives and sustaining the process

over time. In addition, critical success factors include executive buy-in, a talent management

mindset, transparent communication, strategic investment in development resources, and central

ownership for the process.

Historically, Sandy Spring’s senior managers have had the primary responsibility for

identifying and developing high potential talent in their own business units. A transition to a

centralized approach will require a culture shift to a talent management mindset. This refers to a

belief that talent is treated best as a corporate asset as opposed to being managed solely in the

business unit. This allows the organization to leverage its best and brightest to deliver on its

strategic intent while maintaining a diverse and ready talent pool. In this approach, business unit

managers are not given absolute authority to “anoint” certain individuals as successors, rather,

the collective leadership team is charged with using a consistent set of standards for identifying

future leaders and justifying talent decisions.

When talent is viewed as an organizational asset, senior managers become accountable

for the successful implementation of individual development plans to meet specific development

goals. For example, senior managers may need to move their high potential talent to other

business units or to fill their open roles with high potentials from other units to ensure these

individuals obtain certain skills needed to broaden their experience and enhance their readiness

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for advanced roles. This practice represents a significant departure from today’s current reality

where talent is owned in the business unit and talent decisions rest solely on the unit manager.

The final piece to this puzzle is the strategic and intentional investment in development

opportunities. As with talent decisions, development resources are generally managed in the

business unit budget. There are a few exceptions to this. For example, attending banking school

programs involves a centralized nomination process that considers the diversity of the nominees

as well as their current performance and future potential. While this is a more “democratic”

method of selecting candidates, it is not connected to an intentional plan to place identified high

potentials in learning experiences in order to prepare them for future leadership roles.

There are many convincing reasons for shifting how the Bank views, identifies, and

develops talent. The first is related to the Bank’s strategic objective of growth through mergers

and acquisitions. Over the next five years, executive leadership expects to grow the bank fairly

rapidly in order to surpass $10B in assets. This will allow the Bank to achieve a size sufficient to

offset the additional costs from increased regulatory burden and capital requirements.

Acquisitions provide immediate access to new clients and markets as well as gains in efficiency.

The biggest challenge during acquisitions is not converting systems or clients but rather

integrating two cultures. For Sandy Spring Bank, culture is everything. It is the cornerstone of

our client experience approach to delivering a differentiated financial services brand in a

crowded market. A leadership pipeline developed in-house and steeped in the culture will be

ready and able to preserve the Bank’s culture in the face of the upheaval introduced with

bringing together two institutions.

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The second argument in favor of developing a leadership pipeline is the changing nature

of the banking industry. Banking is being shaped by and must prepare to respond to an

environment characterized by customer centricity, regulatory change, cyber risk, Fintech,

technology management, and a reimagined workforce.1 The message is that banks must not only

respond to the environment but transform the bank in the process. Strong leadership will be

required to navigate successfully, particularly for community banks who do not have the

resources to be leading edge providers of digital services.

Even as the banking industry as a whole is evolving, the requirements of leadership, in

general, are transitioning based on changes in the overall business environment. Flattening

organization charts mean wider spans of control, geographically dispersed work teams, and a

greater emphasis on cross-functional collaboration. Leadership roles are changing more

frequently to meet the complex demands of the competitive environment. Leaders are

experiencing an increase in both the type and number of job responsibilities. This means that in

order to remain effective, leadership capabilities must change. The leadership pipeline must be

proactively built and managed to respond to business disruption.2

The final reason to be more intentional about identifying and developing leaders is the

ever increasing diversity of our clients and communities. Beyond the legal ramifications of not

promoting it, championing diversity is the right thing to do; it aligns with the Bank’s corporate

value of integrity and is consistent with its history. From its beginning in 1868, the founders

chartered a community-inclusive institution that accepted deposits from married women in their

own names and freemen of all races. Implementing a defined process for identifying and

1 “2018 Banking Outlook,” Deloitte Center for Financial Services, https://www2.deloitte.com/za/en/pages/financial-services/articles/gx-banking-industry-outlook.html, 2017. 2 “Improving Leadership Bench Strength,” CEB, 2017.

