Credit Union Executives Society (CUES) 5510 Research...

ii

Information in this manual is accurate as of the time of publication and consistent withstandards of good practice in the general credit union and publishing communities.However, as research and practices advance, standards may change. We recommendthat readers evaluate the applicability of any recommendations to their particular situa-tion and in light of changing standards.

The views presented in this manual are those of the authors. They do not necessarily representCUES’ views.

Credit Union Executives Society (CUES)5510 Research Park DriveMadison, WI 53711Toll-free: 800.252.2664E-mail: [email protected]

Holly Poast, VP/products & servicesCynthia Robey-Duncomb, products & services managerTheresa Witham, copy editorShawn Krohn, cover designerInterior design by Lorraine Ortner-Blake, freelance graphic artist

Copyright © 2007. All rights reserved.

CUES grants permission for credit unions that purchase this manual to reproduce itscontents for use at their individual credit union. Any other use or reproduction in wholeor part without written permission of CUES is prohibited.

Printed in the United States of America

ISBN: 1-933081-52-X

This manual is also available in an electronic format at cues.org.

A complete catalog of our manuals is available the CUES Web site at cues.org, choose “Products”from the “Shop” drop-down menu.

SUCCES SION PLANNING ES SENTIALS

C R E D I T U N I O N E X E C U T I V E S S O C I E T Y

iii

CONTENTSMEET THE CONTRIBUTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

INTRODUCTION SUCCESSION PLANNING AS A STRATEGIC IMPERATIVE . . . . . . . . . . . . . . . . . . . 9

CHAPTER 1BUILDING LEADERSHIP FROM WITHIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Strategic Succession Planning Case Study:CommunityAmerica Credit Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

CHAPTER 2 FINDING AN EXECUTIVE THROUGH EXECUTIVE SEARCH . . . . . . . . . . . . . . . . . 39

CHAPTER 3 THE ROLE OF COMPENSATION IN EXECUTIVE SUCCESSION PLANNING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

CHAPTER 4 MAKING THE CASE: LEADERSHIP DEVELOPMENT FOR CREDIT UNION BOARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

CHAPTER 5 THE ROLE OF THE GOVERNANCE AND LEADERSHIP COMMITTEE IN BOARD DEVELOPMENT AND SUCCESSION PLANNING. . . . . . . . . . . . . . . . . 83

Board Development Case Study: NuUnion Credit Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

CHAPTER 6 POLICY GOVERNANCE®: A POWERFUL RESPONSE TO CHALLENGES THAT TRANSFORM BOARD WORK AND SUCCESSION PLANNING . . . . . . . . . . 103

CONCLUDING THOUGHTS AND A CALL TO ACTION . . . . . . . . . . . . . . . . . 131

APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

H E L P I N G C R E D I T U N I O N S P R E PA R E F O R T O M O R R O W

1

Introduction and Chapter 1

Deedee MyersCofounder, Advancing LeadershipInstitute, DDJ Myers, Ltd., Phoenix, Arizona

Deedee Myers is cofounder of the AdvancingLeadership Institute, an organization committed to cre-ating sustainable leadership practices for effectiveaction within organizations, and CEO of DDJ Myers,Ltd., an executive recruitment firm well regarded in allfinancial domains. DDJ Myers and the AdvancingLeadership Institute are sought out by financial institu-tions for their work in executive search, candidatedevelopment, organizational leadership, advancing boardleadership, strategic advancements, leadership coaching,

Meet theContributors

2

management training, coaching the coachand, of course, strategic succession plan-ning.

Myers is a Master Somatic Coach andCertified Executive Coach and has morethan 16 years experience in competencybuilding and leadership development forfinancial firms. Her work with clientsfocuses on advancing leadership fromwithin and has helped her and her firmcreate more than 200 succession plans.Myers frequently speaks for credit unionassociations and organizations and has lenther writing skills for various publications.

Myers has a B.S. in marketing fromArizona State University, Master SomaticCertification from the Strozzi Instituteand Executive Coach Certification fromthe Hudson Institute. She is certified inEQ-i, DISC and other assessment tools.Contact Myers at (800) 574 8877 or visitwww.ddjmyers.com.

Chapter 2

Bill WestwoodSenior Client Partner,Korn/Ferry International,Chicago, Illinois

Bill Westwood is a senior client partner inKorn/Ferry’s Chicago office and a leaderof the firm’s Leadership DevelopmentSolutions Practice, focusing in particular

on financial services clients. Over the pastsix years, he has directed more than 50large, executive-level assessment engage-ments for prominent clients of the firm,and he also led the initial global rollout ofthe integration of assessment intoKorn/Ferry’s executive search practice.Westwood joined Korn/Ferry fromMotorola, where he was director of globalleadership and organization develop-ment for the communications enterprise,the largest single business unit withinMotorola. Westwood played a criticalrole in designing a state-of-the-art leader-ship supply process for the company. Healso drove change in the areas of organi-zation design, leadership assessment andsuccession planning. His experience alsoincluded executive coaching, executivecareer planning and executive develop-ment with Motorola executives.

Prior to joining Motorola, Westwoodwas a principal and human resourcesstrategist for two international consultingorganizations. During his tenure as a con-sultant, he served clients in virtuallyevery industry and sector. For theseclients, he delivered services in a widenumber of areas, including strategy,organization design, reengineering,organization effectiveness, performancemanagement, training and executivecompensation. Westwood began his pro-fessional career managing contracts andIT projects for Chicago and San Francisco



3

city governments. Contact him [email protected].

Edward SantimauroSenior Client Partner,Korn/Ferry International,Chicago, Illinois

Edward Santimauro is a senior clientpartner in the Chicago office ofKorn/Ferry International. He is an activemember of the firm’s Financial Servicesand Professional Services practice areas.In the Financial Services area, Santimaurohas focused most of his time in commer-cial and regional banking and hasworked on senior level assignments,including CEOs, presidents and seniorexecutives. He has been involved insearches in the area of general manage-ment, risk management, retail operations,wealth management, private banking,credit and marketing.

Santimauro has also been involved inthe area of investment management, par-ticularly in the public funds area. He hasworked for such clients as Fifth ThirdBank, Charter One Bank, Capital One,Comerica, Inc., National City, and thestates of Wisconsin and Illinois.

Previously, Santimauro was the directorof professional recruitment for HewittAssociates and VP/professional recruit-ment for Kidder, Peabody in New York.He was involved in recruiting senior finan-

cial professionals in the areas of investmentbank, research, asset management andretail brokerage. His career includes a sim-ilar role at Chemical Bank, now Chase/J.P.Morgan, where he was director of profes-sional staffing and MBA recruitingprograms for McKinsey & Co. Santimauroholds a B.A. in political science from St.John’s University in New York. Contacthim at [email protected].

Chapter 3

Charles E. CarlsonPresident & CEO, enetrix(Carlson Dettmann Consulting),Middleton, Wisconsin

Charles E. Carlson, CCP, is president/CEO of enetrix. Company servicesinclude the design and management ofonline surveys, compensation consultingservices and e-commerce business solu-tions. Enetrix specializes in providingInternet-based database and content man-agement solutions for trade and individualmember associations (www.enetrix.com).

Carlson has extensive experienceworking with associations and more than30 years experience as a human resourceexecutive and consultant to public, private,and not-for-profit employers. Enetrixprovides human resource consultingthrough its Carlson Dettmann Consulting

M E E T T H E C O N T R I B U T O R S

4

division. Carlson is a frequent publicspeaker on behalf of enetrix clients.

Carlson holds a master’s degree inpublic administration from the Universityof Wisconsin-Madison, has completedextensive additional graduate work at theIndustrial Relations Research Institute,University of Wisconsin–Madison, andhas a bachelor’s degree from the Universityof Illinois-Urbana in political science andeconomics. He can be reached at608.662.8183 or [email protected].

Scott DettmannVice President & Principal,enetrix (Carlson Dettmann Consulting), Middleton, Wisconsin

Scott Dettmann is an expert in all phasesof compensation planning and adminis-tration. He has conducted compensationprojects, including numerous compensa-tion studies for employers throughout theUnited States, plus international compa-nies. He also has been CEO of a largebenefits management firm and is anexpert in deferred compensation systems.Dettmann has an MBA from DrakeUniversity and a B.S. from the Universityof Wisconsin-Eau Claire. Contact him [email protected].

Chapter 4

William A. BrownAssociate Professor, Bush School of Government & Public Service, Texas A&M University

William A. Brown is an associate pro-fessor in the Bush School of Government& Public Service at Texas A&M Universityand serves as the program director for theCertificate in Nonprofit Management. Heteaches graduate courses in program eval-uation and nonprofit management. Hereceived a bachelor’s degree in educationfrom Northeastern University with a con-centration in human services. He earnedhis masters and doctorate fromClaremont Graduate University inOrganizational Psychology.

