5 Steps In Executing A Well-Organized Transition Plan

Unexpected requirements cause no worry when leadership is on board with a transition plan.

American Flag CU faces an urgent situation, which is best described as a multi-dimensional leadership challenge. With the CEO retiring unexpectedly, the Board must respond decisively or risk losing momentum at a critical time. On a strategic level, the Board is diverse, lacking synergy and perhaps the trust necessary to navigate its challenges. Still, it must affect an organizational transition plan efficientlyin order to instill confidence with the regulator, the staff, and ultimately the members of the credit union. As chairman of the Board, Ferling must lead by examplefor his colleagues and engage them in a higher purpose — positioning the credit union for the future.

There is an organized process for the Board to follow in a well executed transition.

Step 1 Transition Plan

The Board must rethink its strategic initiatives and build a transition plan that both facilitates a smooth shift in control and minimizes operational impact.A transition plan is different than a succession plan. It envelopes key considerations as an integrated strategy with components that include:

  • Establishing a Transition Committee to drive strategy
  • Assessing and reprioritizing current strategic initiatives
  • Determining a timeline for CEO succession and interim solutions
  • Developing a recruitment plan
  • Interviewing organizational development consultants

Step 2 Compelling Reason to Merge

During any transition of power, industry leaders take note. The Board will be approached to consider mergers as soon as the CEO retirement is announced. Before then, the Board needs to conduct a special meeting to review the pros and cons of a merger. What are the compelling reasons to consider a merger?Member value? Operational efficiency? Financial improvement? Leadership? What are the show stoppers? A name change? Board positions? There must be an enhanced member value propositionand brand promise to proceed with the merger option.

If the Board agrees to consider mergers, a merger candidate profile should describe each candidate’s organizational culture, FOM,financial ratios, locations, leadership, etc. Using this profile, a market evaluation will determine potential candidates that may be interested and contact can be made. Even with a strong CEO candidate at the merging credit union, an external searchensures the new Board has the right leader.

Step 3 CEO Selection

Although some Boards elect to conduct a search without professional support, this is seldom the best choice, especially during these economic and regulatory times. A professional recruiter can advise on best practices and conduct a national search specific to the Board’s CEO candidate profile. A CEO selection process includes:

  • Board education on succession realities
  • Internal candidates and approach
  • CEO profile based on organizational strategic objectives
  • Compensation philosophy and market research
  • Networking, direct recruitment, candidate interviews, and evaluation
  • Benchmarking analysis and written exercises
  • Candidate packages for Board review
  • Selection process, interviews, and consultation
  • Negotiations and contract development

Step 4 Appoint an Interim CEO

The CEO selection will require four to six months. Based on the current CEO’s retirement date, the Board may need to adopt an interim solution. The Board can establish an internal teamof executives that is responsible for daily management with authority control policies in effect. There are also retired CEOs who can provide leadership short term and management service companies that provide industry leaders to your organization as a business partner service.

Step 5 Executive Coaching for the new CEO

Traditionally, retiring CEOs give the credit union a specified amount of time to mentor a new CEO, which ensures assimilation into the organization. This transition time varies withcircumstances but typically last three to six months. A variety of approaches can be used for executive coaching — onboarding is a 100-day planned process thatwill increase the new leader’s effectiveness and enhance long-term success.

In sum, the volunteer structure of credit union governance and memberownership presents both opportunities and challenges as organizations position for the future. American Flag CU must respond quickly to its leadership challenge with a well executed transition plan. The selection of a new CEO is the most importantdecision he and his Board colleagues will make as volunteers.

RETURN TO Searching for New Leadership.

June 4, 2014

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