Gary Easterling, CCE, CEO of $1.2 billion United Federal Credit Union, based in St. Joseph, Mich., asked a daring question. “When we become a $4 billion credit union, am I your leader?” Neither the board—or Easterling—knew the answer.

“Our goal is to continue doubling in asset size every five years and become a $4 billion credit union, so I asked the board: ‘What are leaders of $4 billion credit unions like?’ And then I asked them candidly, ‘Am I that leader?’” explains the CEO of the 101,000-member, 425 full-time-equivalent credit union. “I was asking, ‘What leadership competencies do I already have, what do I need to develop, and what do I need to strengthen?’”

The search for answers—and the CEO competency and assessment tools needed to find the answers—led United FCU through an in-depth exploration of leadership competencies.

Easterling says that he, his senior management team and board members searched for an assessment tool to help answer the question, but found few for credit union CEO competencies and certainly no definitive answers.

“Our research revealed no assessment or leadership competency profiles focused on this question specifically for credit unions, and relative to predictive measurement tools for CU leaders, there really wasn’t anything
at all,” he explains.

So, “we started our own research project,” he adds. “With assistance from CUES, we completed several focus groups with board chairs and CEOs—and conducted surveys of volunteer participants from larger credit
unions—to find the quantitative and qualitative study that might help us answer the question of “what leadership competencies are required to lead large credit unions.”

Credit union governance expert Matt Fullbrook is not surprised that the credit union had trouble finding answers as he admits that tools credit unions can use to have ongoing oversight of CEO effectiveness “are very meager.” But, more importantly, “many boards are not even asking the question.”

“That is a rare set of questions for board discussions, but it shouldn’t be,” adds Fullbrook, co-author of the Filene Research Institute’s Tracking the Relationship Between Credit Union Governance and Performance (co-sponsored by CUES) and an upcoming Credit Union Board Renewal Study.

“The process for many boards is to wait for a crisis before asking anything, and you see a lot of resistance to the question from the CEO side as well. However, not discussing CEO assessment on a regular basis puts your credit union in extremely high risk because … the most crucial direct hands-on decision a board ever makes is to hire and fire, and evaluate, the CEO. It’s the No. 1 role the board has, and CEO and management need to participate to make it happen.”

13 Ingredients

CUES member Cindy Swigert, chief human resources officer at the CU (whom Easterling called “a driving force” for the project), took the lead. With the help of CUES and other leadership education resources, and after months of internal and external surveys and focus groups, she compiled more than 80 competencies that participants said are needed by leaders of large institutions. With the surveying and analytical help of the CU’s consultant on the project, Baker & Daboll, LLC, Cincinnati, the many competencies were placed into six basic groups, including: banking and financial knowledge, communication skills; decision-making skills; member, membership and employee knowledge and skills; interpersonal attributes; and specific leadership qualities.

“The original list was interesting and informative to have,” says United FCU Board Chairman J.B. Hoyt, “but 81 seemed overwhelming from a board perspective. So they were categorized into groups and, as a board member, I can evaluate those and drill down if I need to on any specific one if there is a particular program or opportunity.”

Even more useful was the next step. Further focus groups composed of board members, senior management, CU staff, community leaders, and other CU leaders continued the open discussions of leadership competencies begun in the first stage of analysis. The qualitative data collected from the focus group information, as well as the quantitative data analyzed by Baker & Daboll and Dr. Mark Nagy, an industrial-organizational psychologist from Xavier University, revealed correlations between competencies and clearly unveiled 13 top competencies.

The CU recently published these findings in a new CUES white paper titled Leading a Large Credit Union: An Overview of CEO Competencies Linked to Success in hopes that both the process and results might provide other CUs with some heretofore hard-to-find CEO assessment criteria.

Easterling notes that the top 13 competencies clearly fell into more relational categories. These top competencies that United FCU research most linked to successful leadership are:

1. Active listener: Giving full attention to what others say; taking time to understand points being made; asking appropriate questions and not interrupting.

2. Directs change: Leading planned or unplanned organizational transformations in structure, technology, and/or people.

3. Dependable: Being reliable and fulfilling obligations.

4. Empowering: Recognizing and releasing the power employees have in their own knowledge and internal motivations.

5. Encourages trust: Inspiring others’ confidence in one another and assuring reliance on the character, ability, strength or truth of others.

