“Times, they are a-changin’.” Before long, most readers of this publication won’t get that reference to the great Bob Dylan song.

Fully half of baby boomers will turn 65 in the next 10 years and like the definition of classic rock, it will impact the credit union community tremendously in terms of retirements and their replacements.

The coronavirus pandemic is highly likely to accelerate the process. Consider the stress on a cooperative financial institution and its leadership when dealing with the relatively sudden economic crisis. In addition, the need for digital transformation has only become a greater imperative for continued member service. And on the flip side of that, is the transformation of the traditional retail business model. Regulatory pressures are mounting. That means alterations to management style and business model, quick and consistent learning curves and just change.

Half of CEOs plan to transition – whether retire or change positions – in the next six years. And it’s not just CEOs, but the entire C-suite that will be affected. If your credit union is not prepared with a succession plan, the transition will not go smoothly and it can take years, literally, for the credit union to recover. No credit union can afford that.

We are having to become more agile and very tech focused right now. That will require a very different skill set than when most credit union boards hired their last CEO, possibly decades prior.

Fintechs have also invaded credit unions’ battle ground in the war for talent. Their products are innovative and exciting, which can be very attractive for a young executive and their pockets may be deeper, too. Ensuring your credit union has a competitive compensation and benefits plan – not just competitive for the credit union market, but for others who are trying to recruit the same talented executives – is critical.

Understanding the need for the type of leader your credit union will require is crucial and necessitates a clear understanding of the current strategy, as well as, what the credit union may look like five to ten years out. If your credit union is $100 million in assets right now and it’s expected to reach $400 million in assets in the next 10 years, that alone will require a different organizational structure, diversification of products and services and potentially charter or field of membership changes. Each of these pieces fall together to complete a framework for your next CEO candidate.

Include your credit union’s current CEO in these discussions, too. They are experts in financial services, in your market and particularly internally regarding your credit union.

Despite the stiff competition in the talent pool and a broad understanding of what’s in store for the future of financial institutions, only 68% of credit unions have succession plans in place. To maintain a thriving credit union, ensure your board is preparing for the future by:

1.  Encouraging open dialogue with the current CEO to keep the board’s finger on the pulse of his or her intentions.
2. Running fire drill scenarios.
3. Considering internal team members and prep those who would make good candidates. Hopefully you can identify two to four who would make solid potential CEOs.
4. Studying your competition for younger executive and potential merger opportunities.
5. Networking at conferences for credit unions, banks, fintechs and others that will put you in contact with people who might be of interest. Some CEOs who arrive in credit unions from the for-profit world are the most appreciative of the credit union environment.
6. Interviewing recruiting firms that have vast networks and expertise in and outside the credit union market.
7. Keep on top of executive compensation trends and how they can map to your credit union’s long-term performance goals.

Supplemental Executive Retirement Plans are important for not just recruiting but retaining high-quality leadership. Ensuring it aligns to the board’s vision for the credit union can be complicated, so it’s a good idea to retain outside experts. Many credit unions have long-time CEOs, and executive compensation plans have changed tremendously since the last time the board may have studied the issue.

In fact, we recommend credit unions treat their succession planning almost like strategic planning; it should be performed annually to stay on top of the issues of the day and your internal candidates’ progress. Are they filling skill gaps with education and training? How are they leading their current area of responsibility? How do they manage the politics of the organization? Review their strengths and weaknesses with brutal honesty. It’s a multi-year process to develop a real understanding of an internal candidate’s potential. Rigor matters.

Finding your credit union’s next CEO is the biggest decision the board can make and the succession plan must be carefully put in motion as early in advance as possible to ensure a smooth transition that keeps the credit union moving forward. And within that process there are a hundred other important decisions to make, from capabilities of the candidates to how they’ll be compensated. Prepare so your credit union doesn’t let your top talent go – like a rolling stone.