“ Providing Strategies for Success ”

1. “Providing Strategies for Success” Finding the Heirs Apparent: “Leadership Succession Planning for Ensuring Your CUs Future” Utah Credit Union Association Volunteers Conference October 22nd, 2011 Presented By: John A. Vardallas CAE,CUDE Founder/CEO TheAmericanBoomeR Group Madison, Wisconsin USA 1

2. Welcome Utah Credit Union Leaders… Chevy’s The Green Bay Packers Credit Unions Chevy’s The Green Bay Packers Credit Unions

3. My First Car…….

4. My Team…….

5. My Credit Unions… • UW Credit Union ($1.3 Billion) • Summit Credit Union ($1.6 Billion)

6. Today We Will Be Discussing: How To Replace AND TANSITION ceo/BOARD leadership!

7. Poll Question? What Would You Do If Your CEO/Chairman Was Hit By A Bus While You Were part of this program?

8. Why Succession Planning? -- 30% of Credit Union CEO’s will be stepping down by 2014— AND 40% of Credit Unions have no FORMAL SUCCESSION PLAN (CU TRADES) -- The NCUA’ s Letter to Credit Unions 161 identifies succession planning as one of seven internal controls deserving special attention. “The existence of a detailed succession plan that provides trained mgmt personnel to step in at a moment’s notice is essential to the long-term stability of a credit union”.

9. Why Succession Planning? (cont) -- Shrinking pool of talented leadership available due to widespread business retirements nationally -- Downsizing of middle mgmt and flattening of organizations the past decade have created a shortage of executive talent -- 66% of senior managers hired from outside usually fail within the first 18 months—Center for Creative Leadership (The Succession Planning Process Helps Cultivate New Leadership!)

10. Where Do CU CEOs Come From? • 33% are promoted internally • 33% are recruited from other CUs • 34% from other outside organizations CUNA Salary Survey

11. Factors That Are Making the CEO Job Tougher… -- Pace of Technological Developments -- Rapid Change Makes Long Range Planning Difficult -- Global Competitive Marketplace -- Overwhelming Information Provided Through the Internet -- Leading and Managing the Needs of A Diverse Workforce -- Meeting the Expectations of Shareholders/Members -- Can You say “Regulation”?

12. New Leadership Competencies Future Executiveswill need to possess a more sophisticated set of skills mix including global business acumen, technological literacy,multicultural fluency, inspire versus motivate people and the ability to manage change and non-hierarchical organizations.

13. Why Plan For Succession? Board/Mgmt have an obligation to the members to continue the credit union for future generations The Succession Planning Process should cultivate “Predictability versus Chaos”

14. Benefits to the Credit Union-A Succession Plan Can… • Reduce Costs - Loss of Business/Pay for Desperation/Utilize cu training investments/Fill vacancies • Reduce Anxiety/Fear- By Stakeholders Internal (staff/board) External (members/vendors/regulators) • Prepare for CEO Retirement Situations -- Prevent Lawsuits/Create Transparent Transitions/Groom New Leadership • Prepare for Crises Situations -- Unexpected Loss of CEO (Death/Termination/Departure for Better Opportunity)

15. “Boards” Responsibility… As the Watchtower for the Credit Union Guide by Communicating during challenging situations: What are you going to do if the CEO or Board Member suddenly terminates employment or position? Do you have a written plan? What does your bylaws state?

16. “CEO’s” Responsibility… As the Pilot for the Credit Union: Steer by Knowledge & Experience -- Update Job Descriptions -- Identify Career Paths for staff -- Develop Leadership potential (mentor/job rotation/growth opportunities/ professional development) -- Monitor Internal & External Equity (Compensation packages/HR Trends/Job Market)

17. Components of A Succession Plan • Materials (job descriptions, org chart, marketing/part of strategic plan) • Resources (budget/personnel/search firms/executive recruitment) • Time Frame (60-180 day plan, benchmark timetable and dates) • Clear Objectives/Strategies (Fill vacancy of CEO/Ensure transparent transition possible/Ensure Board selects a “valueadded” candidate to the credit union) • Updated and Refine Periodically

18. 6 New CEO Succession Plan Approach Steps • Forecast Business & Leadership Needs • Generate a List of Competencies • Assess Internal Talent & Identify Gaps • Provide Development Opportunities • Hold People Accountable for Their Own Development • Make Succession Planning an Integral Part of Annual Business Planning