Prior to joining Texas A&M University,Brown was an assistant professor atArizona State University, where heworked as the program coordinator of theCertificate in Nonprofit Management andLeadership and was an affiliated facultymember with the Center for NonprofitLeadership & Management. He hasworked with numerous organizations inthe direct provision of services, con-sulting and board governance. Recentprojects include consulting with BigBrothers Big Sisters on evaluation initia-tives and working with the Filene


C R E D I T U N I O N E X E C U T I V E S S O C I E T YC R E D I T U N I O N E X E C U T I V E S S O C I E T Y

5

Research Institute on the role of the creditunion board during mergers and acquisi-tions. Other clients include BoardSource,William Smith Institute for AssociationResearch, Red Cross and the YMCA.

Brown’s research focuses on nonprofitgovernance and organizational effective-ness. Recent research has explored therole of the board in community founda-tions and incentives for participation byboard members. He has authored orcoauthored more than 15 research journalarticles, numerous technical reports andseveral practice-oriented publications.Presentation outlets include more than 20national research conference presenta-tions and regional and nationalprofessional training workshops. Hiswork is published in various outlets,including International Journal of VolunteerAdministration, Public Performance andManagement Review, Nonprofit andVoluntary Sector Quarterly and NonprofitManagement & Leadership. Contact him [email protected].

Chapter 5

Berit Lakey, Ph.D.Lakey Consulting, Silver Springs, Maryland

Over the past 15 years, Dr. Berit Lakey’sconsulting practice has focused on issuesconcerned with governance of nonprofit

organizations. During her professionalcareer, she has also filled such diverseroles as teacher, trainer, staff adminis-trator, executive director and boardmember. Among her clients have beenboards of credit unions, symphonyorchestras, foundations, religious organi-zations, associations and educationalorganizations. She has also served as anadjunct assistant professor in the grad-uate school at the University of MarylandUniversity College.

Prior to starting her consulting practice,Lakey served for many years as a seniorconsultant with BoardSource (previouslyknown as the National Center forNonprofit Boards), the premier resourcefor practical information, tools, trainingand leadership development for boardmembers of nonprofit organizationsworldwide. While there she providedindividualized board consulting andtraining, conducted workshops for boardmembers and board consultants, and wasactively involved with the BoardSourceboard self-assessment program. She con-tinues to serve BoardSource clients inaddition to her own.

Lakey is the author of The Board BuildingCycle, published by BoardSource (2007);CU Board Governance Guide & BestPractices, published by CUES (2006); andother publications. She holds a master’sdegree in organizational developmentand a Ph.D. in human and organizationalsystems from the Fielding Graduate


6

University in Santa Barbara, California.Contact Dr. Lakey at [email protected].

Sandra R. Hughes, Ph.D.Hughes Consulting Group, Inc.,Sarasota, Florida

Dr. Sandra R. Hughes is a governanceconsultant for nonprofit boards andsenior management. She facilitates boardretreats, leads programs, conducts gover-nance training, and works withindividual organizations on complexnonprofit governance change projects.She has led educational and training pro-grams on nonprofit governance, strategicthinking and planning, organizationalculture and values, effective teamworkmeetings and other related topics.

During her many years of experience inthe nonprofit world, Hughes has workedwith hundreds of boards. She has pre-sented numerous seminars andworkshops, and her expertise has helpedguide nonprofit organizations through avariety of subjects. She has also writtenarticles on such diverse issues as non-profit board management, thepsychology of humor and the role ofsports in society.

Prior to her work as a consultant andfacilitator, Hughes held a variety ofsenior management positions with non-profit organizations, foundations anduniversities, including BoardSource, the

United States Rowing Association, theAmerican Bar Association, GeorgeWilliams College, Levi Strauss &Company, the Levi Strauss Foundationand the University of Tennessee.

Hughes received her bachelor’s degreefrom the University of Maryland. Shealso holds a masters and doctorate ofeducation from Northern IllinoisUniversity. You can reach Dr. Hughes [email protected].

Chapter 6

Eric Craymer and Susan StrattonPrincipals, Partners in Policy Governance, Lansing, Michigan

Eric Craymer, MBA, and Susan Stratton,M.Ed., are the principals of Partners inPolicy Governance®, a consulting firmspecializing in assisting boards towardgoverning excellence. They have beentrained at the Policy Governance Academy™

under the tutelage of John and MiriamCarver and actively participate in theInternational Policy Governance Association.Further background information andcontact information for the authors can befound at www.policygovpartners.com.



7

Meet the Editor

Karen BankstonPrecision Prose, Stoughton, Wisconsin

Karen Bankston grew up with creditunions. Her father was a director for hisfactory’s credit union, and her mother,though she was a banker, never missedthe annual spring credit union conferencefor directors and their spouses. Karen hasbeen a regular contributor to Credit UnionManagement magazine since 1994 andis author/editor of several CUES publica-tions, including Director Tool Kit,Optimizing the CEO/Board Relationship andCareerQuest: Mapping Your ProfessionalSuccess. In addition, she has written avariety of training manuals for creditunion employees on marketing, memberservice and technology. Karen is the pro-prietor of Precision Prose, Stoughton,Wis. You can reach her via e-mail [email protected].

Acknowledgments

Special thanks to Dennis Pierce ofCommunityAmerica Credit Union andRick Laber and Steve Winninger ofNuUnion Credit Union for sharing theirstories for the case studies featured in thismanual.


9

SuccessionPlanning as a StrategicImperative

I N T R O D U C T I O N

By Deedee MyersAdvancing Leadership InstituteSM, DDJ Myers, Ltd.

Succession planning is having the right

people in the right place at the right

time. Strategic succession planning is

the blueprint for building the credit

union’s human potential to achieve

strategic initiatives.

10

Making goals is easy; framing them in astrategic context becomes more difficult,and ensuring that the talent exists into thefuture to reach those goals is where therubber meets the road. Strategic succes-sion planning can deliver on the promiseof those goals by ensuring a smooth tran-sition of key leadership to build a cultureof continuous learning and developmentat all levels.

Strategic succession planning is a criticalsuccess factor for credit unions to fulfillon their long-term strategy. More thanmerely an academic statement, if we payattention to what it really means, itbecomes a roadmap for embodying newleadership and how to practice successionplanning integrated as a part of the organiza-tional culture. The shift for credit unionsis to move toward advancing leadershipfrom the inside out to better practice themantra of “people helping people.”

Many credit unions today offer the samecore products and price and promotethem in similar ways. Banks offer thesame or competitive products. Both arejockeying for position by focusing onprice and promotion. Where will you finda compelling difference for your creditunion in today’s crowded landscape?

A major competitive difference is con-sciously choosing how to be in therelationship that starts with the memberwalking in the door. That connection withmembership is built on mutual regard

and cooperation. That relationship withthe member, whose hand is on the doorready to enter your branch, starts at theCEO level.

The CEO sets the tone for everyemployee-member relationship in how heor she pays attention to his or her relation-ship with others. In organizations with anintegrated leadership developmentprocess that identifies and fosters whatcompels high performers to want to workfor you, the product positioning, pricingand promotion are still challenging, butthey are met head on, managed moreeffectively and result in valuable utiliza-tion of core employee competencies.

Leadership development is most effec-tive when it is supported at the boardgovernance level. Credit unions havegrown in size and complexity as a meansto better serve their members. As a result,they need a more intentional approach toseek out volunteers from their wideningfields of membership to serve on theboard of directors. And they must becommitted to developing the governanceand leadership abilities of their directors.The second part of this manual explorespurposeful board succession planningand leadership development.

According to a survey of credit unionCEOs conducted in September 2007, 70percent of respondents said their organi-zation has a formal succession plan inplace, but less than half of the CEOs



11

counted themselves as very satisfied with“the plan’s ability to provide effectivelyfor your own succession.” Just over 47percent selected “very satisfied,” while anear equal percentage chose the rating“moderately satisfied” and 6 percent saidthey were not satisfied with their creditunion’s succession plan. The survey, con-ducted by enetrix, was sent to CEOswhose credit unions participate in theannual CUES Executive CompensationSurvey. The succession planning surveyreports these additional results:

• About 15 percent of responding CEOssaid their board had already identifiedan internal candidate to become thecredit union’s next chief executive,while a near equal percentage saidtheir position would most likely befilled by an external candidate.

• Seven in 10 respondents said the deci-sion about an internal vs. external CEOsuccessor had not been made, but anequal number reported that their creditunions had a least one successor whocould step into the position.

• More than half (56 percent) of respon-dents said their credit union’ssuccession plan focused only on theCEO position.

These survey results support the needfor a strategic approach to leadershipdevelopment and executive successionplanning, the subject of this manual.

Chapter one explores leadership devel-opment within the credit union. Whetheror not your next CEO comes from withinthe organization, the best way for thecredit union to achieve its strategic objec-tives is to build and maintain a culture ofleadership. This chapter outlines 10 stepsfor strategic succession planning, with anemphasis on identifying and supportingthe executive development of internalcandidates.

