AUSTIN, Texas — An effective succession plan can minimize turmoil often associated with a credit union's planned or unplanned senior level personnel vacancies, particularly when a shrinking labor pool makes finding qualified talent difficult. Garry Modrell and Charles Shanley, executive consultants with John M. Floyd & Associates, Inc. Executive Search Group, delivered that message to credit union professionals at an educational breakout session during Texas Credit Union League's Annual Meeting April 12.
Modrell and Shanley shared statistics indicating that a whopping 60% of CEOs will retire within the next 10 years. With one person in the U.S. turning 60 every eight seconds, according to the consultants, executives need to prepare for planned retirements as well as unexpected vacancies.
"When the Baby Boomer generation begins to retire, credit union management teams that have not adequately prepared themselves may be in a detrimental position," stated Modrell. "During a period when credit unions should be growing by offering new products and services to target this new group of retirees, many may be scrambling to cover just the basic operations."
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In addition to needing a succession plan for executives, it is important for credit unions to retain their key employees. In a tight labor market, this becomes even more critical as competitors work to lure away top talent. Replacing employees can cost 50-160% of an employee's compensation, which begins to cut into the credit union's bottom line very quickly. Some of the key reasons employees leave include: lack of challenge or boredom; minimal recognition; poor management; and inadequate compensation.
Quoting from CUNA's 2006-2007 Credit Union Environmental Scan (Escan), Shanley said, "When the unemployment rate drops, competition for top talent heats up. And with the unemployment rate dropping from 5.5% in 2004 to 4.7% in April 2006, the job market has gotten hot."
Modrell and Shaley encouraged all participants to begin a concerted effort now to develop a detailed succession plan for their retiring executives. They suggested this might also be the opportune time to look at their credit union's retention strategies.
"The road looks rocky; the competition for talent is tough, and you can't change either one," Modrell conceded. "But you can begin now to ensure you create a 'best place to work' to win the war for talent. Create a succession plan to be prepared for planned or unplanned vacancies so you don't leave your members high and dry with executive turnover. Your efforts now will have an immediate, positive impact on both your credit union's short-term and long-term performance." –[email protected]
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