Succession planning – it’s probably something that you’ve heard tossed around in conversations and in management meetings. The concept of succession planning is being talked about a lot lately. There’s a very good reason for this: there will be quite a few baby-boomer CEOs and other credit union Executives who will retire in the next 5-10 years, if not before.
Therefore, credit unions are having to develop written plans that identify the steps that will be taken when these retirements occur. But pending retirements shouldn’t be the only reason for credit unions to engage in the succession planning process. Indeed, besides retirement, there are several other reasons such as key executives leaving the credit union for a job opportunity elsewhere, key executives being terminated or, in nicer terms, “separated from the organization,” etc.
You’ve probably noticed by now that I am not just talking about the CEO here. That’e because, for most credit unions, succession planning should go deeper than the CEO. What happens if your CFO leaves? How about your COO or VP of Marketing? The titles aren’t the most important thing to consider – it’s the function that matters. Think of them as your TOP financial officer, your TOP marketing employee, your TOP business development employee, or your TOP IT employee. That will help you determine the positions for which you should have a succession plan.
Succession planning doesn’t have to be complicated. Essentially, it involves 5 steps that you can easily remember by using the acronym H.E.L.L.O.
HIRE great people! That’s the first step. You want to make sure that you are hiring people that exhibit leadership potential as well as for their skill sets. If you hire great people from the very beginning, it won’t be as hard for you to name successors during the process.
ENGAGE the process. This has to have top-down support and commitment. If the Board isn’t on the same wavelength or the current executives feel threatened because you are already planning for their successors, don’t bother.
LEAD! Sounds simple enough. In reality, implementing a true leadership culture is harder than it sounds. It would be great if every credit union employee had the necessary skills to be a genuine leader. That’s just not possible. So, it is critical that you identify future leaders and have discussions with them regarding their long-term career plans. Let them know that you see a future for them at your credit union and find out if this is something that they are interested in pursuing.
LOOK OUT for common mistakes. The first one is that you stop with the CEO. We’ve already discussed that. Another mistake is that some credit unions think that writing a succession plan is a “one and done” type of deal. It isn’t. You should be reviewing and revising your succession plans at least once per year – perhaps as part of your strategic planning session. There is also some debate regarding whether or not to include the CEO in the planning for his or her own successor. I think it is appropriate for the CEO to be involved AS LONG AS the CEO understands that he or she should not be focusing on preserving their legacy but instead be preparing the credit union for a better future.
OPTIMIZE your training and mentoring programs for leadership candidates. Identify at least 2 potential successors for each key position. Pay close attention to what they do, how they do it, and identify unique characteristics that align with your credit union’s strategic vision for the future. Who will be best equipped and able to get you past the goal line?
Finally, there is the debate between hiring from within or performing an external search. It depends on what your credit unions want for the future. If you’re looking to go in a drastically different direction and don’t think you already have the people you need in-house to accomplish the goals, then, by all means, a fresh perspective from the outside might be a good thing.
But a 2012 study by the University of Pennsylvania found that external executive hires are 61 times more likely to get fired within the first 2 years of employment. Think about that for a moment – if you look within for your next set of executives, chances are that most of those individuals have already been part of the overall strategic planning process. They know it. They are committed to it. Hell, they may have even crafted it. Why not give them the opportunity to put the plan into action?
Till next time!