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developing future talent that includes a diverse candidate pool as a key objective is the most

effective and consistent way to ensure diversity goals are met.

A centralized process for identifying and developing leadership talent for future roles will

enable the Bank to overcome the business challenges described. A centralized process is

necessary to ensure consistency and to achieve strategic intention. The process must be

sponsored by the bank president as a corporate initiative and owned jointly by the heads of the

Human Resources and Learning functions. The bank president is accountable to the Board of

Directors which has direct oversight of the bank’s succession plan. The ultimate responsibility

for ensuring leadership transitions lies with him. The weight of his endorsement cannot be

understated in terms of acceptance of and compliance with the process. The head of Human

Resources has access to the enterprise-wide data needed to report on candidates’ current

performance, to measure the program’s success, to identify talent gap associated risks, and to

ensure compliance with employment laws. Human Resources can align succession objectives

with recruiting and workforce planning. The manager of Learning and Professional Development

brings expertise in leadership development and program evaluation. To date, leadership

development has been an isolated initiative lacking a connection to strategic talent development.

Moving towards an integrated approach to talent management presents the manager with a

significant opportunity to grow and develop personally, to influence organizational capability

and effectiveness, as well as to bring talent development to the forefront of organizational

strategy.

Ultimately, building a leadership pipeline is about business continuity and organizational

health. Long term company survival depends on a well-prepared pool of leaders ready to execute

the Bank’s strategy. Leadership transitions represent significant risks to organizations. The

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abrupt departure of a key leader can have dire consequences to short term results and shareholder

value. A well-managed talent pool and succession process ensures seamless execution of critical

functions. Investing in leadership development and promoting leaders from within can also

become an advantage in a competitive job market. Sandy Spring Bank aims to be an “employer

of choice” by offering a company culture that appeals to individuals who want opportunities to

grow and to contribute to a highly successful organization.

In order to populate a sustainable leadership pipeline, the Bank must implement a talent

review process undertaken at the senior levels of the organization. Unlike succession planning,

which is a related process for replacement preparedness, a talent review is for the purpose of

identifying high potential talent and assessing their readiness for future leadership roles. This

process will engage executive and senior leaders in discussing current and future talent needs,

current and potential leader capabilities, gaps, and development needs. Talent discussions will be

based on objective, agreed upon, and consistently applied criteria. Central to this process is the

expectation that managers at every level will meet with their direct reports to understand their

career aspirations, share feedback, and discuss development.

This process will stand in direct contrast to the current practice of individual leaders

identifying and developing talent in their own divisions using subjective, inconsistent criteria.

This will encourage a diverse talent pool and ensure a transparent process that shines light on

how and why talent is advanced in the organization. From an employee perspective, it removes

the mystery around how one can advance one’s career at the Bank and provides a path to

achieving career goals. Appendix 6 provides an implementation schedule and responsible roles

for the talent review process.

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There is a great deal of preparation required before conducting an effective talent review

meeting. This begins with establishing a common definition of “high potential.” The heads of

Human Resources and Learning will conduct interviews with each of the Bank’s eight executive

officers. The point of these interviews will be gather behavioral examples of how each executive

would describe “high potential.” The collective responses will be analyzed for common themes

and then grouped into a set of seven-ten leadership competencies. As competencies are

behaviorally based, they are inherently objective and provide a non-biased, consistent language

for discussing talent.

The heads of Human Resources and Learning will facilitate a kick-off meeting with the

executive team to set the stage for the talent review process. The objectives of this meeting will

be to gain final consensus the leadership competencies and behavioral items, to explain the talent

review process, to define the candidate pool, and to introduce a customized performance-

potential grid for rating each candidate. The recommendation is to include all of their direct

reports in the initial talent review cycle.

