Volunteers

Interim CEOs Are Key to Succession Plans

Plans should establish roles and responsibilities for temporary leaders.

November 17, 2011
/ PRINT / ShareShare / Text Size +

While there are numerous components to a successful CEO succession plan, few are more important than selecting an interim CEO to run the credit union while staff search for a permanent leader.

That’s according to "CEO & Board Succession Planning," a new Credit Union Magazine white paper. In some cases, if the interim CEO has been properly trained, he or she could be named the new CEO permanently.

A variety of staff works together to formulate a succession plan. This can include the CEO, the board of directors, the human resources department, and senior executives. Senior executives may end up taking a lot of responsibility. Besides helping develop a succession plan, they may be called upon to act as interim CEO, the white paper says.

Succession plans should define the process for establishing interim management. Usually the board selects an executive from the credit union staff to work as interim CEO until a permanent CEO is chosen. If the CEO and his backup are both unavailable, they may chose a team of two to three people to take over temporarily.

Subscribe to Credit Union MagazineIf no internal candidate is available or willing, the white paper suggests the board should work with search firms and the state league to find one from outside the credit union. Another option boards might consider is hiring a recently retired CEO or senior executive to temporarily serve as CEO.

At a special board meeting immediately following the CEO’s departure, the board should establish the interim CEO or team. This action must be documented in a letter by the chairman and witnessed by another board officer. The board might consider these factors when selecting interim staff according to the white paper:

  • The interim’s level of authority;
  • The board’s official liaison during the interim period;
  • Salary terms; and
  • Anticipated length of the interim assignment.

The board must also make plans to find a new CEO. Board members should decide whether the executive committee or an appointed search committee will seek out the new CEO. They should outline a hiring process; and they should include whether the interim CEO can apply.

Once an interim CEO is selected, a board must establish the CEO’s role and any limitations on his or her abilities as CEO. Before the interim takes the position, the white paper lists the following steps the board should address:

  • Decisions requiring the board’s approval. These might include a spending limit for the CEO, or specifications on project types that will require board or executive committee review;
  • Term of interim employment—or how long the interim CEO will serve in the position, especially relative to when the new CEO will take over;
  • Compensation. Boards should pay an appropriate rate for an interim, and should consider additional pay or a bonus when the interim is selected from staff, because increased responsibility will mean longer hours, disruption of relationships with colleagues, and project delays which could turn into even bigger workloads when the interim returns to his position;
  • Ability to apply for the CEO position. Most credit unions let the interim apply but make it clear he or she competes equally with other candidates; and
  • Sensitive issues. These are most important if the interim doesn’t apply for the permanent CEO position. One such instance might be if the interim CEO is required to conduct performance evaluations and determine pay raises. The board might delay such a decision, or handle it on its own. 

Succession Plans and Business Continuity

Ken Schroeder, MBCP, VP-Business Continuity
November 14, 2011 10:12 am
Not mentioned in the article, but critical to Business Continuity is the importance of having the Succession Plan in place BEFORE a disaster occurs. (Not just what to do if the CEO departs unexpectedly, but what do do if he or she is hit by the proverbial bus). I've conducted many business continuity exercises for credit unions, and those without a plan are thrown into a complete tizzy when the CEO is a casualty. Just the effort of notifying the board and getting a temporary decision leaves the entire credit union floundering. Succession plans need not be made public, but should be available for surviving staff to immediately continue operations. As the article said, there really should be several options (or a prioritized list) that outlines clearly who is in charge. Good Stuff. Thanks.


Flag Comment as Offensive

Post a comment to this story

heroes

What's Popular

Popular Stories

Recent Discussion

Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

Your Say: Who should be Credit Union Magazine's 2014 CU Hero of the Year?

View Results Poll Archive