The article by Prof. Dr. Christoph Lengwiler and Reto Jauch discusses the findings of the IFZ Retail Banking Study regarding the corporate governance practices of Swiss retail banks, focusing specifically on the practices of Chairs of Boards of Directors (VRP) in relation to personnel planning for the Board.
Conducted in September 2021, the survey targeted 69 Chairs of retail banks with a balance sheet exceeding CHF 500 million, achieving a high response rate of 78% from 54 participants.
Importance of Board Composition: The Board of Directors is primarily responsible for nominating new Members, making personnel planning a critical function. Analysing the current Board composition through detailed profiles of its Members is essential for identifying gaps and preparing for succession.
Profile Analysis: A matrix approach is recommended for tracking Member profiles, which should include various categories such as function, tenure, age, gender, qualifications, market knowledge, and personal attributes. This helps in assessing the board’s overall composition and addressing any deficiencies.
Regulatory Framework: The article emphasizes the importance of understanding the legal and regulatory requirements affecting Board composition, including stock corporation laws and bank-specific regulations.
Candidate Longlist: A confidential longlist of potential candidates for future Board positions should be maintained, detailing key qualifications and connections within the current Board.
Future Planning: Personnel planning should occur annually or as needed, focusing on proactive succession planning and timely recruitment processes. The article stresses the need for Boards to regularly evaluate their composition and make necessary adjustments.
The survey revealed that a significant majority of respondents (83%) maintain a comprehensive overview of Board members and potential vacancies, but only 46% aim for gradual renewal of the Board. Many indicated they often do not engage in succession planning until a vacancy arises. Overall, the findings indicate a strong awareness among Board Chairs of the importance of succession planning but highlight inconsistencies in regular practice.
