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Succession Planning: The Internal Search Presented byLoretta P. Dodgen, Ed. D. HCS Group Insert Your Logo HereNational Association of Federal Credit Unions l www.nafcu.org

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Succession Planning• The transition from one CEO to another is a critical moment in the life of the credit union.• Succession planning for the CEO role is a key responsibility for Boards.• A properly designed and executed succession plan is critical for a successful transition. Insert Your Logo Here National Association of Federal Credit Unions l www.nafcu.org

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Succession Planning• Research-The success of an organization is determined by the effectiveness of the leader.• Increased scrutiny requires Boards to ensure that important decisions are based upon detailed, complete, and objective information.• Failure to plan is a strategic risk. Insert Your Logo Here National Association of Federal Credit Unions l www.nafcu.org

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Succession PlanningAdditional Benefits • Framework for senior leadership development aligned with strategic needs • Ongoing analysis of the position needs • Clarification of key expectations Insert Your Logo Here National Association of Federal Credit Unions l www.nafcu.org

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"Would you tell me, please, which way I ought to go from here?" "That depends a good deal on where you want to get to," said the Cat. "I don’t much care where--" said Alice. "Then it doesn’t matter which way you go," said the Cat."--so long as I get SOMEWHERE," Alice added as anexplanation."Oh, you’re sure to do that," said the Cat, "if you onlywalk long enough.“(Alices Adventures in Wonderland, Chapter 6) National Association of Federal Credit Unions l www.nafcu.org

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Succession Planning Phase One: Planning for the Transition• Outline the strategic direction for the credit union over the next 5 to 10 years• Identify the qualities, skills and experience required for those leading the credit union in order to attain the strategic vision• Outline the Compensation Philosophy and Policy Insert Your Logo Here National Association of Federal Credit Unions l www.nafcu.org

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Succession Planning Phase One: Planning for the Transition• Review the organizational structure to ensure alignment with the strategic direction and needs of the credit union• Outline the Succession Process • Roles and responsibilities • Process for planned and unplanned exits Insert Your Logo Here National Association of Federal Credit Unions l www.nafcu.org

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Succession Planning Best Succession Practices for Boards• Board and CEO discussions on long-term succession planning should begin 3 to 5 years prior to the time a CEO transition is expected.• The full board should be involved.• Open and ongoing dialogue should occur between the CEO and the Board on the topic of succession planning, including a formal annual discussion. Insert Your Logo Here National Association of Federal Credit Unions l www.nafcu.org

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Succession Planning Best Succession Practices for Boards• Board members should be given ongoing opportunities to interact with internal candidates in various settings.• The succession should be staged but horse races should be avoided.• Developing internal candidates is generally preferable to external recruitment. Insert Your Logo Here National Association of Federal Credit Unions l www.nafcu.org

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Succession Planning Best Succession Practices for Boards• The outgoing CEO should exit immediately or have a limited, clearly defined role.• A comprehensive emergency CEO succession plan should be in place at all times and reviewed at least annually.• Consider the political and emotional impact of the transition. Oliver Wyman, NACD Insert Your Logo Here National Association of Federal Credit Unions l www.nafcu.org

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The Internal Search Phase Two: The Search• Conduct an internal and external scan • Do you have qualified candidates within the current staff? • Is there a significant difference between the internal talent and that available within the external market? • Is the credit union positioned to attract external talent and retain internal talent? Insert Your Logo Here National Association of Federal Credit Unions l www.nafcu.org

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The Internal Search Phase Two: The Search• Outline a timeline that allows for a comprehensive search and selection. • Move as quickly as possible to minimize disruption. • Ensure that volunteers are able to commit to the time. • Determine if outside consultant will be used. • Include triggers for external search. Insert Your Logo Here National Association of Federal Credit Unions l www.nafcu.org

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The Internal Search Phase Two: The Search• Clearly communicate the process and criteria. • Will you post and accept applications from interested internal candidates? • Will you approach qualified candidates and invite them to participate? Insert Your Logo Here National Association of Federal Credit Unions l www.nafcu.org

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The Internal Search Phase Two: The Search• Treat all candidates graciously and fairly. • Be consistent. • Include an objective evaluation component. • Avoid courtesy interviews. • Maintain confidentiality. • Compensate a successful internal candidate as you would expect to compensate a successful external candidate. • Plan ahead. Insert Your Logo Here National Association of Federal Credit Unions l www.nafcu.org

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Succession Planning: The Internal Search Questions? Insert Your Logo Here National Association of Federal Credit Unions l www.nafcu.org