Market Trends & Perspective

Credit-Union Executive Recruiting in 2014 — a changed market

2001, when I was just beginning my foray into credit-union executive recruiting, was a good time for credit unions. I had already spent over a decade in the industry and felt I had a pretty good handle on its professional needs. In San Francisco, where I was living at the time, local credit unions had met the seemingly impossible challenge of competing with dot-coms for talent. The dot-com bubble had burst and many gifted executives were recognizing the value in stable employment with a credit union.

That same year, 2001, a book called The War for Talent, argued that even though the economy had weakened substantially, the war for high-value people was not over. Because of demographic, economic and social forces, recruiting top talent would remain at the forefront of business challenges for decades. But the warnings were forgotten in the Great Recession that followed. By the end of the decade, credit unions were looking to cut costs and shrink staff; in many cases were in full survival mode. A long line of displaced credit union and banking professionals could quickly fill any vacancy in the executive staff.

Demand is outrunning supply

Now fast forward to 2014. The landscape has changed dramatically. This change has been much longer in coming than many expected back in 2001, but we are now seeing demand for talent outstrip the supply. Both credit union and personal balance sheets have been repaired. Credit unions are much larger and much more sophisticated than they were even a decade ago. Struggles with competition, technology, and regulatory compliance are affecting them all. And now the first wave of baby boomers is finally opting for retirement. It’s not hard to see why folks who have the resources to retire are only too happy to turn over the keys to a new guard. In the changed environment, the need for executive talent is critical even for credit unions without impending retirements.

Working with credit unions across the country, we see recruiting challenges in every region. Many credit unions are struggling to create sufficient loan demand and maintain a high-performing loan portfolio. With competition back from money center, regional and community banks, finding an exceptionally talented Chief Lending Officer has proven difficult challenge for many credit unions. Then too, in this exceptionally low interest-rate environment, a strong Chief Financial Officer who can optimize investment-portfolio returns, manage balance sheet risk and squeeze efficiencies at every opportunity is essential. Then again, given the focus on remote delivery channels and mobile payments, a competent and visionary Chief Technology Officer is vital, not only to survive but to flourish. In the face of the challenges in retail/branch operations, human resources, marketing, and other core functions, the entire executive team has similarly pressing needs for performers.

Essential: a strategy for the times

Although the landscape has changed, many institutions are still using hiring practices from a decade or more ago. Success for credit unions, today and tomorrow, demands a fully-developed strategy for recruitment.

Here are a few suggestions—to think about and possibly incorporate into your people strategy.

• Shift from “screening” candidates to “recruiting.” Everyone involved in the hiring process should understand that attracting top talent is part of his or her job: “You are being interviewed as well.”
• Make the interview process a positive experience. While you will only hire one person for the role, all candidates should feel good about how they were treated. There will be dividends in the long run.
• Avoid having candidates jump through unnecessary hoops. If, for example, time-demanding personality profiles and comprehensive applications are essential to your process, save them for one or two finalists.
• Weigh carefully the value of ‘panel’ interviews involving multiple parties. You rarely get to know a candidate in front of a panel of five or six people. While it’s good to have an inclusive culture, there may be better ways to involve your people in the hiring process. In any case, focus participants on recruiting, in addition to asking pertinent interview questions.
• Be wary about including in the hiring process employees who will be direct reports to the executive position under consideration. Their preferences for a supervisor may differ from the overall objectives of the credit union.
• Streamline the recruiting timeline. We all want the perfect candidate, but taking several months to interview candidates, with no decision, keeps them in limbo—and in the market—putting results and institutional reputation at risk.
• Recognize the importance of vacation time and/or PTO to candidates. If you are offering a seasoned executive only two weeks of vacation time, you will not attract the best talent. Many banks offer 25 or 30 days for senior positions.
• Supplemental Executive Retirement Programs (SERPs), which are becoming common, make it much more difficult to recruit candidates away from their current employer. If you are not currently offering a SERP to your executive staff, you may want to evaluate the options.
• Given the importance of compensation, your credit union should have a compensation strategy. As a direct result of making the right decisions at the right time, a top credit union executive can pay for his/her compensation many times over in increased income and/or decreased expenses. In seeking the best talent, focus on ultimate value, not penny costs.

More philosophy than tactics

Successful recruiting is certainly not reducible to a set of tactical tips. Your philosophy is more important than your tactics. The best way to serve your members is to ensure you hire and retain the very best executive talent possible. The Board of Directors, the CEO, the executive team, and the senior staff— will determine the credit union’s performance.