Yes or No? CEOs and Contracts
Editor's Note: Credit Union Retired Executives (CURE), a resource for free, confidential management advice, is offering Credit Union Journal readers a glimpse into its files for CU Journal's new "Advice from the Brain Trust" feature. CURE will select from among its user questions and publish the advice that was offered in response. CURE responses are put together by the group's think tank of retired credit union leaders.
Q: Do you recommend that CEOs have a written job description and a formal evaluation process?
A: The short answer is yes. The long answer is more complicated, and there is no universal standard. Instead, it really varies: from the CEO who said that she walked into the board meeting every month not knowing if she would be there for the next, to the CEO who said that he wished his board would be more flexible in setting goals and keeping scorecards, which otherwise puts him in a box with no tolerance for variance, even when the world around the credit union changes.
It is of course the responsibility of each board of directors to create an evaluation system based on standards — hopefully, with input from the CEO — that results in a fair evaluation: a system that measures the CEO's performance on a variety of factors, a system that compensates him/her based on that performance — and, finally, a system that provides him/her with enough flexibility to be able to adjust for changing conditions.
That said, there is no standard job description, there is no standard evaluation process, and there is no standard bonus system. It all depends on the board, whose members may or may not have the expertise to ensure that this evaluation is fair.
What we should all strive for is a job description of what is expected - which will result in an evaluation system that judges performance based on a set of clear expectations and goals, which incorporates ranges to ensure flexibility and allow the CEO to respond quickly and effectively to everything from everyday issues to the inevitable crises that can arise without warning in today's complex financial world.
A contract may seem desirable because it does spell out what is required, including your severance package, but a formal evaluation process and a written job description are still necessary; otherwise, you're working in the dark with no way to measure your success.
A good relationship between the board and the CEO is essential. It starts with mutual respect, founded on mutual understanding and trust that you both share the same mission: serving the members and ensuring the success of the credit union. That shared mission and good relationship, more than anything else, is what will lead to not only your success as a CEO, but also the long-term success of the credit union. Good luck!
CURE is a network connecting current CU professionals with retired credit union executives. Additional information can be found here.