Changing Chairs

Contributing Writer

8 minutes

Board succession planning helps make sure CUs have directors with the right skills when inevitable turnover occurs.

The old saying, “No one is indispensable,” is certainly true­—except when it’s not. There are times when a credit union finds itself in deep trouble after the loss of a leader. After all, an exceptional person leaves an exceptionally large hole. But often the institution hits the rocks not because that one official was truly indispensable, but because there was no strong plan for replacing her.

Most credit unions have faced the fact that there is a need to prepare for the possible departure of a chief executive officer. And while the CEO is undeniably important, that person alone doesn’t make or break a credit union. Yet relatively few credit unions have put in the time and effort to figure out how to replace board leaders who leave, expectedly or unexpectedly.

Perhaps it has something to do with the fact that credit unions have multiple directors. If the chair leaves, another director can surely step into his or her shoes.

But that’s not always a good answer. It’s dangerous to assume that a director will want to take on the added responsibility and demands of being chair. And not every director will shine in the top position; otherwise highly competent people may not have what it takes to be a strong leader.

Then again, since most CU boards tend to be composed of older individuals, emotions may get in the way. Rather than seeing succession planning for what it is—a way to keep the CU performing at its top level through leadership continuity—it can be distorted by a feeling of disloyalty. There may be an even more disturbing feeling that “succession planning” really means “we want to get rid of you.”

“Board succession planning is not about driving current board members out or judging their skill levels,” says Yvonne M. Evers, owner/CEO of Verona, Wis.-based YME Coaching & Consulting. “It’s about planning for inevitable turnover and seeking out the skills the credit union needs.”

Be Proactive

Evers’ company helps executives and directors achieve organizational success. She also is chair of $1.7 billion, 194,000-member University of Wisconsin Credit Union, Madison, Wis., giving her an unusual, doubled-barreled perspective.

A CUES Director member, Evers got first-hand experience with the challenge of director succession planning at her own credit union. She spent five years on the board development committee, which studied current board members’ future plans (when they intended to retire), asked them about their strengths, started looking for potential directors the CU could approach as needed.

Emergency Recruitment Tips
What if, despite its best efforts, a credit union is caught unprepared when one or more unexpected vacancies occur on its board of directors? Yvonne M. Evers, owner/CEO of Verona, Wis.-based YME Coaching & Consulting makes three emergency recruitment suggestions.

First, ask current board members who they might know who would be willing to serve.

Her second recommendation is a bit more controversial: Ask the CEO for names that can go to the nominating committee to be vetted. “The CEO is out in the community and may have seen someone who would be a good addition,” she says, “or may have been asked about becoming a director.”

Some people, Evers admits, have a strong negative reaction to this idea. “They say absolutely not, because they don’t want the CEO involved in choosing someone who will be his or her boss,” she says. But, she points out, the nominating committee will be making the decision.

And avoiding CEO involvement is no guarantee of a great board. “Sometimes, the chair gets friends on, and creates a clique,” she warns.

Third, Evers suggests looking at other volunteers–people sitting on the audit or supervisory committees. “They’ll know the credit union,” she points out.

Still, that’s not a guaranteed solution, Evers cautions.

“Lots of credit unions use the supervisory committee as a recruitment base,” she says. But, it should be used with care.

“The supervisory committee is very important to the credit union,” she points out. “Do you want a lot of turnover there, too?”

You should also avoid assuming that every supervisory committee member will want to make a switch, Evers says. “A lot of times, people are very committed to being on that committee,” she says.


The average director’s age was 66, but there was no feeling of urgency about succession planning.

In fact, at one point the committee presented a draft policy to the board that would have required directors to retire at age 75 or after five, three-year terms. It grandfathered in current members. “There was not a good reaction,” Evers recalls.

Then Evers conducted a survey. “We found out that within the next six years, nearly every single board member anticipated leaving,” she says. That surprised the directors, and changed attitudes: They saw turnover coming.

Now, the credit union asks people when they might be leaving every year.

Evers also sees the impact of not planning among her clients. Too often, when working with credit unions on board assessment, she finds that there’s no formal board succession plan. There’s no informal one, either, Evers adds wryly.

The results can be chaotic. “One credit union went without two board members for two years,” Evers recalls. This created a variety of problems, including a shrunken quorum. The CU finally got two former directors to return.

“You have to be proactive,” she says.

Evers points out that turnover doesn’t just happen when a director’s individual situation changes. Unanticipated board vacancies can happen when a long-time CEO retires; oftentimes a board member—or several—suddenly decide it’s time for them to go, too. And younger board members, if you can attract them, aren’t always a long-term solution; Evers says that younger directors usually don’t stay on the board as long as older ones. That’s true overall, not just in the credit union field, she says.

Consider Competencies

A number of credit union executives and boards have taken the need for director succession planning to heart. At Heartland Credit Union in Madison, Wis., President/CEO Sally Dischler, CCE, and the board are busy building a succession plan.

“We’re in the process of defining director requirements,” says Dischler, a CUES and CUES Director member. With the consensus of the board, the CU is detailing the type of individual it wants as a director. It has established a sub-committee of the board to set down requirements and qualifications.

“We’re planning ahead of time,” Dischler says. “We want to line up people. We have an aging board, and they realize that they’re getting older. They won’t be there forever. They want to work with potential board members and bring them into the culture of the credit union, which I think is great.”

The CU is likely to establish non-voting advisory board member positions. It will be looking at supervisory and asset/liability management committee members to fill these slots, although any interested parties can apply through the election process.

The most important thing, Dischler says, is to be certain that the people who are encouraged to join the board or who ask to serve are qualified. The complexity of CUs today necessitates board expertise.

CUES member James D. Holt, CCE, president/CEO of $232 million, 34,778-member Mid American Credit Union, started thinking about director succession when his board asked him to put together a succession plan for the CEO position.

Unanticipated events that coincided with the development of the CEO plan drove home the need for a board plan. One chair had a serious complication related to her Parkinson’s disease. After a period of absence, it became clear that she wouldn’t be able to return.

And the misfortune didn’t stop there. The person who took her place developed cancer, and died relatively quickly.

“When looking at it, I decided that mine was not the most important position at the credit union,” Holt says.

Today, the Wichita, Kans.-based CU has a board succession plan that is updated annually. And current directors are an integral part of putting it together.

The plan lists the core competencies the credit union needs on its board, and reflects those offered by today’s board. Directors identify their strengths and list their areas of expertise, and underscore any they may have added in the last year.

Although not all their capabilities come from their job experience, many do. For example, one director has a strong background in human resources. Another, a retired attorney, worked for a construction company for many years, and thus has tremendous experience in business-related legal issues. Yet another works as city administrator with expertise in IT. And one is a business owner who shares risk and reward insights.

The credit union divides these and other competencies into “gotta have” and “nice to have” categories.

Directors are also asked when they are likely to leave the board, and if there has been any change in that projection.

When seeking new directors, Holt says the CU first looks at members of the committees: ALM, credit and supervisory. If someone expresses interest who hasn’t been on one of these committees, a key question is how long they have been a credit union member, at Mid American CU or elsewhere, he says.

In all, Holt finds the effort of doing a board succession plan to be worthwhile. “It’s difficult enough to manage your credit union when you’ve got an experienced board, and you don’t have to hand-carry them through every event,” he points out. “We know now that if we have a sudden vacancy, we’re prepared.”

Charlene Komar Storey is a veteran credit union writer based in New Jersey.

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