Younger entrants into the executive suite — such as 31-year-old Facebook CEO Mark Zuckerberg — get plenty of publicity, but the average age of the chief executive at an S&P 500 company hovers around 55, according to a 2015 report by S&P Capital IQ. Berkshire Hathaway’s Warren Buffett tops the list at age 84.
The impending retirement of millions of Americans, from CEOs to front-line employees, is top of mind to HR directors everywhere. With an estimated 10,000 baby boomers reaching 65 every day, leadership succession planning is on the agenda at most credit unions, and a growing number are launching or re-invigorating leadership development programs.
“We were fairly typical of most credit unions, we had one person doing many things,” says Cathy Meyers, chief human resources director at Community Financial Credit Union ($644.1M, Plymouth, MI). “When we were smaller and things were less complex, it was easier to replace that position. With the growth we’re experienced, it’s been harder to manage when we lose a long-term manager or promote that person out of that position.”
CU QUICK FACTS
COMMUNITY FINANCIAL Credit Union
Data as of 06.30.15
HQ: Plymouth, MI
12-MO SHARE GROWTH: 7.58%
12-MO LOAN GROWTH: 15.15%
Succession planning, whether grooming a member of the management team or onboarding someone new to the organization, is a hot topic in board rooms these days.
“We have a number of executives who have been with the credit union a long time,” says Meyers, who has been on the job for 32 years. “Probably in the next five to 10 years, we’re going to see those folks start to retire. Our board is focused on making sure we have the right people to step up.”
Credit union HR leaders came together in July at a Callahan roundtable to discuss these looming workforce challenges. When the discussion turned to the multi-generational workplace, attendees discussed how workplace demographics were changing, how senior managers were leading both millennials and boomers, and strategies to develop and retain tomorrow’s leaders.
Karen Maxfield, HR vice president at Commonwealth Credit Union ($1.0B, Frankfort, KY), sees change happening across her organization’s 274 employees. Today, millennial and Gen Y employees account for 37% of Commonwealth’s staff; Gen X-ers, 43%, and boomers, 20%. This shift, which is happening at all workplaces, underscores the need for renewed commitment to leadership development, Maxfield says.
CU QUICK FACTS
COMMONWEALTH Credit Union
Data as of 06.30.15
HQ: Frankfort, KY
12-MO SHARE GROWTH: 4.03%
12-MO LOAN GROWTH: 17.80%
“As we’ve expanded and moved into other markets, we realize we have gaps,” Maxfield says. “Succession planning has become a huge factor. Another issue is retention of talent. There are so many great workers who need to be challenged. Focusing on their development will hopefully help them grow and we can retain them.”
In many ways, corporate America’s view toward leadership development has come full circle since the 1990’s programs typically set up as in-house management “universities” that immersed select management candidates in all facets of the business for six months to three years.
Many of these programs fell by the wayside when the recession caused companies to cut costs and delayer management teams. Instead, management training became more tactical and focused on specific skills needed at the moment, such as crisis management, change leadership, and ideation.
Today, organizations such as Community Financial and Commonwealth are in growth mode and are focused on identifying leadership talent and providing ongoing development programs.
Future leaders are going to have to meet the culture and the future demands for the organization. We’ve moved from leader development to leadership development and a new leadership culture.
The leadership development program at Commonwealth Credit Union began in 1996, when it opened its first branch and needed to train new managers.
“We ventured into a multi-dimensional approach because it was so important at the branch level for managers to be able to operate by themselves,” Maxfield recalls. “After that, we developed a curriculum and training program. Managers completed the program and then they were done. Now, our approach is much more strategic. Future leaders are going to have to meet the culture and the future demands for the organization. We’ve moved from leader development to leadership development and a new leadership culture.”
Training: In-House Or External?
In managing leadership development programs, credit unions typically choose among three options: training by outside consultants, a partnership with a university, or an in-house program developed and run by the HR/training staff.
“You’ve got to commit the time and money to have an effective program,” Maxfield advises. “It’s difficult to pull staff, throw them into a development program, and expect the work to get done in the branch. You have to be willing to commit your resources to developing that individual while at the same time giving the branch what it needs in terms of staffing.”
Hundreds of university programs are available to support leadership training. There’s Harvard Business School’s five-month Senior Executive Program for China that takes place on its campus in China at a cost of $61,000. On the more affordable side, there is eCornell.com’s three-month online course that offers students an Executive Leadership Certificate from Cornell University. For a fee of $3,600 — $650 a month — the six required courses cover managing change, negotiating skills, developing others, decision-making, and leading through creativity.
In “Why Leadership Development Programs Fail,” researchers from management consulting firm McKinsey & Company note that tailored executive leadership programs at top business schools can cost up to $150,000. According to McKinsey, however, most executives report better results and improved learning from in-house, on-the-job projects.
