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Stephenson tapped trusted relationships to compile a short list of recommended recruiting firms, which allowed the board to quickly pick a consultant to help Aurora Federal develop a balanced short list of CEO candidates. He hosted a board dinner at his home so the consultant could get acquainted with the directors and explain the process, which created trust.
“We accelerated everything,” Stephenson says. For example, Zoom interviews made it possible to conduct initial interviews in a shortened time frame.
“You use the same process; you just do it in weeks or a few months instead of stretching it out over a year,” he says. “We made prudent decisions; we just made them more quickly.”
Yet the seven-member board was also prepared to work hard and to set aside time for important face-to-face meetings. Five board members met with the interim leader so he understood the process and the board’s priorities.
Board representatives also met with all employees in an honest and transparent conversation, which paid off as the credit union retained all employees throughout the transition.
Conversations with candidates focused on financial skills and core values, as well as Aurora Federal’s desire for planned growth, which includes a potential charter change and increased marketing.
The credit union hosted another board dinner for the final candidate and his spouse, allowing everyone to get acquainted and ask frank questions. Inviting a candidate’s spouse or partner isn’t traditional, Stephenson says, but it recognizes changing times as well as the need to quickly build trust.
“If you have an old-school board, you have to break out of what you felt was the norm and look at what is happening in your environment,” Stephenson says.
Aurora Federal selected new CEO Charlie Watts in November 2021 but delayed his arrival until after the holidays so he could provide year-end financials for his previous credit union. Watts attended board meetings in November and December 2021 and became CEO on Jan. 1, 2022.
Succession planning and strategic planning are intertwined at $40 million asset Members Credit Union in Cos Cob, Conn., which is planning now for its CEO to retire in the coming years.
Strategic planning helped Members become a community development financial institution and the only financial institution that addresses the needs of low-income, Hispanic immigrants in Fairfield County. In 2017, Members received the Juntos Avanzamos (“Together We Advance”) designation for Hispanic outreach.
Succession planning will ensure that mission is carried forward after CEO Kathy Chartier’s retirement, which is tentatively set for 2025. Chartier joined Members in 1987 when it had $7 million in assets.
Chartier and Board Chair Brian Wood say Members’ roughly 6-year-old succession plan emphasizes development, which brings in fresh ideas and keeps skills up to date among its 10 long-term employees.
That makes it possible to maintain a high loan-to-share ratio, engage community organizations, and create programs that meet the needs of its growing Hispanic membership.
“What we’re all most excited about is the opportunity to network with organizations that we had been chasing for years that are now reaching out to us,” Wood says.
Succession planning also led the board to recruit younger, more diverse directors to better connect with the Hispanic community.
“We made a big turnover in the board through deliberate planning, which is why they are so aligned with what we’re doing,” Chartier says.
The credit union also gains fresh insights by recruiting high school students as part-time summer interns.
Vanessa Molla Kudeuk, Members’ vice president of lending and Hispanic outreach, learned about the credit union as an intern, joined the full-time staff three years later, and is now approaching 20 years of service.
Wood says he was once hesitant to develop a succession plan because it meant acknowledging that Chartier would someday retire. Watching other small credit unions lose their identity through mergers changed his mind.
“The lesson learned was, start the conversation even if you don’t know where it’s going to go and where it’s going to end,” Wood says. “Then you can have discussions about career development and opportunities for employees to advance. It’s important for us to get our internal people up to where they want to be and make them viable choices for leadership.”
The current plan states that an internal candidate will be the preferred successor to Chartier when she retires. The plan identifies two staff members with complementary skill sets to provide interim leadership if needed.
Both Wood and Chartier say focusing on employee development will help them avoid a merger when the CEO transition occurs while providing continuity to the underserved members who rely on Members for financial services.
“We understand the need and purpose of small credit unions and how they can more closely touch their members,” Chartier says. “Our ultimate goal is to remain independent.”
A broader perspective can help your board successfully replace a CEO and/or create a CEO succession plan, according to consultant Scott Butterfield. Start with these four steps:
1.Recognize the opportunity for change. Reframe CEO succession by thinking about where you want the credit union to go and then seeking the strengths required to get there.
2.Decide whether a CEO search will focus on internal candidates, external candidates, or both. Knowing your position in advance makes it possible to act quickly. While hiring internally can ease the transition, outsiders can bring new energy and fresh approaches, Butterfield says.
3.Seek soft skills. Soft skills such as collaboration can be as important as financial expertise in today’s marketplace. Backgrounds in technology, lending, marketing, communication, and community engagement are also desirable.
4.Embrace internal development. Offer a development plan that mentors and coaches promising candidates at every level in both technical and leadership skills. While development takes time and other resources, the alternative is relying on unprepared employees when vacancies occur.
This article appeared in the Summer 2022 issue of Credit Union Magazine. Subscribe here.