Following the kick-off meeting, each executive will receive an Excel spreadsheet listing

all of their direct reports and a copy of the performance-potential grid (Appendices 6-8). They

will assess each candidate for performance and potential, readiness for the next level leadership

role, and risk for exit. The completed spreadsheets will be sent to the Head of Learning to

consolidate. The head of Human Resources will assemble performance and demographic data for

each of the candidates. All of this data will be the basis of the talent review discussions.

The talent review meeting will be conducted using a structured process as outlined in

Appendix 9. In a round robin fashion, each executive will present their candidates and discuss

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their assessments. The heads of HR and Learning will facilitate this discussion to encourage

candor and objectivity. During these discussions, the members of the executive team will be

encouraged to share their own experience of the candidates and to challenge each other to be

honest and candid about the candidate’s potential for future leadership including any gaps or

potential career derailing factors.The discussion of each candidate will conclude with a call to

action for one of several possible outcomes: to develop for future roles, to develop-in-place, to

move to another role, or to plan for exit.

Following this meeting, the executives will meet with their direct reports to discuss their

future career aspirations. This timing of this meeting will coincide with the annual review cycle

and is, in fact, a part of the current process. What will be different is the engagement in a much

more intentional, robust, and candid discussion of the employee’s capacity and readiness for

future leadership roles. To “tell or not tell” employees identified as “high potential” is a hotly

debated topic in the talent development profession. Although it is not recommended that

candidates be told their rating on the performance-potential grid, it is recommended for

executives to have an open-ended discussion with their high potential directs about future

development for the purpose of preparing them for some future, as yet undefined, role.

For each identified high potential, a required individual development plan (IDP) is

recommended. This adds accountability to the intention of the process. The Head of Learning

will utilize the information gleaned from the talent review meeting about development needs and

gaps to identify and make available the necessary learning resources. These may include in-

house programs, external programs, partnering with vendors, and purchasing off-the-shelf

content. In addition, selection for participation in various external programs, schools, and

conferences will include a discussion of the high potential candidates as one criterion for

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attending. For example, in the future, candidates for Stonier School may come from this pool

rather than the current open-nomination process.

In order to sustain the process and ensure progress, the Heads of HR and Learning will

facilitate a mid-cycle six-month review with the executive officers. During this meeting, each

executive will discuss the development plans in progress for their direct reports as well as any

changes since the last meeting that may impact a candidate’s status. Executives will be prepared

to discuss what has been done to address any performance improvement issues. This information

will be noted and incorporated into the preparation for the next talent review cycle.

The process described herein would not be sustainable without technology support. The

Bank has the advantage of an automated talent management system from Cornerstone on

Demand. This system links all talent management processes from hiring and onboarding to

performance management, succession planning, and learning. Each of the steps in the talent

review process will be documented in the system. This enables robust reporting capability,

tracking, and integration with the Human Resource Information System (HRIS) for the data

needs.

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Financial Impact

Building a talent pipeline will have a variety of financial and nonfinancial impacts to the

organization. Some of these are quantifiable but most are not. There are few predictable hard

dollar costs or benefits associated with implementing the recommendations outlined in the

previous section. To some extent, recognizing the risks associated with not developing future

talent, as well as implementing a formalized process, are a matter of common sense. Similarly,

the presumed benefits attributed to implementing the recommendations are a leap of faith

because they are so difficult to isolate and measure.

The financial impact of developing future leaders is generally focused on three main

considerations. One is the cost associated with formal leadership development programs. These

might include internal or external programs delivered in any number of ways – instructor-led,

online, or virtually. The cost of content and professional facilitation can vary greatly. At this

time, the Bank has not identified a specific program for all high potential leaders to attend nor is

one being suggested as part of the recommendations. In the early phases of the implementation,

formal learning will be provided on an “as needed” basis as part of an Individual Development

Plan. As future talent reviews are cascaded further down into the management ranks, broad based

development needs may be identified and costs will be budgeted accordingly.

