Sudden CEO vacancy at McDonnell-Douglas West FCU turns consultant into interim CEO

HUNTINGTON BEACH, Calif. - Members of the board and management from McDonnell-Douglas West FCU here quickly saw their annual strategic planning session turn from strategic issues to a major personnel issue. In the midst of its strategic planning session, the $500 million credit union suddenly found itself without its president/CEO, Robert Talboy. Talboy had undergone a number of heart-related surgeries recently, and after battling back from some of them and returning to his duties, recovering from his latest surgery required a lot of time and rest, prompting Talboy's decision to retire. With Talboy's departure went a lot of credit union experience from both the board and management side. Talboy joined the CU's supervisory committee in 1974 and became a credit union director in 1976. He left the McDonnell-Douglas West board in 1993 to become president/CEO. The board had to decide what to do about the vacancy-and they needed a decision fast. Fortunately they had just met with one of the industry's leading consulting firms, Counterintelligence Associates, San Juan Capistrano, Calif., in their strategic planning succession. Counterintelligience is experienced in succession planning and executive recruitment. Counterintelligence conducted the CEO search for NAFCU, which Fred Becker eventually landed. The board asked Diane Johnson, CEO of Counterintelligience, to serve as interim CEO until a permanent replacement is found. "The board elected not to run the credit union by committee or to dilute the effects of other managers by giving one of them the interim CEO opposition. I was asked to stay and the board has basically given me full authority as interim CEO," said Johnson. She said when faced with a sudden CEO vacancy some credit unions will put their board's executive committee in charge until a CEO is found. That strategy can backfire, she said, since the executive committee doesn't have the day-to-day operations experience of management. Having helped with McDonnell-Douglas West FCU's strategic planning, Johnson said she was already very familiar with the CU, its members and the management team. "We kind of had a head start. We knew where the credit union was going, and knew a lot of the personalities. The learning curve was shortened," she said. Johnson, who has examined hundreds of financials in her years as a consultant, said Talboy should be commended for the shape he left the credit union in. "It's very obvious that as big and complex as this credit union is, it's very clean and in excellent financial condition. Everyone works well together. In a half a billion dollar credit union you would expect to have some problems, I don't see any here," she said. Johnson's interim CEO contract is on a monthly basis. "That's the plan. We don't like to lock our clients in long-term through a contract." Johnson said McDonnell-Douglas West did not have a succession policy in place at the time of Talboy's departure, but the board was working on one. Johnson said credit unions should have succession plans not only for the CEO position, but also for board members and key management staff. "There's always down-time when someone leaves. If there's no successor or someone waiting in the wings, it can take time to prospect for talent. We like to see the board comb senior management to find someone to step in on an interim basis. The objective is to keep the credit union moving at pace without interruption," she said. Johnson said McDonnell-Douglas West FCU can't afford to miss a beat. "The merger talks with Rockwell FCU have broken off and the board has adopted a very aggressive plan for the credit union." At press time, the board had yet to decide how to handle the CEO search. After having a somewhat unpleasant experience with a search firm, Johnson said the board wants to be very careful in how it goes about selecting its next CEO. -pgentile@cutimes.com