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This piece is presented by the Prairie Family Business Association.
How does a more than 130-year-old family business transition to its first generation of nonfamily leadership?
With a lot of careful planning and clear communication.
The First National Bank in Sioux Falls was founded in 1885 and is one of the oldest and largest independent banks in South Dakota.
The bank announced last year that veteran executive Chris Ekstrum would become bank president and transition to CEO with the retirement of longtime leader Bill Baker.
You can learn more about their succession planning at a webinar Aug. 15 from noon to 1:30 p.m. called The Chaos of Leadership Change: Keys to Leading Your Business Through Transition, organized by the Prairie Family Business Association.
We talked with Baker and Ekstrum to learn more about their approach.
Bill, when did you first begin to think about transitioning? And what was the first step you took?
Dick Corcoran, my board-designated successor for many years, announced his retirement in the spring of 2014. Regulators require a bank has to have a successor identified in the strategic plan, so when he announced his retirement, it triggered me to start thinking about our succession plan. It was good timing for me personally as well. The first thing I did, after talking to key members of my team, was engage MDA Leadership Consulting to help guide us through the process.
Chris, tell us a little about your earlier career at First National. When did you join the bank, how did your role change, and did you ever aspire to eventually lead it?
The Bank hired me as a management trainee in 1993 when I moved back to South Dakota from Minneapolis, where I worked at the Federal Reserve Bank. I can still remember sitting in Bill’s office, interviewing for the position. At the time, I was really just looking for a job – I needed a paycheck! It did not take long for me to understand and appreciate the culture and values at The First National Bank in Sioux Falls. I was fortunate to have some wonderful mentors over the years that helped me develop and grow within the organization. I transitioned from a personal banker to a business banker, to the manager of our business banking department, then to chief banking officer. Truthfully, I never thought the option to lead the bank was available to me, given the family ownership, until 2014 when Bill asked if I was interested in succeeding him.
When and how did it become clear that Chris would be the eventual successor?
BB: Chris, based on his leadership and competence, more than 20 years of engrained knowledge of our organization, our culture and our employees, our customers and our community, was a natural and logical choice. We also had great help from our consultants in evaluating our executive team.
CE: We went through a thorough vetting process. It measured you in about five different dimensions and came up with an assessment of me and recommendations. Bill had a very intentional and well-thought-out plan.
What were some of the steps you took to help transition?
CE: We started with transitioning the departments that were the most known to me, most of the customer-facing side, and at the end it will be the risk and compliance and audit side. The more important part was preparing me and preparing Bill for the transition. It’s a two-way street, and that became obvious to both of us early on. Bill had a coach and I had a coach, and it was very helpful. The third-party independent lens is very valuable to both of us. I still work with my coach now, but it’s an occasional phone call to check in.
BB: We also engaged MDA to do a limited assessment and exercises with our entire executive team because it’s a significant change. They helped create development and coaching plans for the entire group in conjunction with our transition, which was very helpful.
Your transition is still in process. Where are you at with it, and how is it going?
CE: I feel like we’re right on target with our plan. We’ve transitioned most of the bank oversight to me, and it’s gone quite well. The organization as a whole could not be more supportive, from our employees to our board of directors and shareholders. One thing Bill and I did up front is we provided role clarity quickly, and that helped immensely. Having the organization understand that helped them as well I think. People just need to have communication.
We’re calling this webinar The Chaos of Leadership Change. Do you feel like a little chaos is inevitable in transitioning, or have you been able to find effective strategies to control it?
CE: It’s a significant change. It does feel chaotic at times. Our strong team and commitment to our mission has helped us keep the chaos to a manageable level, but truthfully, I don’t mind a little chaos. Sometimes to grow you have to hit a little chaotic phase. It can help the organization look at things from a different perspective, and I think that’s good. Bill and I have different styles and qualities and strengths and weaknesses, but we’re in absolute lockstep with our mission vision and values, and that’s helped the organization feel good about this, I think.
Looking back, is there anything you’d do differently in transitioning or anything you’ve adjusted along the way?
BB: The transition is going remarkably well. I can’t think of anything I’d change!
CE: Honestly, I don’t think we had any big misses. We’ve learned a few lessons along the way but nothing that’s been a derailer. Most of them have been growth and learning moments, certainly for me and the organization. The nice thing for me is I know the organization’s history. I know the DNA. I’ve been here 24 years, so I didn’t have to come in and understand what the core of the organization is really about.
Chris Ekstrum is the first nonfamily member to lead The First National Bank in Sioux Falls in its more than 130-year history. Here’s the story of his CEO transition.