By Rhonda Cooke
According to a recent Credit Union National Association survey, 63 percent of credit unions with $100+ million in assets have some type of plan in place that specifies how the CEO will be replaced if it should become necessary. The data, however, does not specify the type of succession planning that credit unions are doing. And I can tell you from experience that for many of these credit unions, the plan consists of a list of recruiting firms.
These credit unions would not be able to replace their CEO without missing a beat, unlike the CU I recently witnessed during a recruitment effort my firm conducted. During this project, a CEO left one credit union to move on to the CEO position at another, larger credit union. This CEO left behind a fully prepared successor. In turn, the board of directors selected the successor as the new CEO, and the organization continued to move forward with its business plan.
This situation would have played out much differently if there had not been the choice of a developed successor. The credit union would have had to recruit a new CEO at substantial cost and a time line of nearly six months. An effective succession plan includes recruitment, but recruitment does not constitute a succession plan.
While credit unions are constantly planning, they often shy away from succession planning. Why is that? Is it because it is viewed as "soft" planning? Whatever the reluctance, it is irresponsible for a credit union to say "we'll take our chances when the time comes." It is simply too risky.
Some boards shy away from planning because they are reluctant to pre-ordain a successor. But let's get one thing clear: Succession planning does not guarantee anybody anything. A plan provides a credit union with choices by identifying and developing high-potential people for opportunities when the time comes.
In fact, a succession plan is an extremely confidential document that can change each year depending on individuals and circumstances. Only the CEO, board and senior human resources executive should have access to it. The plan should not be discussed outside this group.
This is the time to plan for continuity of leadership of your organization in a financial services marketplace where credit unions are stronger and healthier than other institutions. Whether there are internal candidates available to move into critical management positions will depend largely on your board, CEO and senior managers.
The results of succession planning are not reaped overnight. The board must help the credit union fight the inclination to merely comply with regulation by hastily putting together a document that plans only for CEO succession. Taking a planned, ongoing approach to management development, in a multi-dimensional format, will help your credit union meet the needs of your changing organization tomorrow while helping to ensure continuity of effective leadership today.
Rhonda Cooke is president/CEO of Cooke/Andres LLC and an expert contributor on board/CEO relations and succession planning to CUES' new Center for Credit Union Board Excellence. She also co-authored CUES' Succession Planning Essentials manual.
