Chief executives of major corporations often speak of two basic goals related to staffing senior management positions:

1. Planning to ensure the successful operation of the company during their own tenure as a leader; and
2. Longer-range planning than is currently the practice to lay the necessary groundwork for the continued success of the enterprise beyond their own term of office, including, if possible, the development of strong candidates for succession as the next chief of the organization.

In spite of these well-stated intentions, Pierce recently commented in a Business Week seminar bulletin (that “no more than one-third of the chief executives of the 800 largest U.S. corporations have designated an heir-apparent.” 

Thus, just as the demand for top managerial talent is rising, the supply is declining. Very few companies are in a position to feel secure about their existing talent pools for senior management, and many companies that believed they had an effective management succession system in place are discovering that former high-potentials are side-tracked in specialized jobs, or worse, are working for a competitor organization. In the financial industry in recent years the concern for a pool of managerial talent with creative and innovative ideas has become acute due to a storm of change that has ended the days of limited entry, genteel competition, and statutory protection.

The loss of the exclusive right to offer to check accounts, the demise of protected geographic franchises prohibiting interstate banking, and the end of limits on rates paid to depositors are examples of the traditional foundations of banking that have crumbled in recent year.

The effective management of human resources will be needed in ways that it has never been needed before. Therefore, the entire human resource function is enjoying greater visibility throughout the banking industry. In some banks, human resource issues are defined through the formal strategic business planning process; in others, they are addressed by executives at the department level. Whatever the approach, human resource issues are being increasingly identified as key to the implementation of banking strategies.