Having some kind of a succession plan in place, even just knowing who will take a CEO's place in the event of his or her sudden departure, is a necessity for every credit union. But experts say the best succession plans don't just determine who future leaders will be. They build the skills and knowledge of every employee and positively affect the future of the credit union as a whole.

In addition to identifying who will replace a key individual in an emergency, successful succession plans address how individuals who have indicated they plan to retire or move on will be replaced, as well as how the development needs of potential leaders from within the credit union will be met, said Holly Herman, an achievement coach with AchievingSkills.com, who is a former credit union CEO and chief of staff for former NCUA Chairman Joann Johnson.

Deedee Myers, CEO for leadership consulting firm DDJ Myers Ltd. in Phoenix, Ariz., said a winning succession plan ensures current and future leaders have competencies that align with the needs of the credit union's strategic plan as well as promotes learning throughout the organization. She said a succession plan also satisfies regulators from the NCUA, which just recently announced its Office of Small Credit Union Initiatives would begin conducting succession planning sessions for small credit unions.

Bill Rockeman, a senior consultant with the Wisconsin Credit Union League, added a succession plan puts credit unions at ease should disaster strike.

“No matter how good you and your staff are at revenue projections or economic predictions, no one can truly plan for disaster,” Rockeman said. “Whether it's an unforeseen illness, a natural disaster, or a CEO's decision to suddenly retire, the reasons for having a succession plan are endless. So while you can't plan for disaster, you can put into place a series of contingencies that will help you stay afloat if a catastrophe occurs.”

Of the credit unions that already have a succession plan, some could use a little help, experts say. One way credit unions get succession planning wrong is by not updating their plans often enough, Herman said. “Credit unions often put together a succession plan and put it on the shelf,” she explained. “A succession plan should be an evolving document that contains the dynamic development of the organization's staff.”

Rockeman pointed out some credit unions wrongly develop a plan for the sole purpose of showing it to an outside party, and others may prematurely promise roles to potential successors. Another mistake credit unions make, Myers said, is believing a succession plan merely involves picking someone to fill a role.

“A name on a piece of paper is not a plan,” Myers said. “This is the biggest mistake and does not well represent the board as fiduciary agents of the credit unions and does not serve the potential interim successor unless there is generative dialogue with clarity on expectations and frequent check-ins.”

So where should credit unions without a comprehensive succession plan begin? Herman lays it out simply. First, identify key positions, including the board of directors. Then, determine what you would do if those individuals didn't show up. Who would you notify and when? Who would cover their responsibilities? Will you replace them with internal or external candidates? How will you train internal candidates so they can be ready to assume their new positions?

Myers noted that the board, with help from a neutral third party such as a consultant, should create the succession plan, while the CEO should be assigned to groom future leaders. “Unfortunately, too many boards leave it up to the CEO to decide the next successor, and it really is the responsibility of the board,” she said. “Making this happen requires a structured approach, facilitated by a third party, that guides the board through discussion and construction of a CEO succession plan.”

She added it's also important for a credit union to determine whether its succession plan will be an open or closed process. In an open process, which Myers recommends, potential successors are given a choice in their inclusion and the opportunity to get noticed, while a closed process is much more secretive.

All experts agree on creating a plan to hire an interim CEO, who Rockeman said could be an internal senior manager, or, as Herman suggested, a recent retiree recommended by a state league who would enjoy a temporary assignment.

“You have to continue with the daily operations of the credit union and it is difficult for the board to accept those responsibilities on a daily basis,” Rockeman said. “The interim CEO can be the bridge until a new CEO is put in place.”

Whether a credit union looks internally or externally for its future leaders, determining which traits a leader should possess is an important part of the process. According to Herman, credit unions should consider how candidates will fit into their strategic plans and culture, as well their communication styles. Universally applicable qualifications, Rockeman said, may include a commitment to the credit union's mission and members, an understanding of the credit union's financial aspects, and a display of initiative and strong goals.

Another key quality of a successful leader–leadership presence–can't be achieved through experience, personality or intelligence alone, Myers explained. “Leadership presence expands over five domains: action, mood, coordination, learning and dignity,” she said. “These attributes do not show up on a resume, in a telephone interview or even in most interviews. The mood the candidate produces in a room is an important leadership attribute.”

Seeking outside help during a candidate search process may be essential, and experts suggest credit unions look to headhunting firms, consultants and state leagues for outside candidate recruitment, and to executive coaches or training programs through CUES, CUNA or NAFCU to help develop the skills of internal candidates. Rockeman added that future leaders may be found amongst young credit union employees or outside business professionals who are members of the credit union.

Myers emphasized that credit unions seeking succession planning services from third parties should only work with those that specialize in succession planning, not those that offer the service as an afterthought. Additionally, she said it's critical to know the difference between recruitment and succession planning.

“Recruitment generally refers to hiring one person for one job,” Myers said. “Succession planning is strategic. It determines what you're going to look like in five, 10 and 20 years.”

Instant Insights /

Well-Rounded Succession Plans Take a Broad Approach

Related Stories

Recommended For You