To whom it may concern,
We see you and how much is on your plate. No doubt you (and countless other executives across the nation) are struggling to balance the multitude of executive leadership priorities that come as a result of the ongoing, tough economic environment.
And the priorities are conflicting
- Keep employees engaged and driven — but honor their work-life balance.
- Digitally overhaul business operations — but don’t lose the personal touch.
- Grow profit margins — but don’t chinse on cutting edge technology.
- Recruit the top talent — but keep staff expenses low.
- Increase non-interest income – but ensure borrower-sensitive compliance.
- Keep the member experience as the highest priority — but get new members.
With all these important (albeit, conflicting) priorities, no one would blame you for putting “plan my succession” further down on the priority list.
Unfortunately, you may be putting your organization at risk by not addressing this important task. Especially if you belong to a federally insured credit union.
What the NCUA has to say about succession planning
The National Credit Union Administration (NCUA) recently published a rule about succession planning. It mandates that the board of directors of federally insured credit unions create and maintain succession plans.[1] The goals of this rule are transparency, accountability, business continuity management, and overall cohesion to the industry. After all, “succession planning is vital to the long-term success of any institution, including credit unions,” says the NCUA’s Chairman. Beyond compliance for qualifying credit unions, succession planning is one of the few indicators that can truly predict the health of your financial institution.
What succession planning is (and isn’t)
First, planning your succession does not fast-track your retirement or departure. Succession plans are valuable in many situations, not just retirement. Planning for a successor also strategizes for transitions and becomes critical during mergers and acquisitions. Succession plans should contribute to — not distract from — business goals.
Think of succession planning like this: a person creates a living will not to dwell on death, but to set the future up for success.
With nearly one-third of CEOs being over the age of 60, it’s time to look to the next generation.[2] Succession planning looks ahead and answers the question, “How can we start taking care of them now?”
Succession planning ensures that your business continues to operate even when a role is temporarily vacant. It is a crucial part of overall business continuity planning.
(Download your free Business Continuity Planning Checklist here)
Who to involve for creating a successful succession plan
Succession planning is more about the position than the person. The key roles that should be included in succession planning are:
- Board of Directors
- Chief Executive Officer
- Chief Financial Officer
- Chief Operating Officer
- Chief Technology Officer
- Chief Marketing Officer
- Chief Human Resources Officer
- Chief Diversity Officer
These C-Suite roles are the common ones in need of a successor. However, keep in mind that the most critical roles requiring a succession plan will be unique for each financial institution. For federally insured credit unions, only board of directors are required to have a succession plan. For all other executive leadership roles, it is considered best practice to have in place a succession plan.
How to get started
Succession planning starts now. Here’s how to start strategically preparing for executive leadership transitions:
- Identify roles and define functions: Gather key players’ input. (see list above for key players). Identify the functions of each role, using the job description as a starting point, and building from there.
- Create a pathway for leadership development: Future leaders need job architecture for hard and soft skill development. Consider implementing a company-wide leadership coaching program.
- Establish a transition timeline: This timeline should include milestones and deadlines for handing over responsibility from the incumbent to the successor.
- Invite a specialized consultant: Work with a consultant who specializes in employee engagement and risk management to help identify goals and gaps unique to your institution.
- Approve and document the plan: Once the plan has been approved by the board of directors, document the succession plan and communicate its completion to peers.
- Rinse and repeat: Follow these steps for each role. The most successful succession plans begin early, are revisited often, and are well communicated to stakeholders.
Light the way for your credit union’s future by leveraging your legacy with succession planning. We will ALL thank you.
Sincerely,
Your current and future members
[1] https://ncua.gov/newsroom/press-release/2024/ncua-board-approves-proposed-rules-incentive-based-compensation-succession-planning
[2] https://www.alliedsolutions.net/resources/allied-insights/beyond-benefits-executive-compensation-and-benefits-survey-results-are-in/