CEO Succession Planning Can’t Wait
More than two-thirds of CEOs at CUs with more than $500M are over age 55.
As today’s credit union CEOs age and uncertainty about the industry persists, credit unions must pre-emptively plan for plan for the top dog’s departure.
That entails creating a CEO succession plan, according to a “CEO Succession Planning and Transition,” a white paper from the CUNA Human Resources/Training & Development Council.
“The first step in achieving greatness is that you must have the right people on the bus,” says Jim Collins, author of “Good to Great.”
Some 42% of credit unions don’t have a succession plan in place, according to the white paper, and boards spend only about two hours a year on succession planning.
Meanwhile, almost 65% of CEOs at credit unions with more than $500 million in assets are over age 55, and 20% of CEOs at credit unions will more than $100 million in plan to retire within the next two years. Plus, 6.2% of all credit union CEOs plan to retire within two years.
Credit unions should design two types of CEO succession plans: an emergency plan in case of a sudden CEO departure or death, and a long-term succession planning process to thoroughly prepare successors.
While you can construct an emergency succession plan within 30 days or so, a long-term plan takes two to three years to complete. It involves the board, CEO, and human resources (HR) department and focuses on development, not replacement.
It’s the board’s responsibility to construct a plan because doing demonstrates that it’s acting in members’ best interests by preserving long-term business safety and stability.
Take these steps to construct a comprehensive CEO succession plan:
- Identify an emergency succession plan, a formal CEO succession plan, and a successful CEO transition, as key components.
- Create a timeline. To calculate timing, take your CEO’s projected retirement date and reverse the process.
- Form a succession planning team, including the board, CEO, and HR leadership. Everyone should know their roles from the beginning.
- Identify current business issues, challenges, and opportunities. Then look at issues or factors you may face in three to five years.
- Define CEO qualifications. Include board requirements and seek help from an outside advisor. Identify the core elements of your credit union’s culture and goals for the first year of the future CEO.
- Build a career profile of each internal candidate. Evaluate how well their background fits the CEO requirements.
- Identify candidates’ knowledge gaps and potential. These will help you develop candidates’ training plans.
- Construct unique development plans for internal candidates.
- Engage candidates in leadership development training.
- Update the board regularly on candidates’ development.
Once selected, the new CEO must begin by listening, learning, and getting to know board members, the leadership team, and their staff. The CEO must work collaboratively with board members and others to gain knowledge while working to better the credit union.
Undertaking this process will help ensure the change in CEO leadership will be a smooth and positive experience for all those affiliated with your credit union.
“CEO Succession Planning and Transition” is available free to CUNA Human Resources/Training & Development Council members; $50 for nonmembers.