Credit union boards’ critical role in succession planning
Only 54 percent of credit union boards have a succession plan. Your board can get started with these tips to help ensure a smooth transition.
As the saying goes, "nothing succeeds like success," and for credit unions, this means having a well-planned and executed CEO transition. The responsibility for this crucial task falls squarely on the shoulders of the credit union's board of directors. Hiring a new CEO is one of the most significant challenges facing credit union boards. According to Kevin Smith, consultant/publisher at TEAM Resources, it's also the most important work of the board, and it often takes longer than anyone anticipates. Failing to adequately plan for CEO succession can lead to, at best, a successor who is not well-suited for the credit union or is ill-prepared for the role.
Don't be one of the 54 percent of boards without a succession plan!
Securing the future success of credit unions
There are five places boards can start to prioritize succession planning at their credit unions. Boards should:
- Engage in regular discussions. Plan monthly conversations with the current CEO about their priorities for the new CEO, considering a variety of plans, options, and scenarios.
- Decide whether to focus on internal or external candidates. There are advantages to both avenues. Promoting from within provides insight into the candidate's fit within the credit union's culture and existing management team, while external candidates bring fresh perspectives and new ideas.
- Obtain employee feedback on what they want in their new CEO. Especially for smaller credit unions where the full staff work closely together, this feedback can help create a smooth transition.
- Consider engaging a search firm to assist with the CEO succession process. While this can be a significant financial investment, it may be worthwhile depending on the experience of the board in hiring CEOs.
- Remember this is an ongoing process. Regular discussions between the board and the CEO about potential internal candidates and the need for external searches will help ensure a smooth transition when the time comes.
The domino effect: planning beyond the CEO
The CEO should not be where succession planning stops. Imagine this scenario: your credit union's CEO, CFO, and COO all announce their retirement within a few months of each other. Without a well-developed succession plan that extends beyond the CEO, your credit union could face significant challenges in filling these critical leadership roles. Neglecting to develop comprehensive succession strategies for other senior leadership positions can leave your credit union vulnerable. The domino effect of multiple senior executives leaving simultaneously can disrupt operations, impact member service, and hinder strategic initiatives. Proactive, ongoing succession planning for key positions is essential to mitigate these risks and ensure a smooth transition of leadership. Essential conversations among the Board can include how your credit union is:
- Identifying and developing potential leaders across the organization
- Building a strong internal talent pipeline and leadership bench strength
- Assessing skills gaps and aligning succession plans with the credit union's strategic objectives
- Mitigating risks associated with leadership transitions at various levels
- Finding opportunity for collaboration and learning from peers in the industry
Looking at what your credit union is currently doing and finding ways to build out these conversations can create a culture of leadership development and ensure a deep pool of talent ready to step into critical roles when needed. Comprehensive succession planning is essential for credit unions to navigate leadership transitions successfully, maintain organizational stability, and ensure your credit union has the strong leadership pipeline necessary to thrive in the future.