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.
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.”
NO REASON TO HANG AROUND?
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.