Don't Spin Your Wheels

Credit unions and other organizations have long taken action to develop current and future leaders but, in 90 percent of the cases I see, it has not been strategic or targeted. When succession planning is done without defining what we expect of leaders, an organization often gets poor results.

For example, without a connection between strategy and succession planning, new leaders don’t understand what is expected of them, their team performance is below optimal, unnecessary mistakes are made, and the organization’s performance and profitability are compromised.

Much more effective is having the executive team define what leadership and management behaviors are needed to drive the credit union’s strategy. This approach to succession planning is called competency modeling.

Competency models provide an essential, integrated framework that provides leaders a clear line of sight for future talent by defining what success looks like and prioritizing key behaviors. In all, developing a competency model can help you make the most of your leadership selection, development and succession processes.  

Competency Model Design

Before you create a competency model for your organization, define what you mean when you ask people in your credit union to become more effective leaders. For example, a possible definition would be the ability of leaders to drive growth, work independently across the organization, and foster change and improvement with agility.

A second preparatory step is to gather a cross-functional group of leaders, including human resources and talent managers. The objective of this group will be to identify the organization’s human resource and talent development processes, using the competency model as the foundation. The idea is set up your organization to regularly bring talented people in the door, provide them with performance feedback and coaching,  and leverage rewards and recognition to foster the improvements that are needed.

Once the preliminaries are addressed, you can proceed with developing a com-petency model using these key steps:

1. Agree on the project goal, organizational requirements and current state. Example goal: “Accelerate development of emerging and future leaders.” Example requirement: “Keep project investment at a reasonable level.” Example current state: “We are losing 50 percent of emerging talent.”

2. Differentiate between general leadership requirements and critical competencies. Illustrate the difference by collecting success stories from people who are already demonstrating the qualities you hope to cultivate.

3. Develop a preliminary competency framework. This is a chart or spreadsheet listing the most relevant leadership and management competencies for your CU.

4. Create competency definitions and examples of high performance behaviors.

5. Validate the reliability for your new leadership competency model. The most important and common way to do this is to survey your organization’s leaders about whether the identified competencies are truly essential for success.

6. Develop a communication and change management plan/toolkit.

7. Pilot, refine, and continue integrating the model for additional return on your investment.

Busting Modeling Myths

Competency modeling is not for the faint of heart. Here are prominent myths about them and corresponding realities.

Myth 1: All competency models are the same. I’ll just use one that is used by another credit union, or make one up by looking at others being used.

Reality: Your model needs to make distinct the leadership skills your organization needs to succeed and become more competitive. Discovering what makes you unique and what organizational leadership looks like for your credit union is priceless.

• Do not accept a model created by your staff or a consultant by combining a few models into something new. 
• Build buy-in and commitment for your new model by seeking input from leaders people see as credible.

Myth 2: This is HR work. As the CEO, I can simply delegate it to my staff.

Reality: Your human resources leaders will play an invaluable role setting up these processes and engaging leaders, but as CEO, it is your project to lead. So as you lead the project team, be clear about the common and unique roles for you, your staff and any outside consultant you’ve engaged.

• As the senior leader, you are in the best position to facilitate the definition of leadership success, clarify roles and keep work on schedule.
• Take the opportunity to help others navigate competing priorities and workloads by running interference and helping to re-prioritize work.

Myth 3: Leadership competencies are 100 percent of the definition needed for success.

Reality: What are the information elements you use as a CEO to successfully navigate your career? I’m sure it’s not one document. Four elements—with one being leadership competencies—are the best predictors for success:

• Strategic direction: What direction and outcomes is your organization heading toward in the near future? Which initiatives and goals are your top priorities?
• Professional responsibilities: What responsibilities are key to the leadership role? Which occur individually and which require collaboration with other leaders?
• Leadership competencies: Given leaders’ role and scope of work, which competencies are essential to success? How do the expectations build as leaders effectively grow from first-level leaders to mid-managers and, ultimately, executives?
• Organization culture: How is work best accomplished in your organization? What are the written and unwritten ways to achieve success?

Myth 4: Once we have the model developed and validated, our work is done!

Reality: Coming up with the competency model that defines leadership roles and success is a great achievement, but it is not the end game. Until you have successfully communicated the new model, developed the leadership skills with those impacted, and spent time planning how to best navigate change and transition, you still have some work to do.

• Bring a group of strong and reputable leaders from within the credit union together—typically those held in high regard across the organization—to inform you how to best implement the new model, and what to avoid.
• Make a list of things leaders can stop doing, because they are outdated, and will contradict the new competency model.

Myth 5: The more competencies and HR policies we have, the better!

Reality: Take the same lesson from goal setting and apply it to competencies: Fewer is better. At the same time, don’t simply group specific competencies into categories and think you have achieved fewer. In the end, you want those competencies that are critical to leadership success, and those that will differentiate you from competitors.

• Don’t forget to validate the competencies you have chosen and defined. Bringing in the larger group of highly regarded leaders to tell you whether what you have developed is truly relevant to their work.
• Don’t take on the easy choices and leave the difficult out of the mix. I’ve seen too many companies avoid relationship-building and emotional intelligence for the wrong reasons.

There are certainly other cautionary tales, but this list covers many of the most common. Think of competency models as the North Star for your leaders and executives. They help leaders navigate the unknown, make difficult decisions, align the work of the team, manage change, and raise your organization’s ability to compete in dynamic markets.

We have designed and implemented competency models over the past 20 years. Credit unions considering their value understand they are not the silver bullet. Leaders will need to use them well, and to capture the full ROI, you will need to integrate the tool across your HR and business platforms.

Dan Loichinger is founder, president and principal coach at Loichinger Advantage LLC, an executive coaching and development firm located outside Madison, Wis. As a TEC Chairman, he facilitates CEO roundtables that provide developmental experiences for top executives. He and his firm associates have partnered with CU, industry and non-profit clients for 15 years.