6. Honest/ethical: Being authentic, being truthful and open with others and representing reality as comprehensively as possible.

7. Inspires appropriate behavior: Modeling appropriate behavior, communicates high expectations, and inspires others to become committed and part of a shared vision.

8. Manages board/executive team: Conferring with board members and executive team to discuss issues, coordinate activities and resolve problems.

9. Moral: Expressing, behaving and teaching a conception of what is correct and appropriate.

10. Respectful/inclusive: Giving particular attention to and being considerate of others; also holding others in high esteem.

11. Responsible: Being the cause/source of something positive, involving important duties or obligations, and being able to distinguish between right and wrong.

12. Strategic thinking: Possessing the ability to proactively, not reactively, think about, assess, view and create the future for themselves and those surrounding them.

13. Visionary: Being able to determine a realistic and believable image of the organization’s future, plus the ability to provide direction toward that goal.

The competency list in the CUES white paper includes focus-group developed good and poor examples of each of the 13 traits. For example, a leader who was honest/ethical would reject an opportunity to make a profit if it is wrong and would not do something immoral just because it is legal. He or she would not, for example, demand employees participate in a charity just for publicity. A leader with good moral competency would not judge others hastily, nor would he or she bring up personal and unrelated issues in front of others in a professional context.

“There are some things that (though in the original list of 81) aren’t in the top 13 that some might expect, like financial knowledge, but when you see what is there, it makes sense. Number one, active listener, goes back even to Stephen R. Covey and The 7 Habits of Highly Effective People when he said, ‘Seek first to understand before you seek to be understood,’” Easterling notes.

Others—like honest, moral and encouraging trust—might seem to be repeats at first glance, Easterling admits. “It might look like splitting hairs at first, but in focus group discussions there were clear distinctions and variances to separate them out. So although they may seem similar, analysis of the inter-correlations suggests that they are distinct and different from one another.”

The Next Steps

United FCU is already implementing its results, incorporating the 13 traits into CEO assessment, professional development and even senior management development. “I am working with my coach to revise my professional development plan down to these 13 traits we came up with and … assess through 360-degree surveys (of all board members, direct reports, others in the organization and community) to help see what competencies I need to improve so I can take my development to the next level,” Easterling says.

He is also “mapping our leadership team’s job descriptions with these 13 traits in line and also lining up our value statements with them as well.” Also, Easterling and other CU leaders and future leaders can now look at these traits and see what they need to look like if they want to be a successor candidate.

The information is “very valuable” to the board’s CEO assessment and any future recruitment, adds Hoyt. “I have had the opportunity to lead a CEO search twice, and you usually start out saying, ‘I know what I am looking for.’ The problem is eight other people have eight other ideas. Not having consistent criteria extended our search process in the past. As a board, we’ve now identified these key characteristics that we can go back
and measure against and use as an agreed-upon list of criteria for a search if we need one.

“We also now have a better evaluation tool,” Hoyt adds. “We had a good process in the past that included 360-degree feedback on Gary’s performance, and we’ll still include that, but our process was primarily having Gary explain his year, along with financials and project measures. The assessment criteria will now make our assessment of CEO performance more holistic and robust.”

Fullbrook agrees that what United FCU now has is “not a blunt instrument but a fine tool that they can apply to the most important job a board has, assessing talent.” The important step, he adds, will be to apply the criteria framework organization wide, “by applying competencies to strategic goals and objectives and then reviewing competencies—and continuing to ask the (Easterling’s) original question—on a regular basis.”

Hoyt concurs. “We may need to reevaluate these and adjust the relative rankings of them as our needs and focus changes and Gary’s competencies continue to expand and excel. And, if something really radically changes in our environment, we will certainly need to revisit them as well.”

The tool itself will hopefully continue to develop, Easterling adds. “We would like to get a large enough sample in the survey size to get more of the quantitative information we need ... to develop an actual predictive index that can assess someone’s capacity for excellent credit union leadership.”

Kristin Gilpatrick is a former editor of Credit Union Management magazine, and a Wisconsin-based free-lancer.