National Association of Federal Credit Unions l www.nafcu.org

Succession Planning:

The Internal Search

Presented by

Loretta P. Dodgen, Ed. D.

HCS Group

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National Association of Federal Credit Unions l www.nafcu.org

• The transition from one CEO to another is a

critical moment in the life of the credit union.

• Succession planning for the CEO role is a key

responsibility for Boards.

• A properly designed and executed succession

plan is critical for a successful transition.

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Succession Planning

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• Research-The success of an organization is

determined by the effectiveness of the leader.

• Increased scrutiny requires Boards to ensure

that important decisions are based upon

detailed, complete, and objective information.

• Failure to plan is a strategic risk.

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Succession Planning

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Additional Benefits

• Framework for senior leadership

development aligned with strategic needs

• Ongoing analysis of the position needs

• Clarification of key expectations

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Succession Planning

National Association of Federal Credit Unions l www.nafcu.org

"Would you tell me, please, which way I ought to go from here?" "That depends a good deal on where you want to get to," said the Cat. "I don’t much care where--" said Alice. "Then it doesn’t matter which way you go," said the Cat. "--so long as I get SOMEWHERE," Alice added as an explanation. "Oh, you’re sure to do that," said the Cat, "if you only walk long enough.“ (Alice's Adventures in Wonderland, Chapter 6)

National Association of Federal Credit Unions l www.nafcu.org

Phase One: Planning for the Transition

• Outline the strategic direction for the credit

union over the next 5 to 10 years

• Identify the qualities, skills and experience

required for those leading the credit union in

order to attain the strategic vision

• Outline the Compensation Philosophy and

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Succession Planning

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Phase One: Planning for the Transition

• Review the organizational structure to ensure

alignment with the strategic direction and

needs of the credit union

• Outline the Succession Process

• Roles and responsibilities

• Process for planned and unplanned exits

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Succession Planning

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Best Succession Practices for Boards

• Board and CEO discussions on long-term

succession planning should begin 3 to 5 years

prior to the time a CEO transition is expected.

• The full board should be involved.

• Open and ongoing dialogue should occur

between the CEO and the Board on the topic of

succession planning, including a formal annual

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Succession Planning

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Best Succession Practices for Boards

• Board members should be given ongoing

opportunities to interact with internal candidates

in various settings.

• The succession should be staged but horse races

should be avoided.

• Developing internal candidates is generally

preferable to external recruitment.

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Succession Planning

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Best Succession Practices for Boards

• The outgoing CEO should exit immediately or

have a limited, clearly defined role.

• A comprehensive emergency CEO succession

plan should be in place at all times and reviewed

at least annually.

• Consider the political and emotional impact of

the transition. Oliver Wyman, NACD

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Succession Planning

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Phase Two: The Search

• Conduct an internal and external scan

• Do you have qualified candidates within

the current staff?

• Is there a significant difference between

the internal talent and that available within

the external market?

• Is the credit union positioned to attract

external talent and retain internal talent?

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The Internal Search

National Association of Federal Credit Unions l www.nafcu.org

Phase Two: The Search

• Outline a timeline that allows for a

comprehensive search and selection.

• Move as quickly as possible to minimize

disruption.

• Ensure that volunteers are able to commit to

the time.

• Determine if outside consultant will be used.

• Include triggers for external

search.

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The Internal Search

National Association of Federal Credit Unions l www.nafcu.org

Phase Two: The Search

• Clearly communicate the process and criteria.

• Will you post and accept applications from

interested internal candidates?

• Will you approach qualified candidates and

invite them to participate?

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The Internal Search

National Association of Federal Credit Unions l www.nafcu.org

Phase Two: The Search

• Treat all candidates graciously and fairly.

• Be consistent.

• Include an objective evaluation component.

• Avoid courtesy interviews.

• Maintain confidentiality.

• Compensate a successful internal candidate

as you would expect to compensate a

successful external candidate.

• Plan ahead. Insert Your

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The Internal Search

National Association of Federal Credit Unions l www.nafcu.org

Succession Planning:

The Internal Search

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Questions?