During the next two decades, some 10,000 baby boomers will turn 65 each day. And 72% of human resource professionals surveyed by the American Association of Retired Persons say they will have difficulty replacing the skill, knowledge, and experience of retiring boomers.
Companies without formal succession plans run the risk of spending valuable time searching for viable candidates. This applies to all positions, but especially for the top spots.
It often takes several months or longer to complete a search for a new CEO. A void in leadership can have a detrimental effect on organizational performance, and can cause the organization to miss valuable opportunities.
Credit unions appear to be preparing for the transitions. About 66% of credit unions have formal succession plans in place, while 14% expect to have plans in place by year-end 2012, according to CUNA’s 2012-2013 Complete Credit Union Staff Salary Survey.
The percentage of credit unions with plans in place is similar to 2011 and much higher than the 2010 figure of 58%.
About 6% of credit union CEOs plan to retire in the next two years, and only 1% plan to leave their credit unions for other reasons. Nearly 80% of CEOs planning to retire between now and 2014 are leaving credit unions that have succession plans in place.
The average age of credit union CEOs is 53.4 years, with 28% nearing retirement age. About 21% are ages 60 to 64, and 7% are 65 or older.
Among those with retirement plans, 61% are ages 60 to 64, while 30% are 65 or older. Among CEOs who don’t know if they’ll retire within two years, 40% are ages 60 to 64, and 27% are 65 or older.
When replacing the CEOs, credit unions are most likely to give internal applicants first preference, followed by giving internal and external applicants equal preference, CUNA reports.
Nearly half (47%) offer the position to internal applicants first, while 41% post the job internally and externally at the same time. Only 7% prefer external applicants.
About 75% of respondents say the executive vice president is qualified to fill the CEO position, and 60% of respondents say their chief financial officer is qualified for the CEO position.
Half of respondents see the chief operations officer as qualified to succeed the CEO, while only 22% consider the chief information officer qualified.
“Credit unions are doing a good job of planning for CEO succession,” says Beth Soltis, CUNA’s senior research analyst. “It’s great to see two-thirds of credit unions with formal CEO succession plans, even though a higher number would be even better.
“Multiple surveys have shown that companies are having a difficult time replacing their CEOs, and planning for CEO departures will be a primary challenge in the coming years,” she continues. “But with experts predicting a rise in retirement levels and in turnover, credit unions should definitely plan for the retirement of not just the CEO but of other senior executives and some nonmanagement positions that are essential to their operations.”