By: Robin Hollis, Regional Director
The business of running a credit union is becoming more complex every day as the financial industry advances. Often times when searching for qualified people to lead credit unions, boards are surprised at the expertise required, cost involved, and time consuming search efforts needed to replace credit union leaders. As much as we like our leaders they simply will not be around forever. Let’s face it people retire, move in another direction with their careers, or have other challenges that affect their ability to continue in their position. CUNA reports that nearly half of all CEO’s will retire in the next 10 years and twenty-five percent in the next five years. It is crucial that credit unions plan for the inevitable change in leadership. Succession planning and preparation is necessary to ensure continued service to members.
When a credit union fails to have a succession plan in place they leave themselves and their membership potentially exposed to a heighten risk of fraud, increased delinquency and write-offs, reputation risk, mandatory mergers, and regulatory/ insurer concerns. Even a strong credit union can crumble when faced with a vacancy in leadership and no plan for succession. With so much at stake it is alarming that per CUNA’s Salary Survey 42% of credit unions don’t have a succession plan in place today. Many credit unions have work to do when it comes to this area. Even if your credit union has a succession plan in place it should be reviewed and updated annually.
A good succession plan should:
• Identify key staff and board positons at the credit union;
• Identify skills needed for key staff and board positions;
• Identify successors and any developmental requirements with time frames;
• Identify action steps for replacing and filling both planned or unplanned vacancies;
• Ensure communication controls regarding vacancies (who, what, when, and why); and
• Provide for ongoing monitoring, reviewing and updating of the plan.