Conducting an external search for CEOcandidates and working with an execu-tive recruitment firm is the focus ofchapter two. We offer an overview of thetwo main types of search firms, criteriafor selecting the right firm to assist inyour search for CEO candidates, andstrategies for an effective interview andselection process. Chapter three examinesthe role of executive compensation instrategic succession planning, both inretaining a high-performing chief execu-tive and in recruiting a successor. Awell-designed long-term compensationplan plays an especially important role intying talented executives to your organi-zation and ensuring their continuedsuccess.

In chapter four, we shift our emphasisfrom executive succession planning toboard development and succession plan-ning, beginning with an overview of recentresearch into existing board practices foridentifying board candidates and ensuring

S U C C E S S I O N P L A N N I N G A S A S T R AT E G I C I M P E R AT I V E

12

the best possible board composition.Chapter five explores the role of the gov-ernance and leadership committee inreplacing traditional nominating commit-tees and reinforcing the concept ofintentional board development. Chaptersix discusses board development at creditunions that have adopted PolicyGovernance® as their governance framework.

A purposeful approach to CEO succes-sion planning and board developmenthas a profound impact on the entireorganization. Strategic succession plan-ning is about aligning your strategic plan,business initiatives, profitability andmember satisfaction to the knowledge,skills, ability, capacity and performanceof the credit union’s people now and inthe future. Recognizing what we do welland, more importantly, can and want todo well: provide a competitive differentiation.



1

13

BuildingLeadershipfrom Within

C H A P T E R

By Deedee MyersAdvancing Leadership Institute, DDJ Myers, Ltd.

Recent research on CEO succession

in American companies identifies dra-

matic differences in executive turnover

depending on whether the CEO was built

up internally or hired from the outside.

14

In a May 2007 Harvard Business Reviewarticle, authors Kevin Coyne and EdwardCoyne reported on their study of 1,000companies from 2002 to 2004. Turnover inthe ranks of senior executives at thosefirms varied based on whether a newCEO was promoted from within or exter-nally recruited, in comparison with nochange in the chief executive position:

No change in CEO 17.0% turnover CEO promoted from within 22.0% turnoverCEO externally recruited 33.0% turnover

When the study looked specifically at“involuntary turnover,” the rates wentlike this:

No change in CEO 7.5%New CEO promoted from within 12.5%Outside CEO 26.0%

We need to pay attention to our peoplefirst so that they can be of service toothers in a meaningful way. If wedevelop people in such a way that theytruly believe, from their deep core, thatthey make a difference in the creditunion, then our business and strategic ini-tiatives will land with more innovation,creativity, clarity and care.

We have control over our own behavior,values and attitudes, and nothing else.Our behavior is an outward expression ofour values. If we value providing an envi-ronment to encourage creativity andinnovation, then our people developmentprograms will be masterful. How we seekout self-mastery every day influences ourleadership behavior, innovation and uti-lization of resources to produce effectiveresults while being in meaningful rela-tionships with those we work with everyday. We build mastery in others by firstbuilding it in ourselves. As Ron Westad,CEO of Arizona Federal Credit Union,puts it:

Product, price, and promotion—isn’t that where credit union leadersshould place their emphasis? Afterall, isn’t value creation our primarypurpose and isn’t this achievedthrough superior products pricedbetter than the competition andmade relevant to our membersthrough savvy marketing efforts? Inour credit union world of “peoplehelping people,” what we do andhow we do it tends to receive themajority of our focus. Academicallyand intellectually, this is the world Icame from. And as I continued towork in this world, another questionoccurred to me: Why is it that eventhe most accomplished credit unionsthat do so much good by their mem-



15

bers may still have dissatisfiedleaders (and employees)? And withthat question, I have changed myworld from a focus on “how to do”to a focus on “how to be.”The focus is on greater self-aware-ness and controlling (or moreeffectively managing) the only thingwe can control—ourselves. It’s alsoan inward focus on the employees ofthe credit union, not outward on themembers. With this inside-out focus,we can create a new world of possi-bilities. Effective responses tobreakdowns, an authentic and cen-tered presence with others, greatercompetency in accepting individualdifferences, and a greater under-standing of “how to be” results inmore effective member service andgreater value creation for members.It also results in influential leadersand satisfied employees. It is theprocess of developing leaders fromwithin. The value creation processbecomes more successful if eachindividual employee increases his orher own satisfaction.

Strategic succession planning, if man-aged with intent and purpose, is aninnovative way to attract talent, developemployees, motivate the right behavior,live and work with values, and retain thehighest performers. The process needstime to evolve and shape itself to meet the

desired results of your credit union. Itwill take time and patience fueled by adeep commitment to be a developingorganization for the sake of leadershipcontinuity.

As more credit unions shape themselvesto effectively develop strategies for futureneeds for people talent and their passionfor the work, they will attract the bestpeople and motivate the right behavior.This requires recruiting and retaining thebest performers, cross-training, anddeveloping depth in targeted competen-cies and experience.

A leadership culture is one in whichhuman development is supported,encouraged and rewarded. Individualsare always on the prowl for new talentand display an eagerness to build itwithin the organization. Building a lead-ership culture shifts the leadership powerfrom the old top-down structure to anenvironment in which every person ful-fills his or her potential and adds valueboth strategically and tactically. Allemployees participate in building afuture for themselves that connects theirindividual powerful offer into the organi-zation’s purpose.

In its white paper “Trends in HumanCapital Management: The EmergingTalent Management Imperative,” the con-sulting group Knowledge Infusion offersthis perspective:

C H A P T E R 1 : B U I L D I N G L E A D E R S H I P F R O M W I T H I N

16

It is estimated that organizationsspend anywhere from 40 to 70 per-cent of their total operating budgeton payroll and other direct employ-ment expenses. And yet very feworganizations make decisions abouttheir people with the same disci-pline and confidence as they doabout money, clients and tech-nology. Organizations that focus onmaximizing their investment inpeople, rather than administering it,understand they will gain a signifi-cant competitive advantage.. . . It is imperative that organizationsintegrate a highly functional talentmanagement solution across allfacets of the business. It’s not a ques-tion of if an organization needs to dothis, but rather when and how .…Traditionally, organizational growthhas been enabled by hiring morepeople. However, today’s economicenvironment requires that the pro-ductivity of existing workersincrease before new headcount isconsidered. Organizational growthhas transformed from “quantity oftalent” to “quality of talent.” Asorganizations seek new ways ofimproving workforce productivity,“talent management” has become avital element in establishing ahuman capital management.

The process defined in this chapter is astraightforward, commonsense approachto building a strategic succession planningculture supported by the development oftalent within your credit union. Byassessing your organization’s “appetite”for strategic succession planning—thepotential for enhancing your currentapproaches to this critical process—youbegin to lay the groundwork for leader-ship development. The 10-step processpresented here connects succession plan-ning directly with the basic processes thatsupport successful organizations—namely,strategic planning and fostering talentdevelopment among all employees. Theaccompanying forms and sample docu-ments are blueprints to shift andstructure for your own needs.

An Appetite forStrategic SuccessionPlanning

An appetite for succession planning is themeasure of commitment, breadth anddepth of integrating it into an organiza-tion. At one end of the scale of appetitesfor succession planning is an appetizer; atthe other end is a full five-course meal atthe center of a memorable evening withgood people in rich conversation over fine



17

dining. There is no right or wrong placeon this scale. It depends on your creditunion’s current practices in successionplanning and executive development andwhat you hope to achieve with theseprocesses. The “appetite” is a matter ofwhat a commitment to succession plan-ning could produce, not how difficult itwill be to implement. To assess yourcredit union’s appetite, you need to knowwhere your starting place is and whereyou want to arrive.

Implementing succession planning canhappen in one of two ways. The first, theRegulator Satisfier, aims to assuage stateand federal regulators that the creditunion has a plan in place to comply withall the rules regarding preparation forCEO succession. The second, StrategicSuccession Planning, creates a grounded,foundational, holistic process that goesdeep within the credit union to build aninfrastructure for continuous learningand people development.

The Regulator Satisfier is sometimes thefirst step toward Strategic SuccessionPlanning. It starts with the need to fulfilldirectives from your examiner, but it alsomay provide the board with a new anddifferent way to view CEO successionand spark a speculative conversationaround future employee development. Atcredit unions where the CEO is retiringand no internal candidate is ready to stepinto the role or even be considered for the

position, the first step may be to adopt theRegulator Satisfier. But this is only astarting point with solid value if theboard directs the new CEO to build aprocess for Strategic Succession Planning.If a strategic and foundational approachto building internal talent does notbecome part of performance measure-ment, there will be an intrinsicbreakdown in leadership for the creditunion that will have far-reaching impact.

Strategic succession planning builds anew competency into the organization,developing talent throughout the creditunion that is forward looking and seeksto create new competitive advantages. Itconsiders the interests of employees,builds on their strengths, and invites newconversations about their future, whichover time become a normal course ofbusiness.

