Andrew Jaeger has no immediate plans to step down as the CEO of Credit Union of New Jersey in Ewing, but that doesn't mean he hasn't started thinking about who might take his place.
"We're all aging, so we're starting to take a much closer look at building strength in the future leaders of the credit union," said Jaeger, who has led the $423 million-asset credit union for more than 33 years.
The issue of succession planning was top of mind for many credit union leaders, including Jaeger, who spoke during the CrossState Credit Union Association's
Jaeger said it takes time and resources to identify the right people and put a plan in place, and many smaller institutions simply don't have those two things in ample supply. Still, Jaeger said that cannot be used as an excuse.
"You need to make time for it because it's critical," he said.
The National Credit Union Administration agrees. The agency in January approved by a vote of 2-1
The NCUA has not put the issue back on its agenda yet for a final vote. An NCUA spokesman said the regulator is reviewing comments.
One such comment came from Chuck Purvis, president and CEO of the $4.7 billion-asset Coastal Federal Credit Union in Raleigh, North Carolina.
Purvis said although he recognizes the need for credit unions to have adequate succession plans in place, he is concerned that the proposal would place an undue burden on credit unions that have previously demonstrated adherence with safety and soundness requirements.
"We urge the agency to consider targeting specific succession planning parameters to focus attention on smaller credit unions who may not have succession plans or those who are clearly experiencing operational challenges," Purvis wrote.
Jaeger agreed and said the rule is unnecessary even though a lack of planning often leads to the demise of smaller credit unions.
"Even if they had succession plans, I'm not sure it would have helped some of these credit unions. I think most boards and credit unions address it adequately," Jaeger said.
And planning needs to start no matter how long a CEO has been in place.
Peter Rice, president and CEO of Hanscom Federal Credit Union in Massachusetts, has been on the job with the institution for
But he said one of the first things on his agenda when he joined the $1.8 billion-asset Hanscom was to make sure that the organization would have a strong succession plan if something happened to him.
"The chief executive officer is not an individual; it's a purpose," he said.
Some leaders would be chagrined to name successors because they might feel it immediately disempowers them — that there's someone else who could possibly do their jobs — according to Rice. But the credit union's board might not be aware of the strength of talent sitting on the bench, either from within the organization or outside it, he said.
"No great competitors should ever fear comparisons," Rice said. "It's your mission and your purpose that's critical here, so I think putting this discussion on the table is the right thing to do."
In its comment letter, the Credit Union National Association said in some instances a merger may be the best approach for a credit union and its members. The group said it understands the NCUA's concern with unplanned or forced mergers, which potentially present safety and soundness risks that could lead to losses impacting the National Credit Union Share Insurance Fund.
"However, we believe there are situations where a — typically small — credit union has a merger plan as the key component of its succession plan. While a plan to merge would not comport with the elements of the proposed rulemaking, we ask the NCUA to consider that sometimes a plan to merge can be the best course to serve the FCU's members," wrote Luke Martone, CUNA's senior director of advocacy and counsel.
Hanscom's Rice said the extent to which credit unions fail to develop leaders is often the same extent to which those companies struggle.
Sometimes credit unions are hesitant to develop executives because they may ultimately leave the organization for greener pastures elsewhere, but that's the cost of doing business, Rice said.
"You have a moral obligation to develop your people," Rice said "They may leave and not come back, or they may leave, get better experiences and come back at a later point. That's the reality of talent and the American dream."