The second financial impact involves recruiting costs to source a high level,

experienced leader in the absence of an internal candidate. These placements are typically

identified by engaging an outside executive level recruiting firm. These firms charge fees that

most often represent a percentage of the new hire’s total compensation. For positions at the

highest levels of the organization that may involve highly specialized experience, such as any C-

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suite officer, this cost can be considerable. In addition, signing bonuses, relocation packages, and

other executive compensation perks will likely be a hit to the bottom line. Moreover, if an

external hire does not transition successfully, there is the potential for far greater risks in terms of

damaging the company’s reputation, losing key markets, or implementing failed strategies.

The final major financial impact is difficult to quantify but presents a true risk to the

business. As mentioned previously, talent at SSB is currently managed in the business unit.

Changing this practice will involve breaking down organizational silos that inhibit sharing talent

across business lines. Most high potential leaders have been promoted into leadership and

management roles based on sustained high performance in their areas of expertise. In order to

prepare the leader to take on a broader-based role, he or she may benefit from running a division

completely unrelated to his or her existing expertise. This will provide a “stretch” assignment

that will test the leader’s ability to adapt and perform in unfamiliar circumstances as well as

round out the leader’s business acumen. Of course, as the leader learns and gains competency, it

is likely the performance of the division will suffer. This may result in a loss of revenue or costs

overruns. In addition, there is the possibility the leader will not perform successfully in the

stretch role and his or her status as a high potential may change. This presents the risk of losing

an otherwise high performer who may become disillusioned and exit the company. Frankly, this

is all the more reason to have a ready-now talent pipeline.

It’s hard for any company to argue against the logic of identifying and developing future

leaders for the sustainable health of the organization. Why, then, do so many companies neglect

to make the investment? The real hurdles are the cultural beliefs that surround talent

development. At Sandy Spring Bank, our narrative around talent development involves many

cautionary tales of past instances where investments were made to put employees through

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programs and employees exited anyway. In some instances, high performers exited the company

after completing the program because they were recruited by other banks or because there were

no available positions for placement. There is no question that lost investment is a real

possibility. It is mitigated by the structure and intention of the talent review process. Individuals

who are aware that the Bank recognizes their talent and wants to invest in their future are more

engaged and loyal. When their development is linked to the Bank’s strategy and their own career

aspirations, employees enroll in the process. They assign a value to it that can’t be met easily by

a competitor.

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Non-Financial Impacts

The Bank can benefit from many non-financial impacts associated with establishing a

talent pipeline approach to succession management. It is a generally accepted belief that an

organization which supports leader development and promotion from within is able to retain and

attract the best talent in the market place. The message to the entire employee base is the

company values performance and there are opportunities for advancement. Both of these are

potent ingredients of the overall employee experience. Although considered “non-financial,”

these impacts are associated with strong organizational health with the resulting improvement in

employee productivity and bottom line results.

Retaining top talent is particularly important for Sandy Spring Bank. The company has

adopted a client experience strategy as its competitive differentiator. Successful execution of this

strategy relies heavily on technology and people. Leadership is responsible for enabling this

strategy by communicating the vision, mission, values, setting the direction, and removing

obstacles. Leaders developed from within are enrolled in the corporate philosophy and will

demonstrate the necessary alignment with company’s strategic intent.

Employee engagement scores are an indicator of how employees perceive their overall

employee experience. The individual survey questions provide more detailed insight into

specific workplace characteristics that enable the company to make decisions based on employee

feedback. The goal is to create a workplace where employees are willing to give discretionary

effort in order to provide the remarkable client experience to which it aspires. Past engagement

scores in the Career/Performance Management section of the survey, as indicated in Appendix 9,

show opportunity for improvement in the career development category. Although Sandy Spring

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Bank scores above the survey vendor’s global benchmark, comprised of over 400,000

respondents from 400 mid-size companies, there is a slight downward trend from the Bank’s

previous survey score in 2016. The employee open comments section indicates a similar theme;

employees want to understand the career opportunities and development resources available to

them. This is particularly true in the younger and less tenured populations. A corporate focus on

developing talent reinforced with a demonstrated preference for promoting from within should

translate into higher employee engagement as evidenced by improved survey scores.

