How Mergers Can Build the Talent Pipeline

Where will your future leaders come from? The question has taken on greater urgency in today’s quickly changing workforce. CEOs are retiring at an unprecedented rate, fueled by the demographic reality of 10,000 baby boomers turning 65 every day. Unfortuantely, organizations are finding it difficult to retain the next-in-line executives who have been groomed to take their place. Executive salaries and compensation packages are climbing at an accelerated clip, meaning that the talented people who have been waiting in the wings for a C-suite position may be lured away by a larger financial institution before an opening occurs.

Building and retaining a talent pipeline is not easy under these circumstances. If you’ve been sitting on the fence about pursuing a merger, the need to acquire talent could be a compelling reason to move forward. Not only will acquiring one or more smaller credit unions help you achieve operational scale, it also can bring in talent that can serve in future leadership roles in your organization.  These issues are discussed extensively in our white paper, “Succession Planning & Mergers“.

When a merger occurs, there are two ways for the combined organization to build the talent pipeline. One is through the merger itself, which will bring two pools of employees together to create a larger, more diverse employee base. In some cases, the smaller credit union may have sought a merger because the CEO retiring and there is no apparent successor. In other cases, the smaller credit union may have a younger CEO who has the potential for leading the larger organization that the merger has created.

“That younger CEO could be the leader of the sustaining credit union after a few years,” says Kirk Kordeleski, executive benefit consultant for PARC Street Partners, a financial consultancy firm specializing in credit unions and nonprofit organizations. “The sustaining organization could build the skill sets of that young leader and offer better compensation that the smaller credit union could not.”

This scenario is a win/win for both organizations, as that young CEO might otherwise leave the standalone smaller credit union for a larger-asset institution that provides higher compensation and more prestige. However, stepping into a key leadership position of a combined organization can put that person in line to be a CEO at a credit union that is larger and more multi-faceted than it was before the merger.

The merger also may provide talent for the CFO, COO, CMO and other roles, Kordeleski observes. “As you grow in assets, all of these roles become critical. You can look externally to fill these roles, but you may want the option to hand them off to someone internally.”

The second way that a merger can build the pipeline is through creation of a larger credit unions that has grown in size and stature sufficiently to attract top talent. Larger credit unions can afford to pay more in salaries, benefits, and bonuses, which is critical in a competitive job market where the most sought-after executives typically are contemplating multiple offers.

Larger organizations also are in a better position to afford effective professional development programs for building leadership skills among high-potential employees. Demonstrating to employees that you care enough to invest in their future helps establish a high-retention environment that is more likely to lead to a successful future for the credit union as well.

“Leadership is probably the greatest asset of any organization,” Kordeleski concludes. “You have to be able to acquire the talent to compete.”