Make your succession plan strategic and give it ‘teeth’ to reap the benefits of stronger governance and more effective C-suite leadership.
By Jennie Boden and Chris Jones, ChFC®, CLU®
Also read “A Short Guide to Compliance with the New Succession Planning Rule.”
2026 is already offering credit unions opportunities to strengthen their organizations to better serve their members.
Case in point: The National Credit Union Administration’s final succession planning rule (12 CFR Parts 701 and 741, RIN 3133-AF42) went into effect on Jan. 1, 2026. The rule requires both federal credit unions and federally-insured state-chartered credit unions to establish written succession plans.
It can be tempting to look at a new regulation as simply an addition to the compliance burden credit unions face as government-insured, and therefore regulated, financial institutions. But we urge you to look at this regulation as an opportunity—and to undertake complying with it as a strategic imperative, not just a regulatory one. Credit unions that make their succession plans serve their strategy will reap the benefits of stronger governance and more effective C-suite leadership.
There will be lots of information published about the new rule, so we’ve summarized it in this article. The NCUA has already published a lot of information about the new rule, and basic compliance with the rule is straightforward. But getting the most out of your credit union’s succession plan means going beyond the basics. We encourage credit union leaders to focus on linking their succession plans to their strategic plans, ensuring that compliance means not just generating another policy document but rather creating a roadmap to the future.
This article will give you some ideas about how to create this link between your succession plan and your strategic plan, and encourage you to put “teeth” into your efforts.
Elevate Board and Executive Performance to New Strategic Heights
The new rule, which was finalized in late 2024, recognized NCUA’s goal of ensuring credit unions plan for the transitions of board members and top leaders.
On the occasion of the rule’s passing, then-NCUA board chairman Todd Harper said, “We know that the failure to plan for management and key decision-maker transitions comes with a cost. The potential costs range from an unanticipated merger of a credit union or its failure when key personnel depart.”
Complying with the new rule is an opportunity to think strategically and prepare not only for planned succession, but also to be able to readily answer the question, “What would you do if your CEO or manager called your board chair on Friday night and said, ‘I’ve taken a new position. I am giving you notice that I’ll be leaving as soon as the terms of my contract allow’?” Taking time to consider what your credit union would do with an unexpected change in leadership points to the importance of strategic succession planning.
In all, it’s important to do more than check a box to fulfill this compliance requirement. Have conversations now about what skills are needed in your next C-suite executive or board member so everyone on your team will be aligned with the organization’s strategy, you can recruit and hire better, you can do a better job with board renewal, and you will be in a better position to face unexpected vacancies.
A number of assessments and other resources can help shape these sometimes difficult conversations. A third party is oftentimes necessary to ensure that strategic discussions about term limits and recruitment practices don’t devolve into personal attacks. Knowing your current board matrix, understanding where there are gaps or opportunities for growth, and how to take action are critical to your success. You don’t have to figure it all out by yourselves.
Succession planning for board members is clearly an area in which many credit unions have room for growth. A national study done by Quantum Governance, L3C, CUES, and The David and Sharon Johnston Centre for Corporate Governance Innovation, Rotman School of Management found that 45% of credit union leaders believe they are adequate or less than adequate at attracting people with the right skills to their board. In addition, the research found, 57% of national respondents believe they are only adequate or less than adequate at regularly renewing their board’s membership.
Credit unions of all sizes can benefit from case studies of credit unions having success evolving their succession planning and board renewal processes.
On the executive side, succession planning is more effective when you have designed your executive compensation and benefits to attract and retain the right people. In other words, executive compensation and benefits, designed well, will make your succession plan a better retention tool.
The use of Supplemental Executive Retirement Plans (SERPs), for example, can help credit unions become an employer of choice for top talent. 2024 research published by NFP, an Aon Company, found that 82%of the 209 executive benefits decision-makers surveyed identified executive benefits as strategically important to their overall company success.
What You Can Do
As the new year continues to unfold, we suggest doing three things in response to the NCUA’s new succession planning rule:
- Shift to an opportunity mindset. Rather than see the new rule as an additional burden, look to gain every strategic benefit you can from your compliance efforts.
- Don’t check the box; do the work to be strategic. Filling out a cookie-cutter succession plan is tempting. But having the conversations with your leaders and team members to clarify what your organization needs most from its people will serve your organization and its members better in the long run.
- Recommit your credit union to outstanding governance and executive leadership. When you do this, you can’t help but work to make your succession plan strategic. With a solid succession plan in place, one that’s regularly reviewed and updated, you’ll move beyond compliance to effectively supporting your credit union’s future.
- Analyze your executive compensation once or twice a year. These check-ins are important to ensure your compensation programs are in line with your goals and the marketplace for talent.
We urge you to take advantage of the strategic opportunity available to you as you comply with NCUA’s new succession planning rule: 1.) Link your succession plan to your strategic plan and 2.) boost your retention with thoughtful compensation and appropriate SERPs that make your credit union a place where top talent wants to work.
This article was originally featured on CUInsight.com
Disclosure: The authors’ firm provides strategy and compensation advisory services; links are provided for informational purposes. Any executive compensation or benefit arrangements should be evaluated for legal, tax,accounting, and safety-and-soundness considerations.
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About the Author
Chris J. Jones, CLU®, ChFC®
Partner & Senior Benefits Consultant
Known for his analytical mindset and mathematical precision, Chris works closely with credit unions to design Supplemental Executive Retirement Plans (SERPs) that are not only durable and compliant but also grounded in data that supports long-term performance. With more than three decades in financial services, he has built a reputation for ensuring that every plan rests on solid numbers and delivers on its promise to executives and boards.
Since 2014, Chris and his team have implemented more than 200 split-dollar SERPs for credit unions and nonprofits, each one on track or exceeding its original performance projections.
Jennie Boden
Chief Executive Officer & Lead Consultant
Jennie is the CEO & Lead Consultant at Quantum Governance, L3C, a Callahan Company – bringing to the organization nearly three decades of experience in governance, strategy, management, leadership and communications expertise in the credit union and nonprofit sectors.
Jennie has led transformational governance and strategy work with credit unions and nonprofits across the country. The firm has worked with almost a third of credit unions in the U.S. that are $1B or greater in assets and with four of the top ten largest credit unions in the U.S.
Under Jennie’s leadership, the group has presented at more than 30 credit union conferences and continues to champion the credit union movement by providing board and C-suite leadership with the resources and guidance to achieve governance excellence.