Many of the non-financial impacts of the recommendation serve as a means of mitigating

the various organizational hurdles that threaten a successful implementation. Management must

always weigh the amount of resistance to a new initiative that is presented by the company’s

culture, structure, and history. This allows them to determine if the “juice is worth the squeeze,”

and to prepare an effective offense and defense. Very often, these hurdles can be overcome with

clear communication and support from the top.

By far the biggest hurdle is the independent leadership culture that creates silos between

organizational units. As stated, talent is owned in the business unit. Most of the company’s top

talent achieves career progression vertically. Viewing talent as a corporate asset represents a

major shift because of the leader’s loss of control and the potential short term loss of production

in the business unit. Complicating this reality is a cultural characteristic of being, “nice.” Sandy

Spring Bankers are nice people. Our culture values harmony without conflict. This results is an

environment lacking honest and constructive feedback. Both of these qualities are essential to an

effective talent review process.

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A second hurdle is the difficulty of attracting top talent in a highly competitive market

with historically low unemployment in an industry plagued by a major perception problem.

College graduates today do not view banking as a particularly desirable career option. Banks

continue to suffer from the reputational fallout from the mortgage crises and the more recent

Wells Fargo scandal. In addition, the “digital natives” don’t view banks as being technologically

innovative making them inherently unattractive work environments.3

Ultimately, the existence of a strong talent development process is expected to result in

Sandy Spring Bank becoming an, “employer of choice,” in the marketplace. Prospective

employees assign value to investments in talent development and internal promotion

opportunities. This should allow the Bank to compete for top talent without having to pay higher

than average market rates.

Finally, Sandy Spring Bank has a relatively flat organizational structure as you move

further up the hierarchy as evidenced by the organization chart in Appendix 10. The potential is

for creating a, “talent pipeline to nowhere.”4 With fewer positions at the top, there are fewer

places to move into. An additional reality at Sandy Spring is that many of the current incumbents

at the Senior Vice President level and beyond are relatively young and not expected to vacate

their roles any time soon. This hurdle can be overcome by including some degree of transparency

in the talent review process. Some consider transparency in the process to be a double-edged

sword. On the upside, it can be an effective means of retaining top talent. On the downside, it can

create unrealistic expectations for progression. To be fair, a high performing, high potential

3 “New Strategies: Decisions Bankers Need to Make for 2019,” BAI Banking Strategies Executive Report, December 2018. 4 “Building a Succession Management Strategy Based on Portfolio Management Insight,” CEB, Succession Management Playbook, September 2013.

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employee will likely have these expectations regardless of being told they are “high potential” by

their manager. At the very least, a high potential must be told that he or she has been identified

as having potential for future leadership roles and will be the beneficiary of intentional

development. This will engage the employee in the process and enable them to see the big

picture.

The cultural issues described can be overcome with the essential elements of a talent

pipeline approach: CEO support, a centralized talent review process, strategic development, and

accountability to the identified success measures for the program. Fortunately, Sandy Spring’s

CEO has expressed a desire and willingness to identify and develop our top talent. He recognizes

that as the company grows, we can no longer rely on executives to have a deep view into talent

and to advance the best and the brightest objectively. It is evident that doing so results in the

system producing what it has always produced: the elevation primarily of white males from the

Commercial Banking division.

The CEO’s involvement cannot stop at communication and buy-in. He must be involved

personally in talent review discussions, particularly those involving talent at the SVP level. His

role will be to encourage candor among the Executive team and challenge the status quo as they

discuss their direct reports. The Director of Human Resources will provide demographic and

performance information, facilitate the process, and reinforce the program goals. The Director of

Learning will suggest and coordinate development activities as part of the individual learning

plans. For example, participation in banking school programs will be linked directly to the talent

development opportunities identified in the review. The group will analyze open and planned

positions and discuss potential matches from the talent pool.

