American Flag Credit Union (a fictitious credit union headquartered in Wisconsin) has a new CEO who has stepped into the role with limited guidance from peers or her Board. She’s looking for advice on what she can do to ensure a successful first 90 days. Doug Fecher, CEO of Wright-Patt Credit Union ($2.2B, Fairborn, OH), offers the new leader advice on how to take the helm of the struggling cooperative.
Onboarding New Leadership At The Highest Level
American Flag Credit Union's Background
As Kathryn Minor walked into the nearly deserted office building at 7:30 a.m. on Monday, a wave of anticipation washed over her. It wasn’t the stillness that bothered her; the 45-year-old was often one of the first people to arrive; nor was it her winding walk up the stairs and around the empty cubicles to her second story office. She always looked forward to opening her window blinds and watching the early sun settle into the valley behind the headquarters of American Flag Credit Union.
This morning, though, was different. She’d been at the credit union for a little less than a year and loved her morning ritual of checking email, reading the industry publications, and monitoring the credit union’s established benchmarks as she sipped on her strong, black coffee no sugar, no milk, “no training wheels” as she liked to say. But this morning she wasn’t walking American Flag’s corridors as an ambitious, hard-working CFO; today, the relative newbie to the industry was taking the helm as the newly minted CEO.
Only six months ago American Flag’s CEO announced he was leaving. The move came as a surprise, as it was more than a year before anyone had expected his departure. Faced with a notable lack of succession planning, the credit union’s Board had to quickly search for a new leader during difficult times both for the economy and the credit union.
Within a week, the Board appointed Minor as the interim CEO, which caused some friction with the EVP of Marketing. Danny Harris started with American Flag two years ago as a hire from one of the credit union’s four mergers over the past decade. Harris thought he was the better interim choice and was not shy about expressing his opinion on where he thought the credit union should be heading.
The Board opened up the application process to the senior staff at American Flag, and in considering the opportunity, Minor also had to consider whether she had the vision, strength, and courage to rise to the occasion of being CEO. She wrote a list of her strengths and weaknesses — a typical “mom’s methodology” approach, her three children would have teased — and decided to throw her hat into the ring.
Along with Harris, of course. The Board conducted a national search, and after six months of interviewing candidates from inside and outside the industry and institution, it selected Minor to become the next CEO of American Flag. Unfortunately, the Board’s support was not communicated to the credit union’s executive staff members, some of who resented Minor’s seemingly overnight rise from peer to boss.
Although nobody would ever accuse her of being a “people person,” the contention baffled Minor, as she thought she had had a commendable working relationship with most of the management team. She’d even partnered with a few of them to present growth ideas and performance enhancement strategies to the then-CEO.
When Minor began her career at American Flag as the CFO, she hadto analyze a back log of credit union financials to identify weaknesses in the credit union’s strategy and suggest new ways to invest the credit union’s resources, keeping in mind at all times the institution’s appetite for risk and available liquidity.
To do so, she drew on her 15-years of experience in the insurance industry and thought she had brought to the table a unique perspective on what the credit union could do. She said as much in her CEO interview and had a list of changes she knew she wanted to make: institutional performance, strategic planning, and intra-credit union communication, to name just three. The Board had a slightly different vision for her inaugural year. The first priority the Board tasked her with was formalizing a CEO succession and onboarding plan. Seeing as how she was expected to take the role with little onboarding herself, she found this assignment both essential and more than a little ironic. Nonetheless, here she was, about to address the senior management team for the first time as their official CEO.
Minor took a sip of her coffee and smiled. “No training wheels” was about to become her professional mantra. She stole a glance out of her office windows — sunshine was a better omen than storm clouds, she thought — and headed down to the Board room.
Doug Fecher of Wright-Patt Credit Union: You Don’t Know What You Don’t Know
Six steps to becoming the best CEO you can be.
First of all, Kathryn, I’ve been through what you are going through. I became the CEO of Wright-Patt Credit Union 10 years ago after our CEO passed away unexpectedly and the credit union became rudderless overnight. At the time, I was the chief operating officer and had been there five years. Most of the senior management had been there for at least 10 or 15 years before I got there, but the Board named me interim CEO while it conducted its search.
