It’s a strategy for ensuring your organization can successfully counteract the current retirement and resignation trends.
Sponsored by SUCCESSIONapp, LLC
Are you struggling with any of the following challenges?
- A high number of anticipated retirements over the next several years on your management team or board of directors
- Unexpected turnover of experienced managers
- Difficulty finding new leaders or board members
The answer to these challenges is succession planning, and here’s why.
The Silver Tsunami
The large amount of turnover in the leadership and board ranks can be linked to what is being called The Silver Tsunami. In 2010, the PEW Research Center reported that starting on Jan. 1, 2011, about 10,000 people a day will be reaching retirement age, and this trend will continue until 2030. PEW reports that by 2030, fully 18% of the nation’s population will be at least 65. That will cause a lot of turnover in our leadership and board ranks!
Further, Ready for Next Cities developed a business disruption rating for cities in the United States. It measures a community’s potential business disruption risk tied to baby-boomer-owned or operated businesses failing to have a transition plan. The rating works like a credit score on a scale from zero to 850, where the lower the score is the higher the disruption risk. What the study found is that the BDR in the United States is 372.14. This means that there is a huge risk of disruption amongst baby-boomer-owned businesses as their owners prepare to retire. They found only 30% have a written plan to transition their business. This could affect the 72 million people who are employed by the 3.5 million businesses owned by baby boomers.
The Great Resignation
The large amount of people retiring within the next 10 years isn’t the only thing affecting the workforce. What is being called The Great Resignation is also impacting businesses around the country. The great resignation refers to people who are not retiring, but rather just leaving their jobs. This creates unexpected turnover within organizations. A September 2021 Harvard Business Review article shared a study that found 4 million Americans quit their jobs in July 2021, and a record-setting 10.9 million jobs were open. One of the troubling trends this study found is that the highest resignation rates were among mid-career people. These are most likely your future senior leaders!
How to Counteract the Effects of These Trends on Your Credit Union
A strategy to ensure your organization can successfully counteract the retirement and resignation trends we are currently facing is to be prepared by doing formal succession planning. Why is succession planning important for your leadership ranks?
- You are going to have turnover.
- The best way to counteract turnover is to have a bench of people developed and ready to go when it occurs.
- Doing succession planning gives people motivation to stay and grow with your credit union. Having a culture of advancement shows employees that you are interested in their development and career.
- Having formal succession plans ensures you are emphasizing the development of your employees.
Turnover is happening on credit union boards as well. As the baby boomers are continuing to reach retirement age and beyond, board members are also aging. The average age of a credit union board member is still in the mid- to late 60s. What compounds the issue of board turnover is the fact that many credit unions have a difficult time finding new board members.
Board turnover also brings the potential for:
- Major board turnover, that is, several board members leaving in a short time
- Not having the right skills on the board
- A lack of experience in board leadership—with too much turnover, who will lead the board?
Not everyone understands the purpose of board succession planning. The purpose is not to drive long-term or “older” members out or judge the skill level of current board members. It is about being ready for inevitable turnover and knowing what skills to look for in future directors.
Now more than ever, it is incredibly important to be planning for your organization’s future by doing succession planning. The future includes a lot of turnover in the leadership and board ranks. Let’s be ready!
Yvonne Evers, the founder and CEO of CUES Supplier member SUCCESSIONapp, LLC, is a succession planning expert who has successfully worked with hundreds of credit unions over the past 25 years. SUCCESSIONapp, LLC is the leading provider of online CEO and board succession planning solutions in the credit union industry. The mission of the company is to help leaders and board members create succession plans to ensure smooth and successful transitions.