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It is not enough to have a defined process for identifying and elevating high potentials.

The talent management program must be evaluated for its ability to produce a healthy talent

pool. “Healthy” in this context is assessed by the number of identified successors for each key

role, the number of “ready now” candidates, as well as diversity targets for women and

minorities. In addition, trends over time should show an increased rate of internal promotions,

lateral moves, and the desirable attrition of non-performers. These goals can only be met by

moving talent around, placing high potentials into stretch assignments and having candid, honest

conversations between managers about the true performance capabilities and future potential of

employees.

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Conclusion

A talent pipeline approach to talent and succession management offers Sandy Spring

Bank many benefits with few negative consequences. Primarily, the existence of an internally

groomed pool of leaders ready to assume leadership positions offers the Bank a measure of

business and cultural continuity. The sustainability of the organization is at risk every time a

senior leader exits the company or a new acquisition is made. The time to plant the seeds which

will grow the next generation of Sandy Spring Bank leaders is now. The Bank’s role in the future

of its employees, clients, shareholders, and community is frankly too important to leave to

chance.

Appendix 1: Market Share

Rank Institution (ST) Branches

Deposits

($mm)

Market

Share

(%)

1 63 5,610 4.6

2 Eagle Bancorp Inc. 13 3,364 2.7

3 Burke & Herbert Bank & Trust Co. 6 934 0.8

4 Revere Bank 8 842 0.7

5 Capital Bancorp Inc. 2 719 0.6

6 Congressional Bancshares Inc. 4 654 0.5

7 Severn Bancorp Inc. 4 570 0.5

8 MainStreet Bancshares, Inc. 4 514 0.4

9 Chain Bridge Bancorp Inc. 1 483 0.4

10 FVCBankcorp Inc. 2 466 0.4

11 Freedom Bank of Virginia 4 453 0.4

12 Old Line Bancshares Inc. 10 449 0.4

13 John Marshall Bancorp Inc. 3 423 0.3

14 Access National Corp. 4 409 0.3

15 Presidential Holdings Inc. 5 397 0.3

Totals 133 16,287 13.3

From Here. For Here.

Appendix 2: Deposit Growth and Composition

Deposit Growth

Deposit Composition (2Q 2018)

Appendix 3: Loan Growth and Composition

Loan Growth

Loan Composition (2Q 2018)

Appendix 4: Operating Metrics

Net Interest Margin (2Q 2018)

Efficiency Ratio

Appendix 5: SSB Vision Framework

Appendix 6: Talent Review Process Implementation Schedule

Implementation Step Date Completed Owner(s)

1. Conduct interviews with executive

managers to identify the most important

leadership competencies for future

success.

Heads of HR and

Learning

2. Develop talent review process proposal

for bank president.

Heads of HR and

Learning

3. Present proposal to bank president for

approval.

Heads of HR and

Learning

4. Present approved process and timeline to

Executive Leadership Team.

Heads of HR and

Learning

5. Identify talent pool to review. Executive Officers and

Business Unit Managers

6. Assemble current performance and

demographic data for executive direct

reports.

Head of HR

7. Complete competency assessments for

each member of the talent pool in the

business unit.

Executive Officers and

Business Unit Managers

8. Conduct talent review meeting with

Executives to populate performance-

potential grid, assess readiness, and

retention risk.

Heads of HR and

Learning

9. Conduct one-on-one development

meetings with talent pool candidates.

Executive Officers and

Business Unit Managers

10. Create individual development plans

(IDP) for all high potential candidates.

Executive Officers and

Business Unit Managers

11. Conduct IDP review meeting with

Executives to plan and coordinate

learning experiences.

Heads of HR and

Learning

12. Provide identified development

resources.