To test the appetite for strategic succes-sion planning, the board and executiveteam should be in a conversation aboutwhat the future holds for the credit unionif those in leadership roles have a com-mitment to people development. In hisbook Effective Succession Planning:Ensuring Leadership Continuity andBuilding Talent from Within, authorWilliam J. Rothwell suggests that organi-zational leaders consider whethersuccession planning and management:


18

• Enjoys top management participation,involvement and support?

• Is geared to meeting the unique needsof the organization?

• Extends to all levels rather than beingrestricted to top positions only?

• Is carried out systematically?• Is heavily influenced by a comparison

of present performance and futurepotential?

• Is influenced by identification of high-level replacement needs?

• Has sensitized each executive to anobligation to identify and preparesuccessors?

• Has prompted the organization toestablish and conduct specific develop-mental programs that are designed toaccelerate the development of high-potential employees?

Using these questions as a startingpoint, the credit union board shouldengage in a group GenerativeConversation (see Figure 1.1 on page 19)facilitated by a specialist, internal orexternal, in strategic succession planning.This work can be part of a strategic plan-ning event or a regularly scheduled boardmeeting.

Integrating StrategicLeadership Values

Core values are the foundation for ourbehavior. They are why we act in a certainway in a particular circumstance.Organizations also have core values.These values are deep within an organi-zation and may be so ingrained that theyare no longer easily recognized by theorganization itself. There comes a point inthe culture when the employee groupmoves or behaves in a certain waybecause that is what they know frombeing in the organization for so long.Their behavior reflects the values deeplyembedded in organizational practices.

Many credit unions have a writtenvalues statement on their Web site, onposters in the hall or on the back ofemployee business cards. Those valuesare typically created around commitmentto service, to a way of being for theemployee, member and community.

Values in the strategic succession plan-ning context are related to what the CEOof the future needs to bring forth to gen-erate ongoing success. These values mayinclude the core credit union values, butthey may go well beyond those statedattributes. Here is an example: A creditunion CEO is retiring after 18 years ofservice. The board’s assessment is that the



19


F I G U R E 1 . 1 Generative Conversations

Generative conversations are those that bring new insights, builddynamic relationships and produce effective action.Generative conversations are different than social conversa-tions, which seek to share experiences, create relationshipsand entertain. The capacity to move and guide dialogtoward achievement is a key leadership responsibility.Leaders reside in the pool of conversation. Their key role isto engage conversations that provide information andinsight, motivate, and secure commitments in action. Leadersengage in conversation to solicit the views of others. These con-versations require effective movement through this cycle:

Reflection Conversation

The reflection conversation explores the cause-effect of what is and the outcomes of ouractions. Reflective conversation often begins with questions such as “Why do you sup-pose…?” or “How did we reach…?”

Speculation Conversation

In a speculation conversation, participants wonder what could be or what wants to be.At the core of speculation is exploring questions such as, “What if…?”

Shifting Conversation

The shifting conversation opens the possibility to a new paradigm or organization. The shiftingconversation requires challenging questions, “What do we need to learn or do differently…?”

Action Conversation

The action conversation organizes and inspires people to move. They fundamentallyseek commitment by answering “What new action will we take…?”

Success and Breakdown

As the board and/or management team moves through this cycle, pay attention to whereyou get stuck or spend an inordinate amount of effort. Are any phases passed over?What moods or mind-sets are present to initiate and sustain generative conversations?

Source: By Mark Haeussler, President, Advancing Leadership Institute, DDJ Myers, Ltd.(www.advancingleadershipinstitute.com)

20

CEO has performed satisfactorily;frankly, directors would prefer that theCEO stay on for another 18 years becauseeverything is going well. However, witheconomic and political changes now andin the future, the credit union will likelyneed to extend into new products andservices to thrive. The values selected toguide the new CEO lay the foundation forhow candidates will be interviewed, howpotential internal successors aregroomed, and how future performancereviews and assessments will be framed.In this particular scenario, the followingvalues will help shape the role of the newCEO:

AssertivenessRisk taking Analytical problem solvingSee possibilitiesSustainability

The success of a set of values adopted orcreated within an organization largelyrelies on explicit CEO support. A recentsurvey conducted by The Aspen Instituteand Booz Allen Hamilton states that85 percent of respondents rely on proac-tive CEO support to reinforce values,and 77 percent say this support is one ofthe most effective practices for rein-forcing employees living the values in theworkplace.

The role of values in strategicsuccession planning

Values are guideposts for behavior, theframework from which we move into dif-ficult situations. A value is the basis ofbeing in the world that defines the rela-tive worth of a way of life and thepriorities with which we organize.Identifying, honoring, living and beingaccountable to values is a step towardmastery.

Values are forward looking. Theyshould define how we will move in diffi-cult decisions, not easy ones. Values arenot flagships; if they are chosen for show,they undermine integrity. Ultimately,“display values” lead to breakdowns(think Enron). Not selecting a value doesnot mean you compromise it in yourdaily life, only, perhaps, that it may notneed more attention or commitment tobring a desired future forward.

In identifying the values to guide yourstrategic succession planning, considerthe three parts to develop leadershipvalues that will generate action, formingthe acronym BAG.

BEHAVIORSWhat behaviors are necessary todemonstrate the values and bringout the desired outcomes for stake-



21

holders? What are the agreed-tostandards of conduct around thevalues?

ABILITIESWhat abilities and talents areneeded to live the values? Whatcompetencies could be developed toproduce consistent assessments thatthe values are lived?

GOALWhat is the goal of having the par-ticular value? How do you knowwhen you achieve success? Howwill we know that each person isaligning their own goal to the largerteam goal?

Board exercise: Build behaviors and competencies

The board can complete this exercise toselect up to five nonnegotiable values theCEO successor needs to bring forth. (Thedirections assume a facilitator is man-aging the flow of the meeting.)

1. Provide each participant with the listof the values in Figure 1.2, starting onpage 23, or develop your own valueslist.

2. As a group, decide if there are anyvalues understood as being in play

already. We usually select Integrity,Honesty and Trust as being core valesany one in a leadership role shouldembody. Draw a line through thesevalues indicating that they are not tobe selected for this exercise.

3. Each participant selects three values. 4. The facilitator writes on a white board

the values selected by each partici-pant and facilitates agreement on afinal group of three to five.

5. The next step is to “behavioralize”each value. The purpose of this exerciseis to generate shared understandingand language about how you willeach know that the CEO is living thevalue. To behavioralize a value meansto identify the specific behaviors thatreflect “living” that value. Byagreeing to the behavior, the boardcreates a shared standard of conductto seek out in CEO candidates andnurture in its leadership team.

6. Once the behaviors are identified foreach value, identify one or two com-petencies for the team to build greaterdepth to in order to live and demon-strate each value.

7. Create a spreadsheet for each of thevalues.

8. Practice on a sample value. Providean example value and identify onebehavior that would demonstrateliving that value. Ask participants to


22

identify a couple of other behaviorsfor practice.

9. Identify the observable competencyfor each value, or what skills orexpertise are needed to demonstratethis value.

10. Lead a conversation on the desiredbehaviors and competencies for eachof the values and incorporate thosevalues, behaviors and competenciesin the credit union’s strategic suc-cession plan.



23


F I G U R E 1 . 2 Examples of Leadership Values

Accomplishment

Accountability

Accuracy

Acknowledgment

Adventure

Affirming

Anticipating

Assertiveness

Authentic

Awareness

Balance

Beauty

Blend

Celebration

Centered

Committed

Community

Compassion

Completeness

24 C R E D I T U N I O N E X E C U T I V E S S O C I E T Y

CUES SUCCES SION PLANNING MANUAL

Comradeship

Confident

Connected

Considerate

Consistency

Containment

Contemplative

Contribution

Courage

Courtesy

Creativity

Curiosity

Detachment

Dignity

Direction

Discernment

Discipline

Elegance

Empathy

Empowerment

Energetic

25


Engaging

Entering

Enthusiasm

Excellence

Extension

Flexibility

Focus

Forward the Action

Freedom to Choose

Full Self-Expression

Genuine

Growth

Harmony

Healing

Honesty

Honor

Humor

Increasing

Independence

Initiating

Innovation



Inspiration

Integrity

Joy

Lack of Pretense

Lightness

Long-Term Relationship

Meaningful Work

Nurturing

Objectivity

Openness

Optimism

Partnership

Patience

Peace

Performance

Personal Power

Productivity

Professionalism

Profit

Purposeful

Recognition

27


Respectful

Risk Taking

Romance

See Possibilities

Service

Simplicity

Spirituality

Stability

Success

Sustainability

Synergy

Taking Stands

Team Member

Tolerance

Tradition

Trust

Visioning

Vitality

Wisdom

Source: Value Cards, Advancing Leadership Institute, DDJ Myers, Ltd.(www.advancingleadershipinstitute.com)

28

10 Steps forStrategic SuccessionPlanning

Strategic succession planning does notbegin when the CEO announces his or herplans to move on. It is a continuous, pur-poseful process that encompassesleadership and talent developmentamong all managers and executives. Theprocess is an integral part of strategicplanning, during which the CEO succes-sion plan should be regularly reviewedand updated based on the credit union’sevolving outlook. Combining thestrategic planning process with leader-ship development creates greatercapacity for the credit union to pursuemore aggressive goals. Managers andexecutives who are supported in thedevelopment of leadership capabilitiesare more competent and confident aboutassessing and taking the risks inherent ingrowing the credit union.

