How Strong is Your Bench?

Lack of leadership bench strength has exacerbated the rate of consolidation in the credit union industry. Are you ready when your CEO announces their retirement? 

Last week, Jim Kasch from Canidae Consulting discussed Strategic Planning considerations for the future of your credit union. Equally important is developing a strong “bench” of talented leaders to continue to prepare and plan for your credit union’s continued success. In this article, Tonya Voltolina from Eleven Performance Group continues the discussion.
 
by Tonya Voltolina, Eleven Performance Group
 
The National Credit Union Administration (NCUA) recently acknowledged something credit union leaders have known for some time. Namely, the lack of leader bench strength has exacerbated the rate of consolidation in our industry. According to NCUA data the number of credit unions has decreased by about 25% since 2010, and credit unions with less than $150 million in assets have shrunk by more than 40%. The NCUA correctly believes a lack of developed, next generation leaders can cause otherwise viable credit unions to agree to a merger when the long-time CEO announces retirement.
 
The NCUA’s proposed rule would require federal credit union boards of directors establish and adhere to processes for succession planning. It would provide credit unions “broad discretion in implementing the proposed regulatory requirements to minimize any burden.”
 
This presents two issues for credit unions. First, how will the credit union board of directors comply with the new regulation? In my experience, many credit unions’ succession plans cover only the basic requirements of the organization’s approach should a senior leader (sometimes, only the CEO) retire or leave the credit union. A robust succession plan considers not only senior leadership roles, it also considers any role that makes a significant contribution to the success of the credit union. Some of these positions may be individual contributors without direct reports. For example, a highly productive mortgage originator, a highly competent indirect manager, and high potential employees in any role should be accounted for in the succession plan.
 
The second issue for credit unions is this: how is the organization preparing its employees to be highly effective leaders? Hiring and promoting people with extensive technical expertise or years of experience is not sufficient. The organization must define and understand its leadership competencies, and it must have a proactive program in place to help its employees – both current and future leaders – improve their performance within these competencies. It must have a thorough talent assessment protocol to identify high potential employees, and it must have an integrated, systematic approach to leadership development.
 
In short, having an effective succession plan means having a leadership development program.
 
Recognizing this need, the Dakota Credit Union Association established a relationship with Canidae Consulting and Eleven Performance Group to offer iLead@11 to all credit unions in the Dakotas. If you are interested in learning how Leadership@11 can help your credit union prepare its leaders for future success, and how the program supports an effective succession plan, contact me at [email protected].
 
You may also contact George McDonald, DakCU’s Chief Officer of Strategic Services with any questions.