Succession Planning Dos and Don'ts

Credit unions want stakeholders involved in succession planning to feel respected throughout the process—that they’ve had the opportunity to grow and develop.The following are guidelines for doing succession planning the right way:

Succession Dos

• Start the process with a philosophical conversation at the board level, rather than having the CEO and human resources executive present their versions of a process.
   
• Create a forward-looking profile projecting the CEO’s role in the future. Three years is a viable starting point.
   
• Remember the profile is organic, and update it with each strategic planning cycle and with major market shifts.
   
• Include leadership competencies, values, and motivating factors in the profile.
   
• Create development plans for internal candidates.
   
• Create a dashboard to use as a guide in objective evaluation of internal candidates.
   
• Refresh the dashboard every year after updating candidates’ personal plans.
   
• Use external online leadership assessments to produce quantitative data to augment subjective assessments. Take these assessments down one or two layers deeper in the organization to uncover potential candidates for the long term.
   
• Conduct a pilot stress test to simulate an unexpected change in the CEO role. This entails an assessment of internal candidates in two timeframes: immediate emergency mode and a medium- to long-term timeframe. For example, how does the internal candidate stack up against the CEO requirements today? And, if a development plan supports the internal candidates over the next three to five years, what is the possibility of a promotion to CEO?
   
• Have a dialog on basic questions: Who is our drop-in candidate, someone who is ready, today, to be CEO? In whom do we invest today to prepare for the future? What are anticipated and unanticipated culture shifts? How will our current governance model work with a new CEO? What support does a new CEO need? Are we willing to invest in the success of the new CEO through onboarding and transitional coaching?
   
• Evaluate external recruiters in readiness for an external search. Discuss your philosophy of hiring a recruiter and the type of recruiter, his/her approach and methodology, and whether these are in alignment with your needs.
   
• Have open communication with internal and external candidates about the others’ existence during the search process. One caveat in doing this: High quality external candidates may self-select out of the search because of the impression they might be brought in just so the board says it looked externally while all along the internal candidate has the upper hand.
   
• Inform your internal candidates about your process; be sure they do not get updates about your succession planning and recruitment efforts first from external sources.
   
• Keep building trust throughout the process.

Viable, effective, and structured succession planning supports your strategic initiatives, improves employee engagement, and gives employees a sufficient sense of importance to invest in development.

Succession Don’ts

Succession planning goes wrong primarily when internal talent is misunderstood and the process is mis- or under-managed. Credit unions may have a plan, but if the plan is not strategically worked and periodically updated, it does not constitute true succession planning. Here are some characteristics of poor succession planning:

• Board members fear no one internally can take the place of their CEO and haven’t created development opportunities for No. 2s. The CEO doesn’t challenge the board’s assumption that a viable No. 2 isn’t in the credit union.
   
• The board expects the current CEO to take the lead on deciding who will be the next CEO. (In truth, the succession planning process is the board’s responsibility.)
   
• Board members lack exposure to potential successors and therefore have limited confidence in internal candidates’ competencies.
   
• Succession planning is a closed process wherein potential internal candidates do not know the timeframe and expectations. Thus, they are not properly groomed for the position.
   
• The CEO may be confident and optimistic about the CU’s No. 2, yet provides that person little relevant exposure to the board.
   
• Boards may have an unrealistic view of potential external candidates as being more exciting and experienced than internal candidates.
   
• Boards remember that their current CEO was an external candidate, and that worked out so well, they wish to replicate that process without giving internal candidates their due consideration.
   
• Boards have the myopic belief that an internal candidate will get the job and neglect to look outside as part of due diligence.
   
• Succession planning doesn’t extend beyond the No. 2 and C level.

Poor succession planning transpires for a simple reason: The conversation about this key topic has gone wrong. Conversation about succession is not an overnight or drive-by event, but ongoing, iterative, generative and, at times, emotional and stormy. If boards enter these conversations with blind spots and a certain mindset, the succession planning process will be short-lived and narrow. And these negative characteristics will transfer to the vision, strategy, and execution of strategic plans. Success starts with good conversation about philosophy, approach and desired outcomes.

Deedee Myers is CEO of DDJ Myers Ltd., Phoenix, a CUES Supplier member and strategic partner.