By identifying potential CEO candidatesone and two levels down into the organi-zation, the credit union is developing itsfuture and demonstrating to keyemployees its commitment to theirfutures as well. There are no guaranteesin succession planning, but incorporatingleadership development that involves

employees in setting their own careergoals and reinforcing their critical rolewithin the organization enhances thelikelihood of their continuing commit-ment to the credit union. In short, they’remore likely to be there when you needthem most.

Identifying the necessary competenciesof your next CEO and fostering thosecompetencies in your executive staff isnot an easy task. It is rigorous andongoing, as those competencies shift withthe challenges facing the credit union.That is why strategic planning and lead-ership development must coincide.

1. Create clarity on strategicvision.

The board and its chief executive mustagree upon, understand and clearly artic-ulate the credit union’s near andlong-term strategic vision as well as per-formance expectations as they contributeto the organization’s strategic focus andbusiness plan. The executive team andboard need to be clear and in agreementon their strategic vision for the future.Through conversation they visualize theshape and structure of the credit union’sfuture. What possibilities are on thehorizon for the credit union in the nextthree, five, 10 years and beyond?



29

2. Determine organizational competencies needed to fulfillthe strategic vision.

The board must identify the humanresource talent and leadership presencerequired to fulfill the credit union’sstrategic and business plans. What orga-nizational expertise and people skills areneeded to execute the strategic vision forthe future?

3. Assess required competenciesfor the CEO role in the future fora minimum of five to 10 years.

Determine and define the competenciesrequired for the CEO role. Use five categoriesof competencies:

i. Resume skills: Achievements; accom-plishments; complexity of experience;formal education in a specific domain;participation in community events;visibility on a local, regional ornational level; and ongoing education.

ii. Soft skills: Personal mastery skillsnecessary for success, which are hardto measure but show up over time inhow the CEO leads the credit union.Examples include decision making,leadership, conflict management,futuristic thinking and writtencommunication.

iii. Behaviors: Specifically, the variousforms and manners of behavior chief

executives must exhibit to achievesuccess. Consider the following ques-tions: What is the preferred behaviorof the role? How would a wildly suc-cessful CEO be seen by others? It isbest to answer these questionswithout thinking of your current orprevious CEO. Separate whoever is inthe role from your assessment ofbehavioral traits needed in the nearand long term. Examples mightinclude listening skills, the ability tocommunicate clearly verbally and inwriting, and the ability to make andfollow through on decisions.

iv. Values: Beliefs and sensibilities thatguide an executive personally andprofessionally. What three valuesdoes the CEO need to fulfill thestrategic vision? Choose values thatneed to be more readily accessed oruncovered; for example, if integrity,honesty and trust are showing up,then assume they are already well inplay. Values like futuristic thinkingand moving from a survival state to athriving state can move your organi-zation in a meaningful way.Flexibility may be relevant if yourcredit union is likely to seek out andwelcome change.

v. Emotional intelligence: How a personfunctions in the workplace with his orher own emotions and those of othersto achieve desired outcomes. A stellar


30

resume, without strong emotionalintelligence, will produce a break-down. A part of the competencyconversation should include a discus-sion of emotional intelligence and howit serves the CEO role.

4. Identify potential internal successors.

Consciously decide to use an open orclosed succession planning process. Anopen succession planning process com-municates to executives and managersthat a strategic succession planning pro-gram is in place and those who areinterested in being considered as a CEO,now or in the future, should share theirambitions with the succession planningcommittee. With an open planningprocess there is opportunity to grow anddevelop a talent pool for two, five, 10 and20 years in the future. The guarantee isnot that everyone who signs up willbecome CEO, but that the culture is openand inclusive and extends to employeeswith high regard for their development.

A closed strategic succession planningprogram, where stakeholders are notopenly included in the process, should bea rarity in credit unions if their way ofdoing business is “people helpingpeople.” Closed processes negate theopportunity for employees to state theirgoals for advancement and, if there is not

space for them to be heard, they may electvoluntary separation and pursue theirdreams elsewhere.

5. Assess competencies ofinternal successors.

Assess the competencies of potentialinternal successors as they correspond tothe needs of the credit union in the future.If your CEO is actively planning to leavethe credit union within two years, payclose attention to the competencies ofother members of the executive team. Bein open conversation with each personreporting directly to the CEO to clarifytheir career goals and desire to be consid-ered for this role. Do not assume thatsomeone is not interested in the CEO rolejust because she or he never mentioned it;there are many reasons why a directreport to the CEO may not openly con-verse about an aspiration to be CEO. Theboard chair or head of the successionplanning committee should directly askeach executive if he or she wants to beconsidered and do so in a way that invitesan authentic response. Leading questionscan be harmful; proceed in these conver-sations with a frame of possibility.

If your CEO plans to stay on in this rolefor long time—say, five or more years—youmay want to look for CEO potential talenttwo layers deep in the organization.Create a culture of futuristic thinking in



31

developing your leadership talent. In fiveyears it is possible that direct reports tothe CEO may be recruited away becausetheir time has arrived to step up into aCEO role and one is not open with theircurrent employer. Look deep within andassess who are potential high performers.Pay attention to their career goals. If theyare successful, keep in mind that it is pos-sible, even likely, that they will berecruited away to continue their high-performance career path elsewhere ifthey do not perceive opportunities foradvancement within your organization.

6. Develop a career developmentplan (CDP) or leadership develop-ment plan (LDP) for potentialsuccessors and high performers.

The intention of the CDP is to includecontinuous learning in multiple domains:technical expertise, credit union knowl-edge, management skills, leadershippresence and continued education. Thefocus of the LDP is on leadership pres-ence, or how we show to ourselves andothers what the credit union needs forsuccess. Richard Strozzi-Heckler, of theStrozzi Institute, speaks about leadershipas needing three attributes:

1. Competency in your own field, spe-cialization or industry;

2. Intelligence to deal with complexissues and multiple commitments;and

3. A certain presence, or “the self thatyou are.” High-performing executivespersonify integrity, flexibility, accounta-bility, and the ability to generatepositive moods and a sense of possi-bility. They motivate and influenceothers, and people want to be aroundthem. When they enter a room, othersapproach them, not because of theirtitle or position but because of “theself they are.”

At the executive level, professionalshave developed their competency in spe-cific domains and tend to rely on othersto support them in areas where they havenot specialized. Executives also have acertain level of intelligence that servesthem in supporting multiple commit-ments and decisions involving complexissues. The presence they develop is thesum of their ongoing exploration of howthey can evolve as humans and continueto develop self-mastery. They must firstbe effective leaders of themselves beforeothers will willingly accompany them onany journey or mission.

In assessing potential successors, regu-larly revisit the five categories defined instep three: resume skills, soft skills,behaviors, values and emotional intelli-gence. Within the context of these fivecategories, facilitate a self-assessment bycandidates on how they see themselvescompared to what the organization needsin the CEO role. Interview their managersfor input on the five categories with a


32

view of current state and the ability, com-petency and capacity to be a “ReadyNow,” “Ready Future” or “Targeted forDevelopment and Learning” candidate.

Once the CDP or LDP is drafted, reviewit with each potential successor and his orher manager for validation. The potentialfor success with strategic succession plan-ning is greater with proactive support.

7. Implement and monitor development of each potentialsuccessor.

The final segment of the CDP/LDPshould outline actions and observableoutcomes for the potential successor. Forexample, if written communication is adesired competency for the CEO role,then the internal candidate seeks oppor-tunities to write and have her or hiswritings be more visible to the CEO andboard, with the intent of producing theassessment “she or he writes well.”

Each internal candidate needs a coach ormentor to supervise ongoing develop-ment and use of resources. Blending aninternal mentor with an external coach isthe ideal combination for a future CEO’ssuccess. The internal mentor, who mightbe the CEO or a current board member,knows the way of the credit union. Anexternal coach should be competent incoaching CEOs and potential CEOs withemphasis on leadership presence.

Establish a periodic review with theinternal candidate. If the CEO is to retirewithin:

• One year, the review should be con-ducted monthly;

• Two years, the review should be con-ducted quarterly; and

• Three years, review twice a year at aminimum.

8. Develop a viable action plan toacquire the needed competen-cies to fill critical vulnerabilitiesif they are not available whenneeded by the credit union.

A critical mistake is to wait until the CEOretires, becomes ill or voluntarily leavesthe credit union to take effective action toidentify external potential candidates ifthere are no internal possibilities for pro-motion. The most important decision theboard makes is deciding who will beCEO. When the CEO’s position is vacant,the credit union is at great risk.