Head of Learning

13. Conduct mid-cycle status review with

executives and make any needed

adjustments.

Heads of HR and

Learning

14. Gather data to evaluate success. Head of HR

15. Prepare for next talent review meeting. Heads of HR and

Learning

Appendix 7: Talent Review Spreadsheet

Region Name Age Gender Race Initial Rating Readiness Risk

3 Brown, J. 54 Female Black or African

American Develop-In-

place High

3 Cook, M. 60 Female White Key

Contributor Medium

3 Davidson, R. 50 Female Black or African

American Key

Contributor Medium

3 Fleming, W. 41 Male White Key

Contributor Low

3 Jong, S. 57 Female Asian Key

Contributor Low

3 Kotter, K. 39 Female Black or African

American Key

Contributor Medium

3 Lee, B. 48 Female Asian High Potential Ready 1-3 High

3 Mayhew, L. 59 Female White Key

Contributor Low

3 Ming, Z. 44 Female Asian Key

Contributor Medium

3 Neff, T. 34 Male White Key

Contributor Medium

3 Patel, L. 31 Female Asian Promotable Ready Now High

3 Patel, K. 38 Male Asian Replace Low

3 Tran, C. 31 Female Hawaiian/Pacific

Islander Promotable Ready Now High

3 Williams, F. 47 Male Two or more races Promotable Ready Now Low

Appendix 8: Performance-Potential Grid Rating Description Key Behaviors and Attributes

Pro

mo

tio

n P

ote

nti

al

High

Potential

A highly exceptional, promotable person

who has the potential to develop into a

Regional Manager or other senior level

leader over the next five years.

This person is committed to his/her career development.

He/she also has the skills and track record to show leadership in delivering results and managing organizational change.

Promotable

This individual is promotable to the next

level of branch management over the

next two years.

He/she has a strong, sustained performance history with documented results.

This individual also has demonstrated leadership skills above and beyond those required in the current role and/or at the current layer of management.

Ready Now

The individual is currently capable of

moving to the next level of branch

management.

Individual has a proven track record of success over a consistent period of time.

He/she demonstrates capacity for a more complex, demanding level of management.

No

t P

rom

ota

ble

No

w

Key

Contributor

Highly valued resource who has total

control over the functional/technical

skills of the job. Individual is a good fit

for the current role.

Consistent high-level performer who lacks the desire and/or capacity to move-up to the next layer of management at this time.

The employee can, however, take on greater responsibility in the current role or move laterally into a new assignment.

Develop-In-

Place

Employee is not fully proficient in the

current role because of development

issues. In time, could move up or down

in the ratings.

Individual demonstrates inconsistent performance in the current role and may be on work-improvement plan.

He/she requires additional development to meet expectations in the current role.

Too New

The employee has been in the job less

than 3-months or the management team

is too new to make a realistic

assessment. Additional time and

observation are needed.

Employee is on pace to proficiency.

Pla

cem

en

t Is

sue

Transfer

Good employee who has performed well

in the past, but whose current job is not

well matched to his/her skills or

personal circumstances.

Individual is not a consistent performer in the current role but may have success elsewhere.

Replace

Marginal contributor, who because of

performance or job-related behavior

problems, is to be replaced/outplaced.

Individual is not performing as expected for a period of time.

He/she has not responded to development or coaching.

Appendix 9: Talent Review Meeting Agenda

Agenda Item

Presenter

Review Meeting Objectives

To discuss each candidate in the pool

To finalize individual grid rating

To determine individual and broader development planning needs

Head of Learning

Talent Pool Discussions

Present each candidate – performance history, readiness, risk

Discuss initial grid rating

Open rating discussion

Confirm final rating

Discuss development needs

Executive Officers

Summary and Next Steps

One-on-one meetings with directs

Development planning

Mid-cycle meeting

Head of Human Resources

Head of Learning

Appendix 10: Engagement Survey Scores

Appendix 10: Organization Chart

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