19. Tips For Boards in Designing A CEO Succession Plan --Take Stock How is the cu doing? What are its strengths/weaknesses? Should you be looking for candidates to keep the cu on coarse or to change directions? -- Draft a list of possible successors to the CEO -- Appoint a committee to oversee the succession -- Motivate the CEO to create a succession strategy -- Increase the CUs Bench Strength -- Expose emerging staff leaders to the board -- Plan for retention of high performing staff(this may prevent executive poaching) -- Limit the Succession Time frame (Waiting too long leaves cu vulnerable to missed opportunities

20. Succession Leadership for Small Credit Unions… Strategies to consider: -- Partnering or Twinning with a Larger credit union -- Utilizing outside Management Firms or Retired CEOs -- A Merger (after a CEO retires)

21. Poll Question? Identify the possible Barriers you see for an effective Leadership Succession in your credit union? -- -- --

22. Steps To A Successful Board Succession Plan • Develop A Desired Director Qualifications Profile • Develop Director Roles and Expectations (Job Descriptions) 3. Develop Strategic Recruitment and Exit Plans (Associate Director/Director Emeritus Program) 4. Establish a Candidate Assessment Process (Application/Interviews)

23. Succession of Directors Checklist… Concerns/Challenges -- Lack of Interest/Getting Candidates/Loss of pool of people due to changing FOM -- Aging of Boards/Retention of Directors Who have lost their effectiveness -- Increased time/development commitments/expanded responsibilities -- Liability exposure/Increased regulation -- More Scrutiny due to concerns over Ethical Practices -- Term Limits

24. Succession of Directors Checklist (cont) Possible Solutions -- Develop effective director recruiting program (use directors to recruit, job descriptions, make a difference, rotate board members/committee chairs) -- Increased Liability/Indemnification clauses/Legal opinions for Dir support -- Creating Director Emeritus/Mentoring/Associate director programs utilizing committee members -- Ongoing Director Education/Training -- Regular Reward/Recognition Programs

25. Creating A “Balanced Board”… • Research Your Needs • Review the Current Profile of Your Board • Does it reflect your current field of membership? • What does the Board need to better represent the current / future membership?

26. Determine Your Talent Needs… • What kind of person does the Board need to better understand the future direction/ products/services and financial situation of your CU to help meet the needs of your members? • Develop Attributes/Skills profile of new board member (Community Rep/Human Resources/Finance/Marketing/Etc)

27. Where Do We Find the Next Generation of CU Directors? • Task Current Board Members to Profile/Recruit a new board member • Utilize CU Web site as a recruiting tool • Look at Your SEG Groups for persons interested in Serving • Appoint to Specific Task Groups/Committees • Look for Boomer Age Group Members • Keep assignments short termed (Episodic Volunteering) Key: Focus on Diversity versus Tokenism

28. Tips to Remember When Recruiting Volunteers… • Give the volunteer the “Big Picture” and a Compelling Message to Join • Clearly Define the Task (Job Description) • Describe the Expectations/Time required • Assure support and assistance • Be Prepared to respond to stated/hidden objections (legal/time/fitting in) • Convey excitement/fun/the opportunity to help Make a Difference • List out Education/Training Opportunities (Focus on the CU Philosophy)

29. Creative Group Exercise CREATE YOUR IDEAL CEO & BOARD

30. And Finally….. The Keys to Effective Succession Planning and Ensuring Your Credit Unions Future -- Make it part of your credit unions overall Strategic and Business Planning Process -- Your Top talent Must Embrace & Plan for Change -- Choose Your Staff/Board Leaders for the Future Not the Past -- Think of Your succession plan as your credit unions “Leadership Will” -- You as today’s CU Leader are preparing the CU for Tomorrows Members… What Legacy Will You Leave?

31. Open Forum Time… • Final Thoughts, Questions, Discussion Items

32. Thank You For Your Attention and Input. I wish you Personal and Professional Success! …JAV Please feel free to contact me if I can be of service to you. 7x24x365 Direct Cell: (608) 577-8707 JVARDALLAS@AOL.COM www.theamericanboomer.com 32

33. About John A. Vardallas CAE,CUDE“Providing Strategies for Success” John A. Vardallas is an International Credit Union Business Consultant and Founder/CEO of TheAmericanBoomeR Group, a Madison Wisconsin based Speaking and Consulting Business. His work focuses on helping credit union leaders and organizations increase productivity and profitability.He conducts High Performance Leadership & Management Development, World Class Service, Change and Growth programs forstaff and directors. He also facilitates Strategic Planning sessions for a variety of credit unions throughout the USA each year. For a free E-Catalogue of Programs & Services you may contact John/ Office (608) 221-4621 Cell (608) 577-8707/ e-mail jvardallas@aol.com/ www.theamericanboomer.com