If there are no internal possibilities forpromotion, a viable internal interim can-didate needs to be able to “drop in” to therole while external candidates arerecruited. If a drop-in candidate does notexist, then the practices involving recruit-ment and development of high-qualityexecutives need to be a serious commit-ment. Promotable people need to find the



33

credit union attractive as an integral partof a high-performing career; if no one ofthis caliber exists in the credit union, youshould seriously consider how well themembers, employees and community arebeing served.

9. Research external potentialcandidates.

We will explore this process in moredepth in chapter two. For our immediatepurposes, consider one avenue involvingthree steps for researching externalpotential candidates.

Step 1: Start a “hot list” of externalpotential candidates. List names of exec-utives from other credit unions you meetat conferences and advisory boards andwhose names you see in industry tradepublications. At this point it is not neces-sary to ask them if they want to be onyour hot list. The intent is simply to createa list of potential candidates for possiblefuture conversation.

Step 2: Research the credit unionswhere your hot list candidates areemployed. Look for evidence of how theyare moving with the competencies youdesire for your credit union. For example,if a peer credit union has demonstratedthe ability to move effectively in adverseconditions, you want to know who is onthat top-performing team.

Step 3: Select the top two or three can-didates on your hot list and reach out tothem. The intent of reaching out to theseexecutives is to engage them in a net-working conversation with the intent ofgetting to know who they are andassessing leadership presence.

10. Develop a CEO emergencysuccession plan, CEO talent pool assessment and strategicsuccession plan policy.

The CEO emergency succession planshould be reviewed and updated everysix months or year depending on theCEO’s intentions for ongoing employ-ment. This document provides the basicaction plan for a sudden, unexpecteddeparture of the CEO to keep the basicoperations in place.

It is also critical to develop and update yourCEO talent pool every six months or year.

Finally, the board and executive teamshould review the CEO strategic successionplan policy as part of strategic planningor at least once a year. Any shift instrategy calls the needed competenciesinto question and may require updatingthe CEO talent pool and the executivetalent pool as well. (See sample docu-ments provided in the Appendix startingon page 135.)


34

Career Builder Guide

The Career Builder is a tool designed tofoster the executive development ofpotential internal CEO candidates andother managers who are looking forwardto a long career with the credit union. Theguide is created and updated annually byemployees. The purpose of the documentis for employees to inform others of theirdevelopment of and experience in spe-cialized skills, knowledge and roles aswell as what other assignments, lateralsand promotions are of interest in devel-oping their career.

The accompanying sample CareerBuilder on page 35 can be renamed tomeet your needs and culture. Progressivecredit unions post these guides on theorganizational intranet where they areavailable and accessible by a key wordsearch or with general browsing ability.For example, if a need arises regarding aninsurance question that requires actuarialbackground, Beth (in our example) mightbe available as support prior to seekingoutside consultants.

Conclusion

Whether you are faced with the need toreplace your CEO tomorrow or 20 yearsfrom now, strategic succession planningprepares the credit union to meet thetoughest challenges head on. The seam-less integration of strategic planning andleadership development builds a strongorganization based on the talents andcommitment of its people. Successionplanning becomes so integrated into theculture that it automatically becomes partof any strategic planning conversation.

As your next CEO moves up fromwithin or is recruited from outside thecredit union, strategic succession plan-ning helps ensure a smooth transition.The new CEO will be supported by acompetent, confident executive team, andthe strategic succession planning process,rather than ending, continues around thisevolving leadership so that the creditunion always has the right people in theright places at the right time.



35


SOURCE: Advancing Leadership Institute, DDJ Myers, Ltd. (www.advancingleadershipinstitute.com)

Position History

Job Ti t les Time on T i t le

Financial Analyst 5 years

Senior Financial Analyst 3 years

Assistant Treasurer 2 Years

Treasurer 4 years

Specialized Skills or Knowledge

Investment Portfolio Management, Asset/Liability

Market Risk, Product/Servicing Pricing and Profiltability, Funds Transfer Pricing

Technology Skills: Bancware, Sendero, Excel, Access

CompetencyStrengths

Business Driver—Strong understanding of financial process, forecasting and capital planning

Coaching—Maintains development plans on all my people, coaches and mentors three employees, regularly assigns stretch goals for team.

Deve lopment Needs

Strategic Planning—Need to look for additional revenue opportunities drive greater comittment to revenue goals through products, services and fee income to improve ROA.

S A M P L ECareer Builder

PreferencesAss ignments Requested Latera l Moves Promot ion Moves

Leadership Steering Committee VP, Branch Operations, TD Chief Financial Officer, RN

Enployee Strategic Development Programs VP, Lending, TD Chief Operations Officer, RF

Lending Committee

Pricing Committee

Name: Beth Young Title: Senior Vice President, Finance

Supervisor: Mark Williams, CEO Time on Title: Two years Hire Date: 10/15/2005

Readiness for Move Indicators Relocatable

x Ready Now (RN) x Yes

Targeted for Development (TD) No

Ready Future (RF) Possible: (explain) Willing to move for promotion only. I need to

Learning (L) wait until '08 before I can leave current location.

36

References and Resources

Advancing Leadership Institute, DDJ Myers, SPOT: Succession Planning Operations Template (Phoenix, AZ).Information available online at: www.advancingleadershipinstitute.com.

Advancing Leadership Institute, DDJ Myers, Star Performer Model (Phoenix, AZ). Information available onlineat: www.advancingleadershipinstitute.com.

Advancing Leadership Institute, DDJ Myers, Value Cards (Phoenix, AZ). Information available online at:www.advancingleadershipinstitute.com.

Coyne, Kevin, and Edward Coyne, “Surviving Your New CEO, Harvard Business Review, May 2007.

Haeussler, Mark. “Generative Conversations” (white paper). (Phoenix, AZ Advancing Leadership Institute ofDDJ Myers).

Knowledge Infusion (Human Capital Management Consultant). “Trends in Human Capital Management: TheEmerging Talent Management Imperative” (white paper), July 2006. Available online at: www.sap.com/industries/insurance/pdf/BWP_Trends_in_Human_Capital_Management.pdf

Myers, Deedee, and Mark Haeussler, “Succession Planning Going Deep,” Credit Union Management, March2006. Available online at www.cues.org under Management Magazine.

Rothwell, William J., Effective Succession Planning: Ensuring Leadership Continuity and Building Talent fromWithin, 3rd ed. (New York: AMACOM, 2005).

Strozzi-Heckler, Richard. Strozzi Institute, www.strozziinstitute.com.



135

A P P E N D I X

APPENDIX A

SAMPLE CEO EMERGENCY SUCCESSION PLAN . . . . . . . . . . . . . . . . 136

APPENDIX B

SAMPLE CEO STRATEGIC SUCCESSION PLAN POLICY. . . . . . . . . . 138

APPENDIX C

SUCCESSION TALENT POOLINTERNAL POTENTIAL SUCCESSORS . . 140

APPENDIX D

CANDIDATE FOR CEO ROLE:LEADERSHIP DEVELOPMENT PLAN . . . . 141

APPENDIX E

USING THE PREDICTIVE INDEX®

IN STRATEGIC SUCCESSION PLANNING . . . . . . . . . . . . . . . . . . . . . . . 153



S A M P L ECEO Emergency Succession Plan

In the event that the CEO is unable to perform his or her duties due to illness, death, orsudden and unplanned departure, or for any other reason, the following actions will betaken to ensure continuity of leadership.

First business day (8 hours)

1. The board of directors will notify the interim successor, _____________ (insert nameand title) that he or she will assume the executive authority as granted to the CEO.

2. Credit union employees will be notified of the change in CEO status. A memo will besent via e-mail to all employees by the chair of the board of directors drafted with thesupport of the human resource director. A copy will be sent to all members of theboard and supervisory committee.

3. The public relations executive will draft an announcement to be sent to all organiza-tions that need notification of change in CEO status. These organizations include:NCUA, state regulator of financial institutions, league, corporate credit union, CUNA,NAFCU, CUES, major business partners, and other associations as well as local andstate credit unions.

4. Transfer all executive authority tools to the interim CEO; these will include securitylevels and check signing authorities. The supervisory committee will secure recordsas needed.

5. Contact information for required personnel is:

Interim Human Board Supervisory Security CEO Resources Chair Committee Officer

Executive Chair

Name

Office phone

Cell

Home phone

E-mail address

Home address

Other contact info

APPENDIX A

137

A P P E N D I X A : S A M P L E C E O E M E R G E N C Y S U C C E S S I O N P L A N

First week (five business days)1. The board of directors will review the strategic succession plan and move in consistency with

the plan to:

a. Assess internal candidates for possible internal promotion.

b. Assess viability for using an external search firm.

c. Assess feasibility of conducting an external search on their own behalf.

2. The supervisory committee will implement a transition audit to ensure a clean start for theinterim CEO.

3. The interim CEO will communicate with all employees that the strategic plan and business ini-tiatives will continue; the mood conveyed should be one of confidence and being centered.

