This article is the third part - Glass Slippers - of a three-part series related to current vacancies of permanent leadership at system-level organizations that impact B.C. credit unions.
Empty Seats: Current vacancies & short term impact
Visionaries Wanted: Medium & long-term implications
Glass Slippers: Governance actions & best practices
This article comprises four sections - Cinderella's glass slipper; System-level CEO recruitment; Stealing good ideas & leveraging best practices; and a Call to system-level governance bodies.
CINDERELLA’S GLASS SLIPPER
Prince Charming used but a glass slipper and unerring faith to find his true love Cinderella. Governance bodies may need to take a more sophisticated, pragmatic and urgent approach to recruit permanent system leadership.
Imagine for a moment that the Prince faced three options to find his bride:
Search high and low throughout the land. The glass slipper must surely be a perfect fit to signal true love. Patience.
Ask advisors & other palaces. Perhaps different slippers or a prioritized search process. Assemble a royal working group.
Trust his heart. Seek passion for serving the realm today & for dreaming of a better tomorrow. Forget footwear.
An unromantic royal advisor may tell the prince of trade-offs between time, cost and quality. A recent ball attracted but a few, rare princesses. Princes of nearby kingdoms also seek brides. Some princesses may be seasoned wearers of high heels. Some may simply covet a pair of snazzy slippers. Extra resources may quicken slipper fittings. But while the prince searches, the realm may become restless and remains unattended.
SYSTEM-LEVEL CEO RECRUITMENT
Each system-level organization, in its own way, has a significant current and/or future impact on the credit union system. But there appear to be several key differences in organization and circumstance that may impact CEO recruitment:
System-level organizations vary materially in their employee size, legal basis, ownership basis and ultimate purpose
System-level governance bodies vary materially in their number, expertise, representation and nominations authority
All recruitment processes, with exception of Central 1, appear not to be assisted by incumbent permanent CEOs
Exit circumstances of prior/current permanent leadership may vary significantly by system-level organization
Current process stage of recruitment of permanent leadership appears to vary materially by system-level organization
Ideal profile, and likely compensation expectations, of new permanent leadership may differ materially by organization
Permanent leadership may face near-term challenges that, despite overlaps, may be dominated by entity-specific issues
Leadership recruitment initiatives by governance bodies of FICOM/CUDIC and of Stabilization Central Credit Union do not appear to have significantly leveraged, if at all, executive search services.
STEALING GOOD IDEAS & LEVERAGING BEST PRACTICES
Plenty has been written about CEO recruitment. Thought leadership, perceived best practices and potential pitfalls seem well-documented across a range of publications. Some expert advice appears both timelessly and generic while some advice may be specific to an economic cycle, industry, organizational type, organizational circumstance or nature of the transition. There are inevitable differences between CEO succession issues at an international corporate conglomerate, such as General Electric, and the equivalent processes at any of the system-level organizations that impact B.C. credit unions.
Significant wisdom may be gleaned. In efforts to assist governance bodies then the author has selected a handful of publication. Where possible, direct quotation has been made. The governance bodies responsible for the appointment of permanent leadership of B.C. credit union organizations vary significantly in their profile. As do the organizations that they govern. Learnings may be applied on a selective basis or adapted as appropriate. The author perceives that related external advice may be categorized into three discrete components - succession planning; executive search & selection; and leadership on-boarding.
HLS#1 - Harvard Law School, ‘Advice for Boards in CEO Selection and Succession Planning’
HBR#1 - Harvard Business Review, ‘The Art and Science of Finding the Right CEO’
HBR#2 - Harard Business Review, ‘Don’t Hire the Wrong CEO’
HBR#3 - Harvard Business Review ‘The Secrets of Great CEO Selection’
HBR#4 - Harvard Business Review ‘The Right Way to Bring a New CEO on Board - After the Handshake’
FAST#1 - Fast Company, ‘Why You Should Hire for Potential not Experience’
Weblinks to all publications append this document.
HLS#1: ‘Most boards review succession planning with the incumbent CEO on a regular basis. We advise that there be a comprehensive discussion at least annually regarding internal candidates and planning for emergency circumstances.’
HLS#1: ‘In ideal circumstances, the succession process will be managed by a successful and trusted incumbent CEO, with the board or a board committee overseeing the process, reviewing the candidates and providing advice.’
HLS#1 - ‘A board working on CEO succession without [an incumbent] CEO can be dysfunctional where:
‘a board has personal animosities or recurring substantive disagreements that prevent it from reaching consensus on priorities or candidates, or
the board has one dominant personality whose influence is so strong that other directors are effectively excluded from the decision-making process, or
a board [say through prioritization of independence] lacks the depth of experience and expertise in the company’s business and industry.’
