Heather Nelson was approached multiple times about succeeding David Schuelke as president and CEO of Spring Bank before ultimately saying ‘yes.’
Nelson had been a commercial lender with the Brookfield-based community bank since 2010. Schuelke had led the company since its founding in 2008. With retirement on the horizon, Schuelke asked Nelson for a few years running to consider stepping up.
“Every year, I would decline,” Nelson said. “And we would then interview different candidates, and we never found someone that we thought was a good fit for a community bank of our size and our culture.”
In 2022, Nelson was approached once again.
“For the first time, I said, ‘Let me think about it.’ At that point in time, I was comfortable being a commercial lender, which I had done for 30 years, and I thought I could just continue to do that. I was really comfortable; I was good at it,” Nelson said. “But then, with David’s persistence and his encouragement, I finally made the decision to step out of my comfort zone into a job I knew I could do.”
Nelson assumed the president role in January 2023, with Schuelke staying on as CEO for another year. Nelson added the CEO title this March, completing the succession plan.
In many ways, the conditions at Spring Bank were right for a leadership hand-off: a next-generation leader, prepared to step into the position; an existing, trusted relationship between outgoing CEO and successor; and a long enough runway to allow for mentorship. Nelson credits the year of overlap between her and Schuelke, along with the support of the bank’s board of directors, with helping ease her transition.
Depending on the industry, a year or more of overlap between the incoming and outgoing CEO is ideal, said Jim Morgan, vice president of business development and workforce strategies for Waukesha-based employer association MRA.
But not all businesses enjoy the luxury of time, he said.
Twenty years ago, the transition from one leader to the next was “relatively well-scripted,” Morgan said. A company would identify key C-suite leaders that were nearing retirement, begin the process of identifying an internal candidate or candidates, and the heir-apparent would step onto the on-ramp as early as two years ahead of the retirement.
That scenario is not as common today. Wider talent shortages have led to crises for companies looking for their successor, according to Morgan.
“Companies are now having trouble finding talent, and it’s not just the top two or three people in the organization,” Morgan said. “They’re looking at all of their key positions – it might be a key manager, it might be a key department head, it might be that one person left on the factory floor who knows how to start that one machine. Succession planning is really just becoming a bigger talent management process now that asks: Do we have a bench? Do we have people ready to go? Are we developing our next set of leaders?”
When preparing for a CEO’s departure, a company’s board of directors must have a clear vision of its future before launching the search for his or her successor, Morgan said.
“The goal is to figure out what are the company’s next steps, where is it going in the next five to 10 years? Is it a company that needs to get the ship heading in the right direction? Is it a company that’s ripe for growth or acquisitions? Then you’d need somebody with a whole different skill set,” Morgan said.
When multiple internal candidates vie for a position, a business should work to retain them in the transition, he said.
“The first step is complete transparency. If (an employee) applied for the CEO job and didn’t get it, that employee deserves an explanation,” Morgan said, noting that the hirer should communicate the skill set or experiences they were seeking in their next leader and how the candidate can prime themselves for the next opportunity.
“… And that should be followed up by, ‘You’re still a valued member of this team. We’re going to need your expertise as we bring the new person on board. We hope you’ll be a part of that.’”
Family businesses have a unique set of considerations when passing the company from one leader to the next, said Dennis Ellmaurer, a Vistage chair emeritus who advises family and closely held businesses. The process should start early and is tied up in the career path of the next-generation heir-apparent.
“You have to have them go work for somebody else for a while to gain some experience that’s different from the company that they’ll be eventually leading,” he said. “That may take a couple of years, so it’s a longer-term process.”
A potential successor should also gain experience working “from the ground up” within the family business, Ellmaurer said.
“It’s a good idea to get your hands dirty on the shop floor; that’s usually a good place to start,” he said. “They’re probably going to be exposed to some increasing levels of authority and responsibility and probably fast-tracked, but they’re getting there touching different disciplines, … getting a feel for how those functions work.”
That’s how Matt Judson got his start at Judson & Associates, the Pewaukee-based commercial real estate firm his grandfather founded and his father now helms.
Judson cut his teeth at the firm working in maintenance.
“I was the one painting rails, changing lights, all that good stuff,” he said. “All those experiences, at the end of the day, were just very helpful when I actually decided to join full time.”
He went on to become a licensed sales agent in 2013 and honed a focus in industrial real estate within the company. In February of this year, he was named president of the firm.
Judson grew up learning about the business from his father, Mike, and grandfather, Darryl. He recalls taking drives on the weekend with Mike pointing out properties.
“He used to tell me, ‘We just leased this building to this group,’ or ‘We just sold this one.’ ‘This is 20,000 square feet,’ ‘This is 50,000.’”
In some respects, the succession plan was already underway back then.
“When I was younger, at family dinners, we happened to talk a lot about the business and real estate and transactions,” he said. “I might not have known what the heck they were talking about, but as I look back now, I understand that it was able to kind of lessen my learning curve when I actually did join (the business).”
Judson identified “patience, education and communication” as key elements of a good succession plan, noting that a positive of family businesses is that there’s time for a long handoff.
“There’s never going to be a day where (Mike’s) input is not important, and this is a transition that’s going to take a longer time than just what the paper says, but that’s the blessing of it,” Judson said.
While there is often the temptation for a founder/CEO to remain involved in the business after their retirement, Ellmaurer said it’s best for an outgoing CEO to limit their involvement to an advisory capacity.
Nelson said she continues to benefit from the mentorship of Schuelke, who now serves on Spring Bank’s board of directors.
“He continues to be an advocate for me and to help me in areas where I have questions,” Nelson said.
Among family businesses, Ellmaurer has seen success when an incoming CEO forms an advisory board that includes the founder, along with people from outside the organization, who can be counted on to bring third-party independence.
For the retiring leader having trouble cutting ties, Ellmaurer offers this advice: Allow their successor to lead and make mistakes; pick a firm date to make their exit; and then, “go play some golf.”
