Tips for Lessening the Impact of Losing a Key Employee At Your Credit Union
Tips for Lessening the Impact of Losing a Key Employee At Your Credit UnionPublished :
When a key employee leaves your credit union, it can impact the whole company — from executives to interns, and anyone in between. The loss of one central person’s expertise and knowledge base may leave your team struggling to get up to speed quickly. Or, the absence of a particular employee’s positive and motivating personality may have an effect on morale. More likely, you’ll see both types of impact on your staff. Losing a key employee leaves you shorthanded in more ways than one, making it crucial to find a capable person to fill the position as soon as possible.
If there aren’t any internal candidates ready to step into the shoes of the departing employee, the company will be forced to undertake an external search. Like any organization, your credit union needs to prepare for this eventuality — even if you’ve built a strong team of loyal, dedicated members, you’ll inevitably experience an employee moving away, retiring, taking another job, or even (in the unfortunate case) becoming suddenly ill or unable to work.
A successful credit union will have measures in place to both reduce employee turnover, and lessen the impact of any turnover that does happen; with programs designed to retain top talent, and a well-defined plan to handle succession.
Turnover of high-level, core employees is a multifaceted problem for organizations. It costs the company money, leaves knowledge gaps, and has a negative effect on employee morale — the effects can even leak outside the walls of the company, causing customer dissatisfaction.
The cost of replacing members of upper management can be substantial for several reasons, including:
- The expense of advertising and recruiting
- Lost productivity
- Lost time and resources spent training a new employee
Succession Planning is Important
Many organizations fall into the trap of one of two lines of thought: they either don’t understand the value of succession planning, or they underestimate its urgency. In 1996, Jerry Junkins, then CEO of Texas Instruments, proclaimed he saw no need for a succession plan, stating “I’m as lean and healthy as a horse.” Junkins unfortunately passed away a few months later, from a massive heart attack.
While the company did have a succession plan, that plan was scheduled for his retirement in two to three years. As that was still a few years off, Texas Instruments didn’t see the need to have the details worked out in advance. When Junkins died unexpectedly early, the organization had no planned successor — and it took the company more than ten years to recover from the tailspin created by the lack of leadership.
Creating a Succession Plan for Credit Unions
Succession planning for credit unions gives the institution’s officials the direction necessary to find their next CEO, or to produce an internal program to train leaders. This provides a well-trained group of internal candidates, helps employee development, and increases retention.
Credit unions of all sizes should have a succession plan in place, but it’s especially important for smaller organizations. While larger credit unions may take a hit to productivity, the absence of a succession plan in small credit unions can spell disaster. If a CEO or upper-level manager retires or becomes incapacitated, a small credit union may not have employees on staff who can step into the role, and take over. In many cases, a credit union can’t fully recover from the unexpected loss or retirement of a CEO — it must merge with a larger credit union, or simply close.
To keep your credit union resilient and prepared for any major change in staffing, take the following actions to create a solid succession plan:
1. Identify Important Functions
Credit unions should identify the most important employees, including managers, collectors, loan officers, accountants, and other crucial staff members. The succession plan should lay out how each of these positions would be performed during the long- or short-term loss of each function, and how it will eventually be filled. Employees can be trained to fill in for other job roles. It’s even possible to create a reciprocal agreement with another credit union, to have their staff help in an emergency.
2. Update Job Descriptions
Current and accurate job descriptions will ensure that services continue during an emergency; these can also be used in the search for a new employee.
3. Define Responsibilities
The succession plan should include a timeline for the completion of the plan, and delineate roles, including the process for monitoring and revising the plan.
4. Establish the Economic Impact
The succession plan should include an analysis of the economic impact that hiring a new CEO or manager will have on the organization. These can include:
- Expenses associated with contracting employees, in the event current employees are unable to assume the necessary responsibilities
- Costs of advertising new positions, or using a recruitment agency
- Costs associated with paying two salaries during the transition, if a manager or CEO is retiring
- The current market salary for the open position
- Possible alternative methods of funding compensation for the position, including life insurance and retirement plans
5. Assemble Resources to Assist with Recruiting
Information on how to search for a new employee can be included within the plan, such as:
- Confidentiality agreements
- Interview methods
- Salary and benefit information
- Alternative benefits, like life insurance or retirement benefits that will accompany the position
- Possible recruiters or executive search teams to use in the search
- Information on how to advertise for open positions at a credit union, including ad templates
Putting It All Together
The first step is to fully understand — and convey to upper management — the urgency of having a succession plan in place. Don’t make the mistake of thinking that just because your CEO or CFO is happy and engaged in his or her position, there’s no chance of losing this person. You never know when an irresistible new job opportunity, a change in personal or family life, or a sudden illness or accident may occur.
With these steps and guidance, you can get started building your credit union’s succession plan. Early planning ensures your credit union can recover smoothly and quickly should you lose a CEO, manager, or another critical employee. The security of a succession plan allows your organization to continue working for success, while knowing you’re prepared for any major road bumps along the way.