In the News: Succession planning for the C-Suite? Try the whole credit union instead
Succession planning for the C-suite? Try the whole credit union instead
Credit union succession planning could be in the midst of a sea change.
As a result of ongoing CEO retirements coupled with a strong job market, some credit unions are expanding their succession planning from beyond the C-suite all the way across the organization.
“Larger credit unions are getting larger; whether it’s mergers or just growth, that next level down is really key,” said Andy Roquet, senior executive benefits specialist at CUNA Mutual Group. “One person can’t run the show and have all the expertise in lending, accounting [and] technology.”
That’s a methodology that Onalaska, Wis.-based Altra Federal Credit Union is pursuing, a process that began in April 2018 when the CU’s former CEO announced his retirement plans.
During the second quarter of last year, the $1.6 billion-asset institution hired D. Hilton Associates as a consultant to assess the organization, with an official CEO succession-planning search starting on Aug. 1, 2018. The firm outlined competencies desirable for a CEO and the rest of the C-suite, which included business acumen, collaboration, vision and strategy, continuous improvement and community involvement.
After identifying those competencies, the executive team was then assessed and given a readiness score to improve its approach. This whole process united the organization and helped bridge some internal gaps, explained President and CEO Steve Koenen, who was ultimately hired for the top job and took the helm earlier this year.
“I think the focus has been to develop succession planning strategies throughout the organization by identifying people who can potentially be a good fit for a particular role and be developing staff in all areas of need, not just at an executive level,” Koenen said.
‘You have to have executive commitments’
With credit unions competing for top talent in a hot job market, their ability to retain staff for the long haul is as important as ever. Forty-six percent of organizations surveyed in PayScale’s 2019 Compensations Best Practices Report felt the strong job market is having an impact on turnover rates. Moreover, 66% of respondents listed employee retention as a major concern.
Organizations are now moving their focus beyond the operational level and looking toward personal development and leadership strategies when cultivating their employee base. According to Michael Monahan, principal-in-charge of Grant Thornton’s Northeast Human Capital Services practice, one of the best approaches an institution can implement today is a lattice approach.
The lattice method stretches across the entire organization and utilizes a flexible approach designed so that employees don’t become over-saturated in one silo but instead rotate around related subject matter across the company in order to grow his or her skill sets.
This approach is similar to what Altra has implemented, and is considered a talent-retention strategy in which organizations make sure that on-boarded staff are ready to go once a new position opens up rather than “relying on someone from the outside to walk in,” explained Koenen.
But all of these efforts fall apart if the board isn’t backing succession-planning efforts, said Robert Morlot, a managing partner at Clearwater Business Advisers.
“In most large organizations and even mid-sized organizations, you have to have the CEO and the board sponsor succession planning,” Morlot said. “If they don’t buy into it, it’s not going anywhere and it will collapse. So you have to have executive commitments.”
Monahan echoed that, suggesting every board should have a human resources committee devoted to succession planning. One of the major obstacles CU boards face, he said, is hesitation and unfamiliarity with the demands of succession planning in practice, rather than in theory.
“Progressive succession development starts at the board level to best create a culture of development and readiness,” said Deedee Myers, CEO of DDJ Myers, Ltd., an executive-recruitment firm that frequently works with credit unions. “Higher performing boards look out five to ten years or more to decide what competencies are needed. The C-suite then aligns their succession risk and development. If the succession conversation is rigorous at the senior levels, there is cross-organizational heightened awareness and attention.”
Myers also noted that CUs too often focus on a succession plan rather than succession development.
“Organizations tend to focus first on the paper aspects of a plan and the people dynamic is orphaned. If the emphasis is on a plan, the ongoing day-to-day development is minimized,” she said. “Every conversation with an employee needs to be focused on ongoing development and learning. Every coaching situation needs to connect an employee’s daily actions to the long term strategic vision and initiatives.”
What may come as a surprise to some organizations is the time commitment – one that frankly may be more manageable than some credit union leaders expected. Morlot said that organizations can get their succession-planning efforts off the ground with as little as four to seven days’ worth of strategic planning.
Still, there are methods for credit unions who only have limited resources to put toward their succession planning.
For institutions with limited budgets for an employee’s personal development, Roquet recommended that credit unions consider looking inside their own organizations, starting with internships.
“There are very good ways where you can have a leadership-development program [in which] you hire someone as an intern, and bring them back as another intern,” Roquet explained. “And if it works out, you can bring them in [to the credit union] and if they don’t know where they want to land with their career, a leadership development program can have job rotations every six months.”