The Guiding Light of CEO Succession

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By Mary Van Skiver , Heidi Bolger

3 minutes

Boards must be proactive, intentional and thoughtful about CEO transition planning and implementation.

Every organization is always in some form of transition, whether it’s a result of high growth, leadership succession or dealing with a change in the competitive environment. Regardless of the forces behind the transition, every credit union should have a plan in place to support and align with its vision and to tackle transition head on.

Where CEO succession is the transition priority, the board should take a proactive role. Boards are central to every credit union, and members are identified and recruited with the intention that they will protect the organization’s long-term best interest and success. These members should play a central role in ensuring that a leadership transition plan is in place and effectively communicated—and that any transition is guided—in an intentional and thoughtful manner.

The board functions as a guiding light throughout the transition process. They understand any CEO transition will occur over a period of time and recognize many interests and dynamics will intersect throughout. They will support the credit union in being “ready,” including the organization overall and current leadership. This will involve encouraging the review and investment in an ongoing human capital plan to attract, retain and develop the brightest and best talent, continuously monitoring the depth of leadership, and challenging the management team to groom the next generation of leaders. 

The board also serves as an element of continuity in the CEO transition. Directors understand the history or context of the organization, the vested interest of key stakeholders, and are a supportive resource for the outgoing or changed person, program or product. They provide education, accountability, coaching and cheerleading to a new CEO.

The board may be seen as a security blanket or insurance policy. Directors do not have vested interest in a specific outcome or individual, but in the outcome and overall success of the credit union. Directors may also be a catalyst to start the transition process. They may help design and oversee implementation. They may also have to make and support difficult decisions and have challenging conversations with individuals that take a direction different than that supported by the strategy and developed plan. Vetting candidates for the CEO position is another very important aspect of the implementation process where the board plays a leadership role.

Having a defined timeframe for the transition allows the organization and board to communicate internally on the specifics of the succession plan and address the impact to employees, business partners and the community. As with any major announcement, transparent and early communication reinforces trust and develops buy-in from employees as it prevents them from feeling as though they are “in the dark” and uncertain of the effect it has for them personally. Continued communications to the employees as the process progresses builds support for the decisions and the transition.

With board involvement in a well-planned CEO transition, there is potential for a seamless changing of the guard, engaging everyone involved. Boards should have a primary voice in these important decisions and are vital to planning well before a transition begins.

While there is a focus on the impact the board provides for the organization’s transition, it is also critical to establish a succession plan for the board itself. Having a process in place to communicate expectations, establish measurements for director success and bring on new directors are key responsibilities for any high performing board.

Mary Van Skiver is a senior manager on the Rehmann Consulting Team. She plays a team lead role in assisting organizations with the design and implementation of exit plans, supporting the development of successor leaders and optimizing the financial structure of each situation. She is a certified exit planning advisor with over 15 years of experience across industries. Heidi Bolger is a founding principal of the Rehmann consulting division and consults with businesses in the areas of mergers and acquisitions, strategy, succession planning, profit improvement and valuation.

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