Hiring the next generation of CEOs could soon get harder
Recruitment for credit union CEOs will see some unique challenges in 2019.
Each day roughly 10,000 baby boomers retire, according to Investopedia. That means credit unions will have to increasingly fill the void left by CEOs and other executives who are looking to step down. An economic downturn could further exacerbate the problem if leaders decide to retire rather than fight through another difficult time.
To fill this gap, more institutions could turn to females to take on jobs at the top, but a number of challenges remain in getting more diverse candidates into the upper ranks, experts said.
“If we move to a significant economic downturn and our CEOs feel competent about their ability to retire, that will increase the propensity of mergers to happen because there seems to be less risk in merging than there is in doing the executive search,” said Jill Nowacki, president and CEO of the Credit Union League of Connecticut.
There are some that believe that an economic correction is long overdue following years of growth. A volatile stock market, partial government shutdown, slowing growth in China and an ongoing trade war have left many concerned about sustaining economic upswings.
All of that can throw a wrench into the plans of headhunters looking to fill executive positions. Recessions tend to have a domino effect on the economy, which leads to increased unemployment and decreased levels of growth.
“I think we’re going to go through a hiring regression when we go through a recession,” said Patricia Oliver, a partner at Tucker Ellis and former executive vice president at BB&T Corp. “I think there will be a pool of candidates who will not get hired because people will be scared to bring on new people.”
“I think we’ll be ‘deer in the highlights on what to do next,’” she added.
Hiring gaps are attributable to other factors as well, though.
The $5.5 billion-asset Ent Credit Union in Colorado Springs, Colo., has “multiple senior-level positions where we’re having a hard time finding a number of good qualified candidates to see who’s the best fit,” said Mollie Bell, chief development officer.
“The war for talent is real,” Bell added.
Finding top-level talent for credit unions is difficult and boils down to two issues, Bell said. First, the smaller number of potential Gen Xers to hire. Gen Xers, who range from 39 to 53 years old, are typically of the age when an employee enters the C-suite, but there aren’t enough in the demographic to fill vacancies left by retiring baby boomer executives.
Secondly, the credit union industry tends to be less high profile than other sectors and that creates a lack of awareness for potential hires, Bell said. She believes this is beginning to be addressed by credit unions and the industry’s trade groups that are launching awareness campaigns.
Last year in June, the Credit Union National Association announced its initiative to raise $100 million over the next three years for its Open your Eyes campaign in an attempt to draw more attention to credit unions.
Some experts also see the gaps left by baby boomer retirements as an ideal opportunity to hire new, diverse talent, including more women. But in order to do so, Bell said that credit unions need to make an intentional effort in their hiring processes to ensure greater diversity in executive positions and on boards.
The first step is thinking about an institution’s culture, Bell said, adding that language, culture and active inclusivity are important.
“Culture is hard to define sometimes. It’s a fairly nebulous thing,” Bell said. “When you walk into a building and when you see suits and ties, that speaks to one culture whereas when you walk into a building and see an open workplace [with] more people relaxed, [that] shows different stories.”
Over the last year, the #MeToo movement has drawn additional attention to women in the workplace. It has largely highlighted sexual harassment on the job, including in the bank and credit union industries. Some argue it has also spurred larger conversations, such as working to ensure a more diverse workforce.
Still, deeply entrenched challenges remain for sending more women into top jobs. For one, some worry that the #MeToo movement could actually hurt efforts to reach parity, noting that the movement can be a double-edged sword.
“A big challenge and an unintended negative consequence of the #MeToo movement has been a knee-jerk reaction where senior male executives have come to a place where they now have self-proclaimed that they are less likely to spend time with a female colleague [one-on-one] because of fear of sexual harassment allegations,” Nowacki said.
Others don’t believe the two are related.
“We don’t think of women [as] different from men in a different standpoint in any way whatsoever,” Robert Voth, a consultant at Russell Reynolds Associates said. “In #MeToo, it’s separate from the world of recruiting.”
Still, many women think that their gender influences their career paths. Forty-three percent of women in credit unions believe their gender has a negative influence on opportunities for advancement, according to a recent survey co-sponsored by National Association of Federally-Insured Credit Unions, BFB Gallagher, an executive compensation and benefits consulting firm, and DDJ Myers, which does executive recruitment. That’s compared with just 2 percent of men in the credit union industry.
Deedee Myers, founder and CEO of DDJ Myers, points to unique obstacles that women face in the C-suite level recruiting process such as compensation negotiation and saying yes too quickly.
Myers continued that credit unions and other financial institutions aren’t doing enough to hire women for top positions. She argued that hiring female CEOs, especially at larger credit unions may be difficult and that the industry “needs more women ready for these roles and it needs boards with a mindset that appreciates and value a diverse candidate brings to the role.”
The problem of too few female executives means intuitions may need to attract candidates from other sectors.
“There are only so many qualified female C-suite existing credit union executives, that if we stay in this narrow environment and look for diversity, [credit unions] will not find success,” Voth said. “But if they look at a diversification of talent, if they go look into banking versus simply credit unions, then the world explodes for them.”
Oliver advises a more long-term approach – looking toward promising young hires internally and working with them so they are eventually prepared to take over. To do so, she recommends active-sponsorship which requires a commitment between a manager and an employee to cultivate the employee’s growth in the organization over an extended period of time.
This approach, Oliver explained, invites young talented people to organizations from diverse backgrounds who feel supported. That helps “bust wide open the old boys' network,” Oliver added.
“We know that most senior level executives are older, white men so when those senior level executives are choosing from a pool that looks like them, we end up getting more white men in those CEO positions so it’s a big challenge for recruiters, boards, [and] current CEOs looking to develop the next level of talent in their executive team,” Nowacki said.