Should CEOS stick around af­ter they re­tire and their suc­ces­sor starts?

With baby boomer CEOS re­tir­ing in droves, many credit unions are be­ing faced with a sit­u­a­tion of whether to let the old boss linger af­ter the suc­ces­sor takes the helm.

Credit Union Journal - - Collaboration - BY PALASH GHOSH

AS WAVE AF­TER WAVE OF CREDIT UNION CEOS re­tire, new is­sues are be­ing raised about best prac­tices for suc­ces­sion plan­ning — among them, should a credit union hire a new CEO and still re­tain the pre­vi­ous boss in some ca­pac­ity?

Many ob­servers might say such an ar­range­ment is not ideal, yet it does hap­pen. Among the most re­cent ex­am­ples was Brook­lyn, N.y.-based Bay Ridge Fed­eral Credit Union, which hired An­thony Gri­gos as its new CEO while in­cum­bent CEO Gene Brody re­mained on the board of di­rec­tors.

Bay Ridge of­fi­cials de­clined to com­ment for this ar­ti­cle, but the topic en­gen­dered plenty of other re­sponses.

“I don’t be­lieve it’s good or proper for a re­tir­ing CEO to be­come a board or su­per­vi­sory com­mit­tee mem­ber of their credit union upon re­tire­ment,” Robert Tay­lor, pres­i­dent and CEO of Po­catello, Idaho-based Idaho State Univer­sity CU, told Credit Union Journal in a let­ter to the edi­tor. “The in­abil­ity of a re­tir­ing CEO to hang up his or her hat is a dis­ser­vice to the in­com­ing CEO, em­ploy­ees and the mem­ber­ship.”

New CEOS, Tay­lor added, “even if they are well known by the board and were pro­moted from within the credit union, need time on their own, with­out in­ter­fer­ence and over­sight from their pre­de­ces­sor, to de­velop as the new chief ex­ec­u­tive of the credit union.”

In the case of Bay Ridge CU, Gri­gos was an in-house hire, hav­ing served as its ex­ec­u­tive vice pres­i­dent for four years prior to his pro­mo­tion to the top job. More­over, Brody him­self rec­om­mended Gri­gos as his suc­ces­sor.

Even un­der the best cir­cum­stances, many said, prob­lems can arise.

Michael G. Daigneault, chief ex­ec­u­tive of­fi­cer & co-founder of Quan­tum Gov­er­nance of Vi­enna, Va., em­phat­i­cally told Credit Union Journal if he were of­fered a job as CEO of a credit union un­der the pro­viso that his pre­de­ces­sor would re­main with the in­sti­tu­tion, he would not take the po­si­tion.

“This kind of ar­range­ment can cause real prob­lems,” he said. “It’s not all that com­mon for ob­vi­ous rea­sons, but it does hap­pen.”

Jim Bur­son, se­nior di­rec­tor at Cor­ner­stone Ad­vi­sors and a spe­cial­ist in strate­gic and de­liv­ery chan­nel plan­ning, said this state of af­fairs can cre­ate some awk­ward sit­u­a­tions and dis­com­fort for both par­ties — but it largely de­pends upon the ”culture dy­nam­ics” of the or­ga­ni­za­tion and just how long this pe­riod of “over­lap” lasts.

“When it does hap­pen, the for­mer CEO may stay on any­where from one month to six months,” Bur­son said. “From the point of view of the in­com­ing CEO, he may feel like some­one is al­ways look­ing over his shoul­ders, es­pe­cially if the new boss wants to im­ple­ment some strate­gic changes.”


Jim Blaine, for­mer CEO of the now $37 bil­lion State Em­ploy­ees Credit Union of Raleigh, N.C., said re­gard­less of the fi­nan­cial health of the credit union, he sees lit­tle rea­son to keep the for­mer boss on the premises.

“If the credit union is strong, there is clearly no rea­son for the de­part­ing leader to keep hang­ing around,” he said. “If the credit union is weak, a shove out the door is ob­vi­ously in or­der.”

Blaine in­di­cated that since he re­tired from SECU last year, he has had no in­volve­ment with the credit union at all, ad­ding that SECU con­tin­ues to “grow and pros­per.”

“Good or­ga­ni­za­tions of any size are never about just one leader,” Blaine added.

Yvonne Evers, the CEO and founder of SUCCESSIONAPP LLC, a Madison, Wis.-based com­pany spe­cial­iz­ing in suc­ces­sion plan­ning, said some boards and CEOS feel it is ad­van­ta­geous to have the prior chief ex­ec­u­tive avail­able for the new leader when he or she starts at the credit union — but that’s not a strat­egy she gen­er­ally rec­om­mends.

“The prior CEO can men­tor them for a pe­riod of time,” she said. “I be­lieve that this time should be no longer than six months. Although the length of time will vary a lit­tle de­pend­ing upon whether the prior CEO had done a good job de­vel­op­ing his/ her po­ten­tial in­ter­nal suc­ces­sors or not prior to the tran­si­tion.”

Dr. Anna N. Danielova, as­so­ciate pro­fes­sor, fi­nance and busi­ness eco­nom­ics at Mcmaster Univer­sity in Hamil­ton, On­tario, said keep­ing the prior CEO can in some caes “fa­cil­i­tate a smooth tran­si­tion.”

But Danielova, an ex­pert on cor­po­rate gov­er­nance, warned that there is a danger that such a sce­nario may sig­nal that the board does not have “enough con­fi­dence” in the new CEO.

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