HBR#1: ‘Many CEOs don’t push their boards to discuss what might happen when they leave, because they don’t want to think about it—unless they know their departure is imminent. By then it’s probably too late to start preparing succession candidates.’
EXECUTIVE SEARCH & SELECTION
HBR#2: “If boards follow the guidelines below, they are much more likely to hire the right CEO:
Come to a shared definition of leadership [in the specific context of current organizational challenges]
Resolve strategic & political conflicts [‘board should not assume that a new CEO can come in and puts its house in order’]
Actively measure the soft qualities in CEO candidates
Beware of candidates who act like CEOs
Recognize that real leaders are threatening [‘without realizing it, many boards are adverse to outsiders who threaten to shake things up’]
Know that inside heirs usually aren’t apparent [‘outgoing CEOs often aren’t good at ... choosing their own successor’]
Don’t rush to judgment’
HBR#3: ‘Board members who are adept at picking CEOs do four things others don’t:
Work painstakingly to clarify the essential qualities to succeed in the job [‘two or three pivot capabilities’]
Keep an open mind about where the best candidate will come from [‘back off from longtime favorites and keep an open mind’]
Go deep to understand which candidate is the best fit
Allow for imperfections in the chosen candidate [’every CEO has an open flank’]’
HBR#2: ‘During a search process, Boards might do well to keep their long knives sheathed because, in fact, real leaders are threatening to those intent on preserving the status quo’.
HBR#2: ‘Search firms do what they are told. In essence, headhunters look to fill round holes with round pegs. And that is fine so long as they are told the right thing. There are two problems with this. First, the Board had better be sure that they have a round hole to fill. Second, talented, frequently younger people - high-potential sorts - are excluded from searches because they lack the exact experience being sought.’
FAST#1: ‘Organizations and their leaders must transition to what I think of as a new era of talent spotting–one in which our evaluations of one another are based not on brawn, brains, experience, or competencies, but on potential. The question is not whether your company’s employees and leaders have the right skills; it’s whether they have the potential to learn new ones. Four other hallmarks of potential are curiosity, insight, engagement, and determination.’
HBR#4: ‘Whether new CEOs are hired from the outside or promoted from within, they should be aware of a daunting statistic: One-third to one-half of new chief executives fails within their first 18 months, according to some estimates.’
HBR#4: ‘Most new leaders fail not because their financial or operational abilities are inadequate but because their style or political skills render them unprepared to manage the organization’s culture.’
HBR#4: ‘Although many people tend to think of succession as the process of identifying and assessing internal and external candidates, defining the characteristics the new CEO will need, and ultimately settling on a final choice then that’s really only half the job. Succession should include activities that occur after the new CEO takes the job - activities designed to maximize their chance of success. In many ways, the later stages are more difficult than recruitment and assessment phases. They involve emotions, ego, beliefs about what the organization should become, and, in particular, company culture and politics.’
HBR#4: ‘For a board, a CEO succession is a critical moment in the life of the company - a time when directors should expect to be meeting, talking and contributing more than they ordinarily do, much as they would during a merger or an acquisition.’
HBR#4: ‘Clear expectations are among the most crucial things directors can provide.’
CALL TO SYSTEM-LEVEL GOVERNANCE BODIES
The B.C. credit union system needs permanent leadership. The system’s purposeful impact on membership, employment and communities seem stronger today than ever. Its future potential to benefit the economy and society appear vibrant. The system seems likely to face challenges that are numerous, complex and substantive. It needs strong and progressive permanent leadership, across all system-level entities, to embrace a daunting suite of circumstances; to imagine a better future; to engage disparate system opinions; to navigate challenging political realities; and perhaps to bushwack a trail through unfrequented or uncomfortable terrain.
A leadership transition in a single organization may be significantly effectual to that organization. New leadership in a organization with system scope or authority has broader impact. But concurrent new permanent leadership across many system-level organizations may create implications and opportunities of seismic proportions.
Research notes sobering statistics of CEO failure. It also highlights best practices, potential pitfalls and thought leadership that may assist efficient, effective execution. The risk of untimely appointment of permanent leadership may be material too.
There is competition to attract leadership talent. In September 2016, the Board of Deposit Insurance Corporation Ontario appointed Guy Hurbert as Acting President & CEO. In March 2017, Credit Union Deposit Guarantee of Saskatchewan’s CEO Garth Melle announced his intention to retire effective December 2017. Numerous Canadian credit unions - including Cornerstone, Encompass, VP, Auto Workers, Plainsview, Mount Lehman, Lake View and North Winnipeg - have active or recent CEO recruitment campaigns.