4. The board will decide who is on the CEO selection committee of up to four members.

First two weeks (10 business days) The selection committee will decide whether to pursue internal candidates, hire an externalsearch firm or conduct an external search on their own behalf. If the decision is made to hire anexternal search firm, a request for proposal (RFP) will be forwarded to three potential search firmsrequiring a response within three weeks. (Note: as part of the strategic succession planningprocess, an organization can maintain on file current proposals from external search firms thatcan be implemented upon need, allowing them to move more readily into purposeful action.)

If the search will include internal candidates, the chair of the selection committee will speak tomembers of the executive team and discuss their intentions of being considered for the CEOrole. Upon indication of interest, the board will provide internal candidates with an overview of theinterview and selection process, including position description, assessments and interview withthe board or selection committee.

If the search will include both internal and external candidates, using an external search firm, thesearch committee will request that internal candidates must complete the same recruitmentprocess as the external candidates presented by the search firm.

First three monthsInterviews for the CEO role are completed and a decision is made.

The board will address an appropriate transition strategy for each possible scenario:

1. Promotion of the interim CEO to CEO

2. Another internal candidate

3. An external candidate




S A M P L ECEO Strategic Succession Plan Policy

Purpose

The purpose of the CEO strategic succession plan policy of (insert credit union name)is to communicate to its employees, members, community, regulators and other partiesof interest the credit union’s ongoing commitment to effective leadership. The (insertname of credit union) is fully committed to equal employment opportunity for allemployees, regardless of race, religion, sex, national origin, sexual orientation or disability.

Policy

It is the policy of this credit union to strategically develop internal talent to achieve thefull potential of these executives and to hire high-potential performers into all executivelevel and senior level management roles so that, if needed and desired, they can stepinto, on a permanent or interim basis, the CEO role.

Philosophy

It is the philosophy of this credit union that every person in a role of SVP (or VP) or highermust have the capacity and competency to serve as interim CEO for a minimum of upto (one year or insert time frame).

Procedures

Assuming the present CEO has no immediate departure plans, the board will review onan annual basis the following information:

1. The CEO emergency succession plan, updating potential successors.

2. This policy, the CEO strategic succession plan policy, ensuring that it is in line withthe strategic plan.

3. The knowledge, skills and abilities of potential successors as they relate to thestrategic plan and credit union operations. The board must assess the developmentgap of each potential successor and what he or she must learn to serve as CEO ofthis credit union.

4. The CEO development plan to ensure that the incumbent remains current with con-tinuous learning as it relates to industry issues and changes.

Assuming the present CEO plans to depart within two years, the board will conductreviews one through three, above, on a quarterly basis.

APPENDIX B

139

A P P E N D I X B : S A M P L E C E O S T R AT E G I C S U C C E S S I O N P L A N P O L I C Y

Assuming the present CEO plans to depart within 12 months, the board will conductreview three, above, each month, in addition to conducting monthly individual meetingswith potential internal successors to ensure clarity on their development needs.

Plans

The succession planning process will be developed and maintained with the full supportof the CEO, human resources executive and other executives as needed. Each poten-tial successor will have a development plan that articulates his or her competencies,knowledge and ability related to the needs of the credit union and the CEO’s role.Competencies will include assessments such as behavior profiles, emotional intelli-gence and personal mastery.

NOTE: The executive committee or succession planning committee may be substituted for the board inany or all steps in this policy.




Succession Talent PoolInternal Potential Successors

Position Incumbent Anticipated Name, Title Readiness*Replacement Date

CEO Mark Williams 12/31/2010 Kirk Gove, EVP Administration RN

Elizabeth Miller, EVP Operations RN

Molly Myers, SVP Finance RF

EVP, Administration Kirk Gove 12/31/2010 Kathleen Haeussler, VP Facility RN

Scott Edwards, VP Marketing TD

Kyle Charles, VP Human Resources RF

Ian Maxwell, VP Business Development TD

EVP, Operations Elizabeth Miller12/31/2010 Bryce Storbeck, VP Branch Ops RN

Rebecca Young, VP Op Support TD

Peter Condon, VP IT LN

SVP, Finance Molly Myers 12/31/2012 Sandy Timmons, VP Accounting TD

Jim Rives, VP Consumer Lending TD

Kathy Nuez, VP Business Lending RF

*Anticipated Replacement Date means expected retirement or promotion date.

RN: Ready Now RF: Ready in Future, Needs More Success in Current Role Before Advancing to TD

TD: Targeted for Development LN: Early in Cycle, Identified as a Potential High Performer


APPENDIX C

141

A P P E N D I X D : C A N D I D AT E F O R C E O R O L E : L E A D E R S H I P D E V E LO P M E N T P L A N

Candidate for CEO Role:Leadership Development Plan Created by DDJ Myers, Ltd.

Executive Summary

Executive Summary of the Leadership Development Plan (LDP) summarizes competen-cies, strengths and places for development for the individual. The summary alsodescribes individual’s ideal environment, goals and conditions of success.

Jon has depth of fortitude and resilience that are valued in roles of leadership; he is for-ward looking, competitive and results oriented. His problem solving ability is good andhe will creatively seek new ways to solve old problems.

As a manager, coach and mentor, Jon is dedicated to the success of his direct reports.It is important to him they are both successful and fulfilled; he urges them to step intotheir potential in ways that are inviting and compelling. He has capacity to listen deeplywhen coaching his team and demonstrates optimism and positive expectations ofothers. Being future-oriented and forward-looking, there are few dull moments in his life.

Jon excels in an environment that supports innovation and opportunity and freedomfrom controls and close supervision. He is able to build trust and credibility while influ-encing others and is agile in adapting to change while responding to shifts in directionsand priorities. Recognizing opportunities for positive outcomes is a component of hisoptimism and he listens to gain perspectives from diverse sources.

Decision making is a strong attribute in that he readily can move into timely decisionsand accepts the consequences of his actions. He will correct erroneous decisions andaddress performance issues promptly, fairly and consistently.

Jon has a depth of leadership presence that recently is starting to evolve in a bigger way.He could further his abilities to become a CEO by stepping out more in leading the orga-nizational structure for effective resource allocation while ensuring the vision andstrategic decisions are implemented. Future looking for Jon would be to see how he canextend into the community and industry, and play a bigger part in the strategic vision forthe credit union.

One of Jon’s conditions of success over the coming year is to coach and develop hisdirect reports in developing and viewing different possibilities for scenarios. Overall, heis expected to deliver on the vision for the credit union.

APPENDIX D



Individual skills Jon should focus on to further his leadership presence and build uponto step into the CEO role:

Interpersonal Skills

• Extension in developing relationships with many different kinds of people.

• Listen, observes and strives to gain understanding of others.

Diplomacy/Conflict

• Understand how to effectively move through emotional situations.

• Assist people in adversarial situations in identifying common interests.

• Adapt conduct and communication to encourage more possibilities.

Hard Skill Competencies

The Hard Skills section’s required values are derived from conversations with the CEOand Executive Team. This section creates expectations for the role.

The CEO position requires the following tangible and measurable areas of expertise ona rated scale of one to 10 with 10 being the highest:

Skill/Knowledge Required Value Jon Smith

15 Years Executive Leadership Experience 9 9

MBA–Business 9 7 (CPA)

BS Liberal Arts 9 9

5 years as CEO of a Financial Services Organization with the same or similar complexity, diverse relationship management and multiple relationships 9 8

Local Community and Charitable Presence 9 8

Demonstrated Political Involvement

Trade Associations

Local and State Involvements 9 8

Financial Acumen 9 4

143


Behavior

Behavior statistics are taken from the individual’s DISC assessment. This section of theLDP describes the behavior needed for the CEO role compared to individual’s naturaland adapted styles. This section notes the places to pay attention, on why an individualis adapting their behavior style.

Jon has a positive match for his behavior profile for the future CEO role. Jon’s naturalbehavior style generally is well-aligned with the needs for the role.

(D) Inherent Need to Direct

The following describes the scope of authority, power and decisiveness as describedby CEO and Board. Jon’s ability and capacity to make and step into decisions showsup with authority and directness.

0

2

4

6

8

10

15 YearsExecutive

Leadership

MBA BS LiberalArts

5 Years CEOFinancialServices

CommunityPresence

DemonstratedPolitical

Involvement

FinancialAcumen

Required

Jon Smith

Required Hard Skills



CEO Role Required Behavior Jon’s Adapted and Natural Style

Calculating the use of power and authority. Authority to carry out responsibilities.

Responding to problems and challenges. Quick response to problems or crisis situations.

A drive to succeed. Demanding attitude of self and others.

Clarification of authority and parameters. Direct answers from others.

Challenging assignments. Challenging assignments.

Independent thinking. Creative and original thinking.

Freedom from much detail work. Freedom from routine and details.

Flexibility. Some independence in decision making.

Ability to solve problems and meet Sense of urgency in getting things done.challenges.

Taking an idea and moving with it, but not Appropriate title to acknowledgebeyond the scope of authority. status and prestige.

