Change is inevitable. At some point, every credit union must deal with the issue of succession, whether planned or due to unforeseen circumstances. Some plan for it in advance, while credit unions that find themselves unprepared may face chaos and uncertainty when a CEO retires, is terminated, becomes incapacitated due to illness, or even passes away. Even if your credit union has created a succession plan, it’s helpful to understand the best way to choose a new leader who is a fit for your organization and its members. Making the right decisions can ensure the smooth continuation of the credit union and can affect its fate for the future. This blog highlights how to choose the right leader for your credit union.
Determine Future Demands
There may be a desire from the board to replace the current CEO with someone who has similar qualities based on the success or comfortability they currently face, but that could be a mistake. The current CEO may have been an excellent leader during the time they served, but effective succession planning recognizes that the plan is designed to serve the needs of the credit union, not the talents or strengths of the current CEO.
As times change, so do the demands placed on your credit union. The skill set that has served the current CEO may not be productive five or 10 years from now based on the direction your credit union is going, industry changes, growth plans or even advances in technology. The board members of a credit union should look at where they want it to be in the future and identify the challenges that may lie ahead. Developing a business strategy to meet those challenges and take your credit union to the next level, rather than relying on the same approach that was successful in the past, will help your credit union innovate and grow.
Where to Look
One question that comes up is whether to look for a successor internally or hire externally. While it may be tempting to hire from outside the credit union and choose a new leader with excellent credentials and a good track record, this may not have the anticipated outcome. The Center for Creative Leadership, a global leadership development organization, found that 66% of senior managers hired from outside fail within the first 18 months. The reasons include lack of familiarity with the company’s culture, not having a good understanding of the business philosophy, or having the wrong personality for the organization.
The Inside Advantage
In addition to identifying roles and strategies for transition, a succession plan should outline how to help your credit unions develop leadership from within the organization. This begins with a culture that cultivates talent and is willing to invest in training.
Credit union CEOs should be involved in the succession process by mentoring and preparing prospective leaders for advancement. Your credit union can benefit by fostering job rotations, encouraging professional development and exposing employees to opportunities for advancement. To retain good talent, compensation packages should be equitable within the company as well as between the credit union and competitors.
Tips for Choosing a CEO
Here are some important considerations to keep in mind when designing your succession plan. These tips will help ensure your credit union makes the right decision.
• Assess the credit union’s needs and challenges. Align the leadership qualities with the future needs of the organization.
• Evaluate the performance of the credit union and determine if the new CEO should follow the same course or change direction.
• Create a list of the leadership qualities, talents, traits and culture fit desirable for a new CEO.
• Take stock of the internal pool of talent and determine if there are any disparities between available and needed capabilities.
• Explore alternative executive compensation possibilities, to keep your organization competitive.
• Provide opportunities for training and career development.
• Use an executive search firm if you decide to look outside the credit union
Overall, it is critical to plan for the success and longevity of your credit union. Failure to have a comprehensive plan to replace your credit union’s CEO can throw the organization into disarray and lead to disastrous results. On the other hand, a solid succession plan can help create stability during the transition period and position the credit union in good stead for many years to come.