Beyond the Drama: Crafting Effective Succession Plans for Credit Unions

The popular television series “Succession” brought the high-stakes world of corporate leadership transitions into living rooms, albeit with a healthy dose of dramatization. While the fictional boardroom battles might seem far removed from the day-to-day operations of credit unions, the core challenge of leadership succession is a very real one for financial institutions. Michael Kadel, a managing principal at OneAccord, a firm specializing in strategic and succession planning, emphasizes that true succession planning is about “remov[ing] the drama” and fostering a proactive approach to leadership continuity.

OneAccord is a strategic advisory firm that has guided hundreds of organizations through leadership transitions and growth strategies for over 25 years. Kadel’s role within the firm is to help financial institutions move “from surviving to thriving” by understanding and executing robust succession plans. He highlights a critical distinction: “Succession Planning is not replacement planning”.

Proactive vs. Reactive: The Heart of Succession Planning

Kadel stresses that many credit unions mistakenly equate succession planning with replacement planning, a reactive approach to filling a sudden vacancy. He paints a clear picture of the chaos that ensues when a key executive, like a CIO, gives notice without a succession plan in place: “the CEO is scrambling to find a critical role”. This often leads to temporary solutions, with existing executives assuming additional responsibilities, disrupting operations and potentially proving “very disastrous to the day-to-day operations of the credit union”.

In contrast, true succession planning is forward-thinking. It involves identifying critical roles that will be needed in the future, even “2 to 5 years down the road”. By anticipating future needs and potential vacancies, credit unions can avoid the “drama” and ensure smooth transitions. As Kadel explains, “You’re planning in the event a vacancy does occur, you’re ready to respond, you’re ready to take action, because the plans already in place”.

Defining “Depth”: How Far Down Should Succession Planning Go?

A common question Kadel encounters is how deep into the organization succession planning should extend. His answer is unequivocal: “You need to go very, very deep, because it does you no good to get a robust succession planning for the C suite and you ignore the rest of the organization”. He views succession planning holistically, starting with identifying critical roles throughout the institution.

To determine a critical role, Kadel suggests a practical “Core Competency Assessment“: “If that VP of operations was out of commission for two months, how nervous would you be?”. If the anxiety level is high, a succession plan is needed for that position. He even notes that in some cases, succession plans have been created for “six or seven individual contributor roles that were critical to the functions of a credit union”.

Furthermore, succession planning should align with the credit union’s strategic plan. Kadel gives the example of a Chief Revenue Officer role, which may not exist today but might be essential in two or three years based on strategic goals. In such cases, the planning begins immediately to define the role, necessary skills, and potential internal or external candidates.

Internal vs. External: Balancing Development and Need

The decision to promote internally or seek external talent is another key consideration. Kadel strongly advocates for prioritizing internal promotion whenever possible: “You should always really try very thoroughly…to really try to fill any or any role that becomes vacant…internally, that’s number one, because it builds culture”. He points to compelling statistics: “internal promotions…are 30% more likely to stay within five years or more”. Promoting from within fosters employee engagement, speaks to a supportive culture, and builds “bench strength”.

However, internal promotion isn’t always feasible, especially when immediate needs arise and internal candidates aren’t yet ready. This is where the strategic plan and development timelines come into play. If a role needs to be filled in six months, but internal high-potential employees (HPEs) require a year or two of development, then “that’s the trigger that you need to go outside”.

Kadel emphasizes transparency in grooming high-potential employees. Organizations should communicate clearly that while they are being developed for a specific role, there’s “no guarantee” and other individuals are also being considered. This open communication also acknowledges that not everyone is suited for a leadership role, and individuals may opt out of the development process if they realize the time and resource commitment is too demanding. “You have to appreciate and respect and be willing to acknowledge that possibility“, Kadel advises.

The Evolving Plan: Re-evaluating Succession in a Dynamic Environment

Succession plans are not static documents. Kadel highlights the crucial link between strategic planning and succession planning: “Your strategic framework, your strategic plan, is really your Bible. It’s really your guide in how you go about succession planning”. As strategic goals evolve, so too must the succession plan.

Regular re-evaluation ensures that the credit union has “the people, not only the people in the right places, But we have the key identified successors identified already” to meet future objectives and KPIs. This ongoing process allows credit unions to proactively manage “unplanned vacancies” and “avoid disruptions”.

Key Elements of a Robust Succession Plan: Michael Kadel’s Insights

Michael Kadel stresses several critical elements and considerations for effective succession planning:

• Plan for the Future: Go beyond a current organizational chart. Consider what the organization will look like in two years, planning for anticipated retirements, departures, and newly required future roles.
• Organizational Restructuring: Be prepared for restructuring driven by market conditions, interest rate fluctuations, or evolving market demands. Succession plans should be flexible enough to adapt to these changes.
• Shifts in Strategy: A credit union’s strategy can shift based on factors like membership growth, technological advancements, or economic conditions. Succession planning must align with these strategic pivots.
• Performance Issues and Cultural Fit: While promoting from within is ideal, external hiring may be necessary. In such cases, carefully consider the cultural risk associated with bringing in outside talent.

The Imperative for Credit Unions: Why Succession Planning Matters

Ultimately, for credit unions, effective succession planning goes beyond mere business continuity. It’s about preserving the core mission of serving their communities. By proactively identifying and developing future leaders, credit unions can ensure that they “continue to be served by that credit union”, preventing situations where they might be absorbed by larger organizations and “completely destroys the mission of the organization”.

In a constantly evolving financial landscape, credit unions face unique challenges, from adapting to new technologies to navigating changing member demographics and economic shifts. A well-crafted succession plan provides the stability and agility needed to address these challenges head-on. It safeguards institutional knowledge, maintains operational efficiency, and, most importantly, ensures that the credit union’s commitment to its members remains unbroken. By investing in succession planning, credit unions are not just planning for the future of their leadership; they are securing the future of their mission and the communities they serve. For credit unions, succession planning is more than a business tactic—it’s a safeguard for mission and community impact. When transitions are planned with foresight and alignment, they preserve culture, protect operations, and ensure long-term service to members.

As Kadel puts it: “We’re not just building a plan for leadership—we’re securing the future of the credit union itself.”

 Michael Kadel leads the Financial Institutions practice at OneAccord, where he partners with credit unions to strengthen leadership, clarify strategic direction, and preserve their mission