They don’t show up wearing capes. They aren’t miracle-workers. And they can’t do it alone. Leaders are oft en hard to spot, and they need the support of strong teams. They oft en receive too much credit when things go right, and too much blame when things go wrong.
They are, however, powerful change agents who can transform credit unions and help them identify and embrace opportunities in the face of rapid technological changes, rising member expectations, and persistent economic and competitive challenges. Credit unions need multiple leaders—all on the same strategic page—at key positions.
“There’s a huge leadership deficit today in credit unions,” says management consultant Mike Neill. “Too many credit unions are run by managers, not leaders. They might operate well from day-to-day, but the world is changing at whiplash pace, and that requires leadership.”
Evidence of this lack of leadership is the dwindling number of credit unions, Neill argues.
“You’re seeing it right now,” he says. “Credit unions without strong leadership tend to be over-managed. They won’t be able to change as their environment changes, and they’re going to become irrelevant.”
Matt Davis, innovation director at Filene Research Institute, says there isn’t enough emphasis on leadership development within the industry. “Certain indicators suggest that some senior executives appear to be more interested in maintaining the status quo than in leading,” he says.
About 77% of recent CEO hires in credit unions with more than $100 million in assets came from the chief financial officer (CFO) position—promoted either externally or internally, according to David Hilton, president of D. Hilton Associates Inc., at a recent CUNA CFO Council Conference.
That’s not surprising, as the role of the CFO is expanding in many industries—including credit unions. CFOs are making the transition from financial experts to trusted advisers and strategic partners, driving growth and profitability.
Davis, however, suggests a broader view of leadership. “What startles me is that leadership should come from a much more diverse set of backgrounds,” he says. “Credit unions’ Achilles’ heel isn’t accounting or finance. It’s about telling the marketplace that credit unions are unique, that we’re here to help members solve financial problems and reach financial goals, and that we’re not only up to speed with technology, but we’re leading the way.”
The propensity to turn CFOs into CEOs, Davis says, shows a reluctance to innovate or try new things. “The safe way to go is to make sure we have a CEO who can deal with NCUA and who can make the books look great,” he says. “While that’s important, and many financial professionals are good leaders, it’s also a sign that we’re not thinking about leadership as much as we should.”
Consider marketing executives, Davis says, because of their understanding of members’ wants and needs. He also suggests information technology (IT) leaders—an uncommon CEO pathway— because much of personal finance is shifting to Web and mobile platforms. Plus, IT leaders have a handle on members’ financial behaviors and the delivery channels they prefer. That insight, Davis believes, could produce excellent CEO candidates. But few credit unions consider their IT leaders for this position.
Ultimately, Davis believes this conservative strategy of focusing first—and almost exclusively—on finance professionals will do the industry more harm than good.
“I think it goes back to the difference between leading an organization and maintaining a business,” he says. “Maintaining a business is obviously essential, but if we’re not innovative and coming up with new solutions for our members’ problems or new ways to make our business model sustainable, credit unions’ future is grim. If we don’t do these things, we’ll become irrelevant to consumers.”
NEXT: Beyond the CEO