Doing the Hard Stuff: When It Comes Time for the Board & CEO to Part Ways

The board of directors isn’t always readily thought of as impacting positive credit union workplace culture. Frankly, that is the responsibility of the CEO and his or her team. But if the day has come when the board must make that hardest of decisions and change the leader, culture is a critical consideration. Parting ways. Separation. Resignation. Termination. However you couch it, if this time comes then the board has a massive responsibility.

First, a quick introduction. On the personal front, I am retired from three decades as a State Trooper. I now serve as a vice president in a large long-term care community just recovering from a pandemic. So, fairly, I’ve had to do hard stuff more frequently than some. I’ve been a long-time board member, over 15 years, with a credit union that is approximately $250 million in assets in the Midwest. In the last 40 years, our credit union has had four CEOs. The first consumed 32 of those years.

This isn’t a discussion about the specifics as to why our board of directors chose to part ways with our CEO, twice, in a two-year window of time. To be sure, our board can’t shove this off on those CEOs to accept all the blame. We made errors along the way. But it also speaks to the true difficulty in “knowing” your new CEO at the moment of hiring, if they are not an internal candidate. All the due diligence, hiring firms and online hawking won’t assure you of a positive outcome.

This is not an endorsement at all of changing CEOs. Frankly, I don’t recommend the practice. It also shouldn’t be such a last resort that you let your credit union become a complete mess before you inevitably act. But just because it is uncomfortable and immensely difficult doesn’t mean it isn’t in the toolbox to keep your credit union culture strong.

I know. Only the CEO works for the board. The rest of the employees are “theirs” to worry about. No, they are not! They are your concern. You can care about staff without managing them. If you are properly assessing the work of your CEO, you better know how staff is doing regularly. Many mechanisms, formal and informal, exist to make those assessments. But I’d encourage you to make them. If you only ask the CEO how the employees are … I can assure you they are doing magnificently. But are they?

Directors come from all walks of life. Some have had leadership roles. Some come from backgrounds with sophisticated leadership cultures. Some come from large workplaces while others may be retired or self-employed. All of that makes separating from a CEO extremely challenging under the best of circumstances. It also can lend itself, when every metric leads to a separation, to it being ignored because it takes more fortitude than a board can muster.

Let me be crystal clear. Do the hard right over the easy wrong! We couldn’t bring ourselves to do it. We didn’t know where to begin. We didn’t know how to tell them. All of those will be emotions for board members. And likely many others. But if you are doing what is best for your credit union membership and staff, then you simply must navigate every hurdle. And you can!

Being a credit union director, about 99% of the time, is a pretty good gig. We strategize through an occasional challenge. But largely, I suspect, it is very important work we do that isn’t terribly taxing in the grand scheme of things. Heck, it is rather enjoyable. Because of that, it can be pretty overwhelming when these situations arise. Whether the separation is the result of a single negative act or of a long, ongoing effort to right behaviors that ultimately are unsuccessful, a board should not feel guilty about its actions.

But anytime we are making the hardest of choices, it is important we’ve not done any of our due diligence a disservice. So it is important you’ve been thorough, accurate and complete in your fact-finding. If it is an HR issue, be sure to document as much as is possible. If confidentiality can be maintained, have your HR lead assist you in assimilating documents. This could include things related to the matter at hand or it may be hiring contracts, renewals or agreements that you must follow. To this end, you should always seek the assistance of legal counsel skilled in employment law. They can keep you on the right track, provide assistance in creating separation documents and serve as a wise and experienced voice in guiding you through best practices to complete this difficult task correctly and legally.

As for delivering the news to the CEO, my thoughts are that it be done as privately as possible. I would recommend two members of the board meet with the CEO to avoid any misunderstandings about what was said. Your legal counsel will likely be able to help you with a script to follow so you don’t, out of inexperience or kindness, say something that could prove problematic later. Be clear. Be concise. Be compassionate. But be firm. You aren’t in a negotiation or a conversation. You are delivering bad news. And just as I did in all those years as a State Trooper when giving others the worst possible news, be able to look back and say that you did your very best work in the hardest of situations.

Be prepared to have a list of notifications you may need to make that would be critical to your credit union’s operations. It is important that you control the messaging to your members and staff to provide for the best possible outcome moving forward. Obviously, having an interim CEO identified is a part of that. But how will you let the staff know of the transition? How will members become aware? Do you need to notify any examiners or auditors? Would your state league benefit from the information? Is your IT department prepared to shut off access? In our two recent cases, we had done more than two weeks of work from the point the board voted to separate from our CEO until they were notified. This requires strict confidentiality by the entire board. This is one example why building trust within your board each meeting is critical.

These are uncomfortable subject matters. We never think we will be confronted with these situations. We cross our fingers many times and hope for the best. There is no real way around the difficulty of it all. But just because we are volunteers doesn’t lessen our sense of duty. And if there is a rainbow in all of these storm clouds, it is this undeniable truth. The staff and membership of your credit union will genuinely appreciate your integrity and sense of honor in living up to the high ethical standard of doing what is best for your credit union, when it would be so much easier to simply look the other way. And when that happens, you, the board of directors, have taken a significant step, which you really can’t appreciate in the moment, to strengthen mightily a culture of respect, honesty, integrity and appreciation in your credit union.

Kelly L. Hindman is Chairperson of the Board of Directors for $237 million Citizens Community Credit Union in Fort Dodge, Iowa.