Supporting change. Accepting and initiating change.

Participating in decision making. Decisive and firm in decision making.

Self-starter who enjoys competition.

Direct answers and statements to the point.

Leadership and directive skills.

Future orientation and abstract thinking ability.

(I) Inherent Need to Interact

This section describes the CEO’s level of ability to influence others to a way of thinkingor doing. Jon is shifting his ability to influence so that it is closely aligned with the rolerequirements.

145


CEO Role Required Behavior Jon’s Natural Style Jon’s Adapted Style

Social interactions. Democratic relationships. Many social interactions.

High trust level. Earned trust. Very high trust level.

Optimistic outlook. Friendly work environment. Optimistic outlook towards all activities.

Verbal skills. Verbal skills. Skillful use of vocabularyto generate enthusiasm.

Getting people Being polite and diplomatic. Highly persuasive emotionally involved. communication.

Working with people. Working with people. High contact with people.

Openness to new ideas. Acceptance of new ideas. Enthusiastic acceptanceof new ideas.

Ability to move from one Coaching and counseling. Ability to move from oneactivity to another quickly. activity to another quickly.

Participatory management. Participatory management. Selling the sizzle as well as the steak.

Creative approach to New and innovative ways of problem solving. solving problems.

Democratic relationships Democratic relationships with others. with others.

Working with people more Working with people more than working with things. than working with things.

A team approach. A team environment.

Initiating contact with others. Ability to project self-confidence.

Freedom from detail and control.



(S) Inherent Need to Deal with Activity Levels

How the CEO role and Jon deal with activity levels shows up in behaviors around per-sistence, consistency and listening skills. The role requires a high level of flexibility anddelegation that matches well with Jon’s Natural Behavior Style whereas his AdaptedStyle is shifting toward increasing his steadiness and follow through.

CEO Role Required Behavior and Jon‘s Natural Style Jon’s Adapted Style

Sense of urgency. Patience.

Shared information and open communication. Ability to listen.

Quick response to crisis and change. Working within the system.

Mobile work environment. Task oriented concentration.

Ability to act without precedent. Follows through on task.

Opportunity to explore change. Limited change in work activities.

Support team to handle some of the detail work. Team participation.

Self-starter. Security for self and others.

Quick decisions. Job description in writing.

Alertness to problems and challenges. Consistent performance.

Awareness of deadlines. Sincere approach to working with people.

Facts and data provided by others. Friendly environment.

Freedom to respond.

Variety of work activities.

147


(C) Inherent Need to Respond to Rules and Regulations

How the CEO role and Jon respond to policies, moving with creativity and outside thebox are in alignment.

CEO Role Required Behavior Jon’s Adapted Style

Awareness and sensitivity to rules and procedures. Testing of rules and procedures.

Practical work. Practical work solutions.

Persistence in getting the job completed. Persistent approach to winning.

Freedom from direct control and supervision. Opportunity to test new ideas.

Expression of new ideas. Challenging work.

Limited independence to question procedures. Responsibility equal to authority.

Testing new ideas and procedures. Limited routine work.

Taking calculated risks. Risk taking.

Questioning the status quo. Independence to question procedures.

Challenging the status quo.

Individualism.

0

20

40

60

80

100

Drive Influencing Steadiness Compliance

Role

Natural

Adapted

Jon’s Natural and Adapted DISC Compared to Role Behavior

SOURCE: Target Training International (TTI)



Personal Master Competencies

Personal Master Competencies’ statistics are taken from the individuals Personal SoftSkills Inventory (PSSI) assessment. This section identifies required competencies for therole, competencies already mastered by the individual and competencies to enrich theirleadership development.

Jon’s soft skills are well developed for someone working to move in, and verbally com-municating, change in ways that can create space for others. These include flexibility aswell as persuasion, diplomacy, teamwork and conflict management. Moving forward, Jonrequires more depth in goal orientation and presenting, to better serve in the role of CEO.

Required Core Competencies

Leadership Mastered

Diplomacy Mastered

Futuristic Thinking Some Mastery

Goal Orientation Some Mastery

Decision Making Mastered

Management Mastered

Presenting Not Yet Mastered

Jon’s Additional Personal Mastery Competencies

Creativity/Innovation Mastered

Persuasion Mastered

Flexibility Mastered

Customer Service Mastered

Teamwork Mastered

Management Some Mastery

Self-Management Some Mastery

SOURCE: Target Training International (TTI)

149


EQ-I

EQ-I section is a summary of the individual’s Emotional Quotient Inventory assessment,their Emotional Intelligence. This section reviews and identifies areas of emotional andsocial functioning where the individual is strong and areas in need of improvement.

Jon’s overall emotional and social functioning is high. His Intrapersonal score indicatessomeone who has a good self-understanding and who has achieved well up to thispoint in his life. He has a solid emotional Self-Awareness, able to recognize the sourceand impact of his emotions, and is able to Assert his ideas readily. Coupled with strongSelf-Regard, Jon is able to convey attitudes and ideas with self-confidence. Heexpresses his ideas and is capable of working on his own.

His Interpersonal skills for forming relationships with others are high, able to build andmaintain long-term relationships. One key area to pay attention is Empathy, the abilityto demonstrate that he can view the world from another’s perspective. Further devel-opment of Empathy, ability to put others’ agendas ahead of his own, will improvecooperative efforts and the way others view his priorities.

Stress management scored high in both Stress Tolerance and Impulse Control; he hasan enhanced ability to withstand adverse events and to put thought into decisionmaking. His highest scores, reaching the Enhanced Level, are Happiness and RealityTesting. This indicates a strong ability to evaluate and grasp the correspondencebetween what he experiences and the factual and real world around him; being con-tent with his current life situation provides opportunity to compel others to follow hisleadership. He usually finds it fairly easy to learn new things and remain open-minded;he will prosper in dynamic environments.

Problem solving is an area that can be improved by approaching problems more sys-tematically as a CEO would. This can relate to Empathy as well; as he is perceived asattentive to the concerns of others, his problem solving will be built in ways that engageothers emotionally.

Jon has a well-developed emotional intelligence with strong potential.



BarOn EQ-i® Resource Report for Jon Smith

Content Subscales

The following graph shows the 15 EQ-i subscales grouped according to composite area.

IntRApersonal

Self-Regard

Emotional Self-Awareness

Assertiveness

Independence

Self-Actualization

IntERpersonal

Empathy

Social Responsibility

Interperonal Relationship

StressManagement

Stress Tolerance

Impulse Control

Adaptability

Reality Testing

Flexibility

Problem Solving

General Mood

Optmism

Happiness

Area for Enrichment Effective Functioning Enhanced Skills

SOURCE: Multi-Health Systems, Inc.

151


Values

The Values section is derived from a conversation with the coach, individual, and what isexpected of the CEO role.

Values are the belief system behind making choice. They provide the framework fordecisions, particularly those that move into uncertain domains. They are considerednon-negotiable.

The following values were chosen by Jon as qualities he needs to add in greatercapacity in order to fulfill in the CEO role over the next three years.

Accuracy

Awareness

Connected

Consistency

Curiosity

Engaging

Extension

Growth

Integrity

Inspiration

Meaningful Work

Personal Power

Visioning



Advancing

The Advancing section describes practices and ideas to improve upon their leader-ship capacity.

1. Meet with the executive team to determine clear conditions of success expectedas the CEO increases travel and other commitments and how to shift more dailyoperational responsibilities.

2. Discuss with the executive team expectations for cultivating relationships forfuture mergers as discussed in the Star Performer role and Strategic Plan.

3. Meet with direct reports to develop their coaching plan and the places requiredfor growth. Work with them in developing practices for more effective leadershipwith emphasis on pace and energy moderation for direct reports.

4. Continue to develop a stronger presence in front of the Board.

5. Work with his managers on agreement of a metric of success that can be usedas an organizing principle for increasing member satisfaction.

6. Work with a coach to create extension practices with the intent of stepping outmore in the community, associations and political events. Review personal valuesselected and how he wants to move with and in them more deliberately. Extendout more in the community to develop strategic relationships with external part-ners so they serve the credit union in the best way possible for members andemployees while achieving the strategic plan.

7. Be selected for leadership roles in political associations and communityorganizations.

8. Be a strategic partner for universities and support them by delivering neededproducts and services.

9. Organize and build competencies around continuous learning and mastery forhimself and others. Building these commitments to Continuous Learning andCoaching can become the basis for developing other soft skills. Meet with acoach or his manager to establish priorities and timeline for above. Do this byJanuary 15.

SOURCE: Candidate for CEO Role: Leadership Development Plan was created by DDJ Myers, Ltd.(www.advancingleadershipinstitute.com)

P.O. Box 14167Madison, WI 53708-0167

800.252.2664 • 608.271.2664, ext. 3400 • fax: 608.441.3346

cues.org

Credit Union Executives Society (CUES) 5510 Research...

Documents

Transcript of Credit Union Executives Society (CUES) 5510 Research...