Avoid mergers with strategic planning that includes succession planning

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Week after week, this same publication reports on the various mergers that occur between credit unions and every time I read one, my soul dies a little. Many of these credit unions are what we call “boutique” credit unions, which of course can have resource issues and are known to avoid risk. I would say that in some areas they can take more risks.

What I can’t figure out is these credit unions merging because they supposedly can’t hire CEOs or board members. This should be an integral part of any good strategic plan. Lack of succession planning is one of the biggest risks of all. Yet the managers of credit unions who try not to create risk for their institutions – which is why many merge with more than 20% capital and very few loans on the books – are in fact one of the greatest sources of risk.

When doing your strategic planning, developing or reviewing your plan for who (or a description of the type of person you would like) will lead your credit union in the future is a sound business practice for executives and volunteers, and fits perfectly with your annual strategic planning sessions. The fact that the NCUA is about to require a succession plan from credit unions is both ridiculous and understandable.

I recently spoke with the CEO of a boutique credit union that had merged with a smaller credit union and immediately discovered the pent up loan demand among its new members. It exists.

All credit unions have to do is communicate the value of what they offer, which should come from the mission and vision of a credit union that are created and revised every year. This value is not your loan or savings rate. It’s not the variety of products or services you offer. What credit unions offer is the value of membership and making people feel like they belong because they trust your institution to, yes, provide them with a lot, but also to give them the help they need to solve the problem they are having. This should be at the heart of every credit union’s strategic planning, and building leadership, now and in the future, plays an important role.

Credit union leaders must be challenged to create meaningful change to succeed as member financial heroes. To maintain (or regain) relevance, we need to question everything like a curious toddler to dig down to your root “why”. Step into various perspectives; dig rigorously into critical facets of your credit union, such as succession planning; and take responsibility to act responsibly. This is the whole purpose of strategic planning.

Executive Decision

Linda White, outgoing CEO of the $100 million Burlingame, Calif.-based Upward Credit Union, who served as CEO for 24 years, began talking with her board of directors and planning her retirement and her successor about five years ago. She worked at the credit union for a total of 37 years. That’s a heck of a lot of institutional knowledge to replace!

Linda recommended current vice president of operations, Jason Mertz-Prickett, who took the helm on September 1. She had five years to coach him, work with the board and figure out if he would be the right fit. She shared that knowing she had someone close at hand was a big relief all around. Even if Jason hadn’t worked, Upward could have figured that out as well and started a search knowing what type of leader would be right for the credit union. Succession planning is essential to meaningful strategic planning.

The role of succession planning in small credit unions is even more critical than in larger ones. Jason said it’s crucial for credit unions, and boutiques in particular, to maintain our uniqueness. It also hurts credit unions when our top talent thinks they don’t have a career path, so they leave for other opportunities – sometimes closing the door to credit unions for the rest of their careers. Jason said he noticed the change in Linda who gave him some jobs, that he’s known her for a long time, and “there aren’t many fires that I wouldn’t run into for her.” This is an impressive leadership transition on both sides and an example of how succession planning can be incorporated into a credit union’s strategic plan.

Volunteer Success

Away from retirement age, Mark Dietrich, CEO of the $125 million Quincy, Illinois-based United Community Credit Union, recognized the need for not just CEO succession planning, but also the planning of the succession of the members of its board of directors. The credit union decided to incorporate this as part of their strategic planning session.

After forming a governance committee, outlining the backgrounds of current board members, and developing and distributing a new volunteer application, the credit union was able to strategically fill in the gaps it had among its volunteers. UCCU went through the process and found Michelle Miller, a financial advisor with a background in banking who was elected to the board earlier this year. She has also served on several local community boards, including Kiwanis and United Way, which has given her comprehensive experience serving the credit union and representing its members.

UCCU now has a proven method of ensuring its future and its relevance through the inclusion of succession planning in its strategic plan.

worry about it

So many boutique credit unions with huge potential are merging because of their members’ failure in strategic and succession planning. They squander their members’ hard-earned trust and capital to give to another credit union whose members often become just a number. These stories are just two of the thousands of small credit unions that can find a way forward by including succession planning in their strategic plans.

The transition between Linda and Jason at Upward has been an impressive collaboration at the executive level, while Mark and the UCCU Board have exemplified the accountability of credit unions to their members at the board level. . Strategic succession planning is part of providing excellent member services now and for the future of your credit union.

Your credit union can’t build a reputation as a hero, grow loans, or gain market share on what you’re going to do – only on what you’ve accomplished. Strategic planning with a strong element of succession planning must be part of the mix if a credit union truly holds itself accountable to its members and their future success.

Bo McDonald Bo McDonald

Bo McDonald is CEO of Your Marketing Co. in Greenville, SC


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