Anatomy of a smooth leadership transition

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H. Lynn Harton pitched major change a few months after he became chief operating officer of United Community Banks in 2012.

The Blairsville, Ga., bank had a strong customer base, but needed to improve its financial performance. It was in the bottom quartile for return on assets among banks nationwide with assets of $5 billion to $12 billion, and investors were restless, Harton said.

He laid out a series of projects that the staff would take on, from redesigning the commercial lending process to creating new employee incentives.

The intent was to overhaul the bank's operations and position it to make acquisitions — which, for a new leader coming in, requires just as much people skill as it does business skill.

But the strategy paid off. United Community ultimately ended up buying five banks, a small-business lender and an equipment-finance company over the next seven years, growing from $7 billion in assets to $12.8 billion.

With change being such a big item on Harton's agenda, he knew that he needed to win over the staff to be successful.

Early on he began holding regular meetings with United Community's top 100 leaders and hosting quarterly calls for the entire workforce, to keep everyone plugged in, he said.

"What I wanted to do when I first came in was really connect with the team already here at United," said Harton, who was following advice from one of the bank's executives at the time. "He said, 'You know, we can't follow you if we don't know you,' which is great advice. And so, I just tried to focus on being present, being vulnerable."

Those efforts helped lay the foundation for Harton's ascension to chief executive of the bank in 2017, then to chairman and CEO of its holding company a year later. United Community, which earned a spot on our annual Best Banks to Work For list, has more than 2,100 employees and nearly 150 offices throughout Georgia, North Carolina, South Carolina and Tennessee.

Harton, 58, knew he was on track to land the CEO job when he first came to United Community seven years ago. But, he said, "I felt like I needed to earn it. You just don't come into an organization; you need to come in and build connections."

Every CEO transition is fraught with risks for workplace morale, according to experts in succession planning. Move too slow, and the outgoing CEO turns into a lame duck. Move too fast, and employees may reel. In either case, some employees are likely resist the change, whether the newcomer is from the inside or the outside.

The new CEO also may struggle to measure up against the old, said Ron Hershner, managing partner at the law firm Stock & Leader in York, Pa. He advises several banks and counsels businesses on succession planning.

Or employees may grumble "that's not the way George or Mary used to do it," Hershner said.

An effective transition depends on communicating upfront with employees but also on building relationships, a task that falls squarely on the incoming CEO, the experts said.

"I have heard of people washing out because they don't do that well," said J. Scott Petty, managing partner in the financial services practice at Chartwell Partners, an executive search firm based in Dallas.

"Banking is a relationship-driven business, so if the incoming CEO is not a relationship-driven person, he needs to do it on purpose in order to maximize integration success," Petty said.

That has been the approach followed by Harton, a self-described introvert who leads from a logical and analytical perspective focused on the big picture.

To counter his tendencies, Harton fills his calendar with visits to the bank's markets, get-togethers with the leadership team, and sessions for strategic review and planning.

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Harton also leans on more informal tactics. He lives and works out of Greenville, S.C., and often car pools with colleagues for the 130-mile drive to the bank's headquarters in Georgia.

He originally moved to Greenville in 2007 to work for the South Financial Group, which he led as CEO from 2009 until its merger with TD Bank in 2011. When he first joined United, he spent three nights and four days per week at the headquarters, but slowly ratcheted it down, and now goes as needed, usually for day trips, he said.

His predecessor at United Community, Jimmy Tallent, was an extrovert with a more emotional, detail-oriented style, Harton said. Tallent, who retired last year, had led the bank since 1984, when it was a one-branch institution with assets of $40 million.

"We are very different, but I think that's OK," Harton said. "There is no one style that is a winning style. The thing we had in common was just being real, being transparent."

The two men also shared a vision for United Community and stood together in December 2012 when Harton laid out the plan for change.

"At the end of the meeting Jimmy stood up and said, 'Guys, this is what we need to do. Lynn and I worked on this together. This is exactly right. We need to do this together,' " Harton said. "That was a critical piece."

Another turning point came in 2013. The bank was able to begin reintroducing pay increases, which had been suspended during the financial crisis.

Six years later, in the first quarter of 2019, the bank's return on assets of 1.44% put it in the top quartile among banks with assets between $8 billion and $20 billion.

To celebrate, United Community delivered sheet cakes this spring to all its offices, decorated with the bank's logo and its motto: "Together for good."

The next leadership succession is underway. United Community has begun to identify and cultivate its next leaders, a process Harton expects could take up to 10 years, which is around the time he would like to retire.

His path to CEO at United Community took five years, a pace he believes was the right one. "Hopefully, to the employees, it never felt forced, it never felt pushed," Harton said, "because the whole goal of a successful transition is you want it to feel smooth and natural."

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Succession planning Workplace culture Workplace management Employee engagement Employee relations Georgia Best Banks to Work For