“Adults typically retain just 10% of what they hear in classroom lectures, versus nearly two-thirds when they learn by doing,” according to McKinsey’s Pierre Gurdjian, Thomas Halbeisen, and Kevin Lane. “Furthermore, burgeoning leaders, no matter how talented, often struggle to transfer even their most powerful off-site experiences into changed behavior on the front line.”
McKinsey’s own leadership development program offers three levels of training for senior leaders, CEOs, and board members: peer-to-peer executive forums, half-day strategy sessions, and three-day off-site management retreats.
Partnering with local universities is another option, but class size minimums make that an impractical solution for many smaller organizations.
Identifying Talented And Tenacious Leaders
To identify and develop its future leaders, Community Financial launched an in-house emerging leader program. The credit union was expanding into lower Michigan, had opened three of its 12 branches within a year, and had plans to open another one in 2015. This created many new management opportunities in what was historically a flat organization.
The course, developed and led by Kathleen Hinchcliff, Community Financial’s director of training, includes traditional classroom learning, presentations, and special project application. It bases selection, in part, on a job-interview style Q&A on strengths, weaknesses, and career path goals. The first tier of future leaders graduated this year, and the second course is underway.
“It’s something I’ve dreamed of doing for years,” Maxfield says. “It was a retention strategy at its core, although we’ve found we need something more ongoing. We’ve been able to use it for career pathing, and as we’ve developed it, we’ve found the program not only identifies interest, aptitude, and attitude but also shows the ongoing tenacity of that individual in becoming a leader.”
For example, she notes, some employees realize leadership is not for them while others see new opportunities.
“Whether it’s C-suite or below, we have a strong philosophy of promoting from within,” Meyers says. “Leadership development is one of the things that will help us.”
To be sure, those interested in the top spot might want to stay put. Statistics of S&P 500 companies show at least two-thirds of CEOs came from within — and nearly one-fourth spent their careers with the same company before first becoming a CEO.
5 Ways To Make A Great Leadership Development Program
Ensure supervisors and managers understand the goals and embrace the program.
If using externally developed course, pick the best of those course and tailor them to your organization’s education strategy.
Include multi-dimensional learning that covers the perspectives of all parts of the organization.
Include a hands-on project component that can has the greatest possible impact the entire organization.
Before planning, benchmark your management team for the skills they currently possess. Determine what leadership qualities, skills, and behaviors will be needed in the future and build your curriculum around that.
Calling On The Disney Institute
Kentucky-based Commonwealth Credit Union has recently crossed the $1 billion threshold in assets. It is expanding into other markets, expanding its branch footprint, and introducing chip cards as well as Apple Pay.
It’s hard to challenge executives who have been in their jobs a long time. In some cases they’re fully seasoned and there aren’t a lot of surprises.”
To keep pace with business and market changes, Commonwealth partnered with the Disney Institute, the professional development arm of The Walt Disney Company, to facilitate cultural change at every level of the organization. After months of work, Disney Institute consultants helped roll out a new program supporting service excellence called Team 1.
“Before Disney would even come in, it required senior management buy-in,” Maxfield says. “Every member of our senior-level team had to commit to this. We had several work teams and champions in the organization on our culture, values, quality standards, and common purpose. Team 1 was built from within by employees at all levels.”
Disney held a training session with Commonwealth’s senior team before rolling it out to every employee. The service-oriented culture is initially focused on internal services through process improvement, improved collaboration, and better communication.
Tailoring To Executives
Few credits unions have formal executive leadership programs in place, although both Maxfield and Meyers see the need approaching quickly.
“It’s hard to challenge executives who have been in their jobs a long time,” says Meyers. “What more can they learn? In some cases they’re fully seasoned and there aren’t a lot of surprises out there.”
Other areas of growing interest include how to manage the multi-generational workplace and how to accommodate a more flexible workplace and hours. Management teams everywhere are beginning to focus on results-based management rather than simply ensuring employees are working at their desks.
“We need to enhance how we’re delivering information organizationally,” Meyers says. “Not everybody is a book learner. They want to have other ways to learn — small snippets of information instead of pages and pages. Some millennials like their books. Others just want the facts so they can move on, and some of our more traditional leaders aren’t used to that.”
Meyers looks for opportunities for senior leaders to network with peers and also brings in outside consultants to focus on specific leadership skills.
“We’ve done this before, but we need to do it on a more continuous and thoughtful basis,” Meyers says. “Through networking, they can talk about the problems of the day with their peers. Call it what you want, but it’s still a type of leadership development.”
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Meyers said it’s encouraging to see an increased interest in leadership development at all levels of the organization throughout the credit union industry.
“I’ve been with this industry a long time and I like to say we graduated from the college of hard knocks,” she says. “That’s great, but as we grow and we want to serve more members, more formalized approaches are what the industry needs to look at.”