A weighty burden falls on governance bodies of system-level organizations. It is they that will ultimately select and nurture a new generation of system leaders. Recruitment processes may be difficult, demanding and even frictional. There may be issues that impact, and consequences of, any untimely appointments (‘empty seats’); with any trade-offs in ideal candidate between short-term operational execution and long-term leadership potential (‘visionaries wanted’); and inevitable desire to appoint the perfect candidate (‘glass slippers’). The stakes are high. The future is watching. Both the B.C. public and the national credit union membership likely applaud your best efforts. Good luck.
B.C. system-level and other leadership announcements
Central 1 Credit Union. Press release: https://www.central1.com/news/central-1-ceo-announces-intention-step-down
Stabilization Central Credit Union, Executive Team: https://www.stabil.com/contact/
FICOM / CUDIC, Executive Team: http://www.fic.gov.bc.ca/pdf/news/News%20release_InterimLeadership.pdf
Lake View Credit Union, Executive Team: http://lakeviewcreditunion.com/your-credit-union-2/management-and-board/
DICO, Acting President & CEO: https://www.dico.com/design/4_14_Eng.html
Selected recent B.C. system-level publications
Central 1, ‘Supporting Credit Union Success: A discussion of the future role and structure of centrals and system partners’. Report: https://www.central1.com/sites/default/files/uploads/files/Future%20State%20Discussion%20Paper%20with%20Letter.pdf
Central 1, ‘If not now, when? Next steps in the future role and structure of centrals and system partners. Report: https://www.central1.com/sites/default/files/uploads/files/FutureState_IfNotNowWhen.pdf
BC Ministry of Finance, ‘Financial Institutions Act / Credit Union Incorporation Act Consultations’. Submissions by B.C. credit union system, centrals, FICOM & other entities: http://www.fin.gov.bc.ca/pld/fiareview.htm
BC Auditor General, ‘Credit Union Supervision in British Columbia’. Report: http://www.bcauditor.com/sites/default/files/publications/2014/report_16/report/OAG%20Credit%20Union%20Supervision%20in%20BC_FINAL.pdf
BC Auditor General, ‘Progress Report: Credit Union Supervision in British Columbia’. Report: https://www.bcauditor.com/sites/default/files/publications/reports/FINAL_Credit_Union_Progress_Audit.pdf
FICOM, ‘Identification of Central 1 as a Domestic Systemically Important Financial Institution’. Press release: http://www.fic.gov.bc.ca/pdf/info_bulletins/cu-14-001.pdf
FICOM, ‘Financial Institutions Commission Regulation of Central 1 Credit Union'. Press release: http://www.fic.gov.bc.ca/pdf/fid/correspondence/16-2452-LTR.pdf
FICOM, ‘Credit Union Guidelines’. List: http://www.fic.gov.bc.ca/?p=fid/guidelines#cu
CUDIC, ‘Update on the Proposed CUDIC Risk Based Premium Assessment Methodology’. Letter: http://www.fic.gov.bc.ca/pdf/fid/correspondence/17-0024-LTR.pdf
Deloitte, ‘21st century cooperative: Rewrite the rules of collaboration’. Report: https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/financial-services/ca-en-financial-services-21st-century-co-operative.pdf
Central 1 Enterprise, ‘Executive Exodus’. Article: http://enterprise-magazine.com/features/executive-exodus/
Harvard Business School, ‘The Art and Science of Finding the Right CEO’. Article: https://hbr.org/2011/10/the-art-and-science-of-finding-the-right-ceo
Harvard Law School, ‘Advice for Boards in CEO Selection and Succession Planning’. Report: https://corpgov.law.harvard.edu/2012/06/11/advice-for-boards-in-ceo-selection-and-succession-planning/
Harard Business School, ‘Don’t Hire the Wrong CEO’. Article: https://hbr.org/2000/05/dont-hire-the-wrong-ceo
Harvard Business Review ‘The Right Way to Bring a New CEO on Board’. Article: https://hbr.org/2016/12/after-the-handshake
Harvard Business Review ‘The Secrets of Great CEO Selection’. Article: https://hbr.org/2016/12/the-secrets-of-great-ceo-selection
Fast Company, ‘Why You Should Hire for Potential not Experience’. Article: https://www.fastcompany.com/3035990/why-you-should-hire-for-potential-not-experience
The author wishes to thank selected credit union system veterans that generously volunteered technical expertise, system memory and professional guidance. Out of discretion then no names are noted. Thank you. Their wisdom, perspective and encouragement were most appreciated.
DISCLAIMER & COPYRIGHT
This article reflects the personal comments of the author, Ross McDonald. This article does not represent the views of any financial cooperative, corporate organization, regulatory body or government ministry. Comments are wholly based on information that is in the public domain.
Although the author has made every effort to ensure that the information in this article was correct at press time, the author does not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.
All rights reserved.