Succession Planning: Road to the Corner Office

Does your credit union have a succession plan? Fifty eight percent of organizations have some type of succession plan, yet, only 29 percent consider their program formal.

 
 

The largest and most public succession process is unfolding as the nation's most ambitious leaders race to be the next U.S. presidential candidate. As talk of our next leader starts years before Super Tuesday, many credit unions may face a more abrupt transition. In the last year, Callahan and Associates estimates that 210 new CEOs have taken the helm of a credit union. This raises the real issue of the need for a strong, ongoing, and effective succession plan.

More than 58 percent of organizations have some type of succession plan, yet, only 29 percent consider their program "formal." Another 26 percent of organizations intend to build a succession plan, according to the 2006 Succession Planning report by the Society for Human Resource Management.

Leadership succession, starting with leadership development, should be a primary concern for every credit union. If a credit union does not have an existing succession plan, the initial challenge is determining the appropriate approach to leadership succession that addresses the specific needs, challenges, and goals of an organization. As a plan develops, subsequent questions arise like: Should our next leader be chosen from a pool of primarily internal or external candidates? Looking closer, depending on the timing and conditions of a succession, there is a lot to measure when considering internal and external candidates.

Internal Candidates Vs. External Candidates
Three-quarters of Fortune’s most admired companies hire from internal pools as a matter of preference or policy.   External hires provide an opportunity to re-invent the company.
Internal hires know the people, culture, and nuances of working within the organization.   Their consideration offers a larger pool of candidates.
Internal hires start with a strong chance to fit in and be accepted.   Candidates with a proven track record from an outside company may be the best fit for specific company needs.
The CU and staff have a sense of how experienced, skilled, and competent a new leader is.   Internal candidates may not have the necessary leadership and experience.
Internal hires have greater credibility with their organization because they have had common experiences.   Hiring from within the industry can also carry over a strong understanding of the credit union.

While campaign efforts include major use of time and money, credit unions often depend on their existing leadership team and budget to generate a new leader. As a succession plan develops, the credit union selection team can get an inventory of the experience, accomplishments, and reputation of candidates in their credit union and in the industry. Such a survey can result in the realization that there is a serious shortage of quality candidates from within the organization and perhaps even the industry. With advance planning, such a challenge can help the credit union mitigate risks well in advance of an inevitable succession. The process can also encourage more effective leadership grooming. A comprehensive management strategy for developing internal candidates should include career development, an environment that fosters learning, and effective performance management and measurement.

The resulting succession management strategy allows organizations to identify key positions, potential successors, and, perhaps most importantly, skills gaps. It also will provide employees with insight into available career options and tools to plan and achieve their career goals.

 

 

 

Jan. 14, 2008


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