More boards soon to face their biggest decision

<p>During the next five years 25% of credit union CEOs will retire. In addition, as the job gets more demanding and opportunities to relocate increase, many current credit union CEOs will probably be fired or quit. Opportunities for talented individuals to become a credit union CEO for the first time, or move up to a larger credit union, will reach new heights. Many boards will be faced with the daunting task of hiring a new CEO for the first time. As those boards that have done it before realize, there are wrong ways to go about the most important decision any credit union board will ever be called on to make, and there are right ways. Some boards, especially where a CEO has been in place seemingly forever, will make the mistake of seeking a replacement who is a clone to the retiring CEO. In doing so, they miss an opportunity to step back, take stock of where the credit union has been, is today, and needs to go in the future. One of the first and most difficult tasks for these boards and in fact any board seeking a new CEO, will be to accurately determine what kind of chief executive will they need to put in place to lead the credit union to the next level? Finding that individual is the next big challenge. How to go about it? Some boards will take it upon themselves to handle the entire search process, not just the final decision on whom to hire. Bad idea! The CEO search process is far too time consuming for individual board members (a typical number of applicants can number in the hundreds). There are also such issues as confidentiality, background and reference checks, and the overall screening process to consider. These are the same boards that decide to create and run a small help wanted classified ad. They also decide to have it appear in every publication they can think of, regardless of its target audience and readership level. Ironically, they often don’t authorize larger ads because they feel the big ones are too expensive. Too expensive in relation to what? The new CEO’s compensation package? Hardly! Bad move! What the ad says is most important, but its size and where it runs also says something about how the credit union’s open CEO position will be perceived by potential candidates. Some boards anoint a replacement, either secretly or openly, for the soon-to-depart CEO. This is almost always true with single-sponsor CUs, especially those where the credit union CEO and staff are sponsor employees. Some boards depend on word of mouth and personal contacts. With boards that are out and about, they could very well be aware of a number of potential candidates including those already part of the credit union’s senior management team. Here, too, is where suggestions from the departing CEO (if the departure is a good one) could be considered. Networking to bring in candidates isn’t necessarily a bad move. But there is a better way. Credit union boards that are serious about getting the best possible CEO for their credit union will want to leave no stone unturned. They will seek out a professional search firm. The most effective of these search firms have the experience to first work with the board to determine very specifically the type of individual that will be a good fit with the chemistry of the board, the membership of the credit union, and the overall vision of the credit union. They will never place a go-getter in a credit union that wants a caretaker, or vice versa. They will do all of this before they lift a finger to seek out a candidate. A good search firm is always plugged into the industry. They know all the players and where the bodies are buried. They know which boards are impossible to work for (four CEOs in six years says it all). They know which credit unions are notoriously low pay and will experience sticker shock at what it will cost to replace good old underpaid Bertha, the CEO for the past 35 years. Also, they know whether or not a board is willing to consider an internal candidate, a staffer from another credit union who is ready to move up to his or her first time CEO position, and, yes, whether or not the board has unspoken prejudices against women, minorities, or outside-the-industry candidates such as former bankers. One of the biggest pluses for a search firm is the fact that they can and will screen out applicants that are completely under qualified, over qualified, and those with an unimpressive track record as well as those with unreasonable pay expectations. One high-profile credit union in the billion-dollar asset range currently seeking a CEO received approximately 900 applications. How long would it take the board, or even a board search committee (another good idea by the way), to sort through these, tossing out, for example, CEOs who feel qualified because they have managed a $50 million CU? Fortunately, most credit union boards recognize how crucial it has become to anticipate replacing their CEO long before his or her departure day draws near. They also realize the importance of plenty of lead time for discussions relating to what type of person they need and what’s the best way to go about getting that person. Finally, completely unrelated to the above, here’s that definition I promised to repeat from last week’s column. Note that I’ve added the word “all” to emphasize that credit unions do in fact serve all members at all income levels. “A credit union is a not-for-profit financial cooperative organized to serve the changing financial needs of all the members who own it.” Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail [email protected].</p>