My first piece of advice is: Be prepared for a change in your interpersonal relationships. If the Board had even a small doubt about your candidacy, then you can be sure the staff doubted it, too. I could have been more effective in my first year as CEO if I had known how much my interpersonal relationships would change. I overcompensated for those changing relationships; I tried to build consensus too much out of the sense of wanting everybody to get along and as a result didn’t firmly establish my authority in those early days.
There will be senior managers who are loyal to the previous CEO, even if he left of his own accord, and who will withhold their support just trying to wait you out. Meet individually with each of the senior management team to hear them out. Ask them about their concerns and what they see as their future role at American Flag. Ask them what they see as American Flag’s biggest problems as well as strengths.
This will help everybody gain a mutual understanding of everybody’s role and how those roles can help you. Ask them if you can count on them. This kind of open, honest meeting will help you establish your leadership style, get everybody talking about the real problems, and stop them from dwelling on issues with who’s in charge.
Which brings me to my second piece of advice: Confront misunderstandings right away.
I had to address emails with hostile undertones and work through turmoil created by, what I thought was, innocuous decisions. On an individual level, I addressed people directly. I asked what was bothering them. For the larger, straightforward decisions I made, especially the ones that fixed backward processes — you know the ones, you have them, too — I had to just say “Look, that’s the way it’s gonna be. I’m sorry if you don’t like it.”
Not every misunderstanding is going to be a deliberate slight of your authority, that’s why it’s called a “misunderstanding.” So don’t take everything personally; just ask yourself: “How would I react if I were on the other side of this table? What would I want to see happen?” Slowly work your way out of the bigger misunderstandings using this technique, taking care to establish your authority in a reasonable way.
Which brings me to my next piece of advice: You’re no longer a peer, you’re the boss. Promoting from within is a much different strategy than bringing in somebody from the outside. An outsider can come in as an unknown entity and immediately have credibility as a leader. They can objectively come in from the outside and ask, “Have you thought about this?” or “What about that?” Going from being a peer to overnight being the boss, for me, was a challenge. We knew we had to make changes, but every time I tried to challenge the status quo — whatever it happened to be — it turned into a bigger fight than it needed to be. Getting people to respect your authority is going to be an uphill battle. The hardest thing isn’t going to be that you’re not ready from a technical standpoint; it’s going to be about facing your peers as their boss.
Fourth: Determine your role and act accordingly. As the CFO, you had your ideas. Your peers had theirs. At some level you were basically in competition with one another for the attention of the CEO, who was always there to keep things balanced and in check. As a new CEO, you don’t want to impose your will on them; but keep in mind that as the interim, you were a caretaker. As the CEO, you’re an agent of change.
If the credit union doesn’t operate on any type of strategic plan, you have to create one. And that plan has to have a goal. As the CEO, you get to determine the character and the values of the organization. Are you building your plan around returning value to members? Are you considering the health of the organization? What about the happiness of your employees?
One last word on your role, you need to be very clear with the Board about what authority you have to create your own team. If the dictum is, “You don’t have any authority; you’re not allowed to fire anybody,” then you need to have a frank discussion with the Board. If you’re not allowed to build your own team, then things won’t run as effectively as they could. Conversely, if you have the freedom to build your own team, don’t plan to turnover your team immediately and all at once. You’ll scare the hell out of everybody.
Your Board has asked you to create a succession and onboarding plan so, take this somewhat muddy transition as an opportunity to build plans. When you have your annual review with the Board, take the time to review, confidentially, your senior management team and talk about their accomplishments, strengths, and weaknesses. At the end of that meeting make your recommendation; say: “If something happens to me, this is who I recommend you make interim.”
This keeps your Board up-to-date without putting it in the middle of operations. Your recommendation might change at some point based on who has developed the necessary skills, but the great thing is, if you’ve been updating your Board members, then they won’t be surprised because they will have been witnessing the progression of the management team.
As a side note, I’d like to say that confidentiality is important, here. You don’t want somebody who has ambition to leave because they think you don’t see them as a leader.
And finally: Don’t be afraid to reach out for guidance. Identify CEOs and industry leaders who have been around for awhile and whose style or performance you admire. Then talk to them. Ask your Board for an executive coach for the first year. You don’t know what you don’t know, but you’ll soon find out