Whether your CEO's departure is planned or unexpected, be prepared in advance to move your CU forward.
You may really get into the Rolling Stones performing “Time Is on My Side,” but when it comes to searching for a new CEO, you’re more likely to end up going back to the Gershwins and singing along to the classic “It Ain’t Necessarily So.”
When it comes to best practices for CEO search committees, one thing is definite: CEO searches all require time. How much? As much as possible, say experts.
That doesn’t mean that the day after you hire a new CEO, you should start looking for his or her successor. It does mean that you should have a plan in place for that eventuality, and update that plan every year or two.
What’s more, says Deedee Myers, founder/CEO of CUES Supplier member and DDJ Myers, Ltd., Phoenix, and co-founder of the Advancing Leadership Institute, every year there should be two or three board education sessions on CEO succession – not recruitment, she emphasizes. “That’s only one component,” Myers says.
More than that, she notes that credit unions should never wait until the CEO gives notice to work on a succession plan. In fact, she prefers to start 10 years out. If not, three years will do.
Myers urges boards to look at what they want the CEO’s role to be three years in the future. Envisioning it, she says, will lessen the panic that a departure announcement can create.
Myers believes in growing future CEOs in house. She says the board should get the support of the sitting CEO so he or she will serve as a mentor to possible successors. Then the word should go out that if anyone thinks they may want to become CEO in three or five years, they should say so. If the board gets any yeses, it should offer a leadership development plan.
That’s part of the reason Myers likes planning as much as a decade ahead. “Otherwise, internal candidates don’t have enough of a runway, and that’s not fair,” she says.
When a CEO is hired, the board may request that it get 12 months or two years’ notice of her intent to leave or retire, Myers suggests. Although everyone may not know their future decisions far in advance, others may plan to make changes to coincide with other life events, such as a youngest child graduating from college or an older spouse retiring.
Charles Shanley, SPHR, CFS, executive vice president of Houston-based JMFA Recruitment Services, a CUES Supplier member, says his firm is often hired six months before a new CEO is needed, and that’s a minimum time frame. Really, he adds, a year or more is needed.
He also makes an interesting point: Time can work to a credit union’s advantage in other ways. “Some retirement dates are better than others,” he says, if the new CEO is an external hire.
“March – spring – is ideal,” he says. Year-end is not good, except on the books. That’s because many top executives receive year-end bonuses from their employers. A credit union really doesn’t want to make up, say, a $50,000 bonus because they hired an executive away from another organization right before a bonus was paid out. So if the outgoing CEO is flexible about his retirement date, set it in March and figure your timeline backwards from there, Shanley advises.
Jeffrey Hamlin, chairman of the CEO search committee for $624 million Smart Financial Credit Union, Houston, says the year-and-a-half process his CU is just completing could have been finished in six months if circumstances had been ideal.
Ideal circumstances, according to Hamlin, would have included the credit union having had a written succession plan in place, a list of characteristics of the person they would be seeking, and some sense of the direction of the credit union. In fact, they had only the latter.
After all, Hamlin adds, “What are you going to do if they leave? Are you grooming someone? That gives an internal candidate the opportunity to move up.”
Not having such plans in place can lead to a free-for-all, Hamlin warns. And that’s not good for any credit union.
Charlene Komar Storey is a veteran freelance writer based in New Jersey.