What is more important to the longevity or health of a credit union than cultivating the next level of CEO leadership? You would think every institution in our industry would have a long list of viable alternatives eager to claim the throne. Yet, unfortunately, an alarming number of credit unions are faced with a skills gap between the CEO and the ungroomed, ill-prepared top executives. Nearly half of all organizations have no viable internal candidate to permanently replace the CEO if required to do so immediately. In fact, we have even worked with institutions that hesitate to name interim CEOs during the transition process to avoid giving too much authority to an incapable C-suite executive.
However, certain organizations do succeed in developing a deep understanding and enduring bench strength. At Mitchell, Stankovic and Associates, we work with institutions all over the country through their leadership transitions, and we have found common factors that contribute to a leadership transition's success. What do these institutions do to create success in their succession planning and leadership transitions? They combine professional development and growth with the methodical and regulator driven process of succession planning in order to create a sustainable and long-term roster of talent. In this article, we will examine four strategies for success in succession management to help take your organization to the next level and create a pipeline of strong internal chief executives.
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Invest in Human Capital
Succession planning is a hot topic because many CEOs are retiring, our bull-pin executives aren't ready and our regulator is adding a line item to business resumption. The first step in creating a successful leadership succession plan is to move away from risk mitigation avoidance and toward a vision of career growth. The last several years were tough. Many of you are celebrating a year of positive net income, others are increasing slimmed budgets, and others are still operating with dangerously low capital and tight operating expenses. No matter the situation, you must invest in your human capital. If you think of your human resources department as that woman who sits in the lunchroom in November and answers questions about the 401(k), it is time to step up your game.
Dedicate resources (time and/or money) to be spent on human capital. The board should understand that education and succession is a long-term investment without immediate return. Utilize business partners for help in creating career paths and building a foundation for the executive positions and growth. You should also utilize the cooperative spirit and reach out to other credit unions that are working on the very same initiative. Finally, encourage those additional designations your people have been "meaning to do," like getting a CPA or MBA.
Recognize that Puppies Pee on the Carpet
Assess your executives in a fair, non-intimidating and non-judgmental way. Also, allow them to be part of the process. Use the assessment as a benchmark or foundation for performance management. As you hire young talent, don't forget they will need guidance and training as well.
Next, value the energy of a new executive. Let me highlight this with a metaphor. When your best friend and confidant – your golden retriever Max – dies at age 16, you can't imagine life without a dog. Then through the tears, you impulse purchase a puppy retriever, and it is a shock. You experience the overwhelming energy of a puppy that pees everywhere, eats cords and jumps on guests. Yep, puppies pee. Puppies need training. Puppies need a heck of a lot more attention than Max did. But just like the old dog, if you spend the time, then one day, your puppies will grow up to be CEOs. Don't be put off by their energy. Train the puppies.
Cross-Pollinate
Capitalize on what you already have. Take a look at the intellectual capital and strengths of the existing executive team. How can you be cross-training? Try incorporating lateral business function moves to gain experience. Just be careful for competitive barriers and people not collaborating in an effort to gain power.
Attending conferences? Share this knowledge with the rest of the executive team in a measurable way. Challenge your executives to attend events outside their comfort zone and in different genres for growth. Finally, encourage your executives to be a part of industry committees and boards. Networking is a powerful teacher.
Write in Pencil
Finally, capture it all in a simple, clearly-defined and well-articulated plan. Seems easy enough, right? Keep it transparent, share it with everyone and make sure the plan remains flexible. Most importantly, treat it like a living document. Do not just file it into your business resumption plan until the regulator shows up. This succession plan must remain visible. Anchor it in the organizational culture by incorporating it into your existing policy, measuring success in your strategic plan and holding your team accountable to their efforts.
Effective succession management recognizes that talent impacts organizational performance. Embracing education and development allows you to enhance your leadership and position the institution for the future.
Brandi Stankovic is senior partner for Mitchell, Stankovic and Associates. She can be reached at 855-362-2002 or [email protected].
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