Smith believes a key element of a CEO succession plan is a board discussion about what the ideal CEO’s vision and approach will be.
The board’s top priority should be to determine their priorities for the successor, he says. “This ideation may result in a unicorn—impossible to find. So, it’s okay—in fact, necessary—to compromise from there. All the directors need to be on the same page.”
Boards must consider a variety of plans, options, and scenarios, Smith says. Multiple plan options are crucial because situations change, or people change their minds, get poached by rivals, or switch industries.
“Contingency plans are necessities,” Smith says. “Today’s world is complex, and too many things can go sideways.”
CEO succession plans should include both long-range and emergency plans, which likely are already codified in the business continuity plan. According to the consulting firm Korn Ferry, when organizations engage in effective succession planning, they:
When the long-term CEO at Oxford Federal Credit Union in Mexico, Maine, announced his retirement in November 2020, he and the board initially looked internally to gauge internal interest for the CEO position.
After determining that leadership team members were fulfilled in their current roles, Oxford Federal added an executive vice president (EVP) position, says Joann Bisson, who took over the helm of the $310 million asset credit union in February 2023. “We stressed that the EVP wouldn’t be the ‘heir apparent,’ but it would be a good opportunity for the board and the individual to work together.”
‘Being able to preview a potential candidate is invaluable.’
David Leclerc, board chair, Oxford Federal Credit Union
“Being able to preview a potential candidate is invaluable,” adds David Leclerc, board chair. “In addition to the feedback from our prior CEO, the year that our EVP worked with the credit union gave us the opportunity to measure how she fit in with our culture and to see the chemistry develop within the management team.”
The board acknowledged that the EVP shouldn’t necessarily be the automatic choice for CEO, but ultimately appreciated the chance to appoint someone “they knew from day-to-day experience as opposed to having to interpret competence and character during a few limited interviews,” he says.
Shelly Mellenberger was one of three internal and eight external candidates considered when she was named president/CEO at $449 million asset PCM Credit Union in Green Bay, Wis., in April 2023. The board recognized that obtaining employee feedback on what they wanted in their new CEO was a key element in the selection process, says board member Karen Sylvester.
“Our culture is very important,” says Christina Connell, PCM’s vice president of human resources. “As a smaller credit union with fewer than 50 employees, all of our staff knew the retiring CEO personally and talked to him daily. We conducted a staff survey, and directors asked employees about their views.”
In August 2022, Devon Lyon joined $790 million asset Central One Federal Credit Union in Shrewsbury, Mass., as CEO. Only the third CEO in the credit union’s 70-year history, Lyon was selected after a nationwide search.
The process was robust, Lyon says, and included multiple interviews, a strategic plan project, and a lengthy conversation with the search firm’s consultant, a retired CEO who asked specific strategic and tactical questions.
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