What Makes A Successful Credit Union CEO – Personality Traits or Leadership Skills?

By Ben Rogers, research director, Filene Research Institute

Hiring and developing a successful credit union CEO can’t be reduced to a formula. But the surprising results of a recent Filene Research Institute study could help guide your credit union in the right direction during its next CEO search.

At the very least, Filene’s 2013 research report, “Leading for Credit Union Success: The Roles of Personality and Practices in CEOs,” could eliminate some common misconceptions about the most important personality traits and leadership skills for a CEO to have.

Report author Murray Barrick of Texas A&M University, says he was surprised how often personality traits seemed to be better predictors of credit union success, often more important than leadership skills or high-productivity work practices.

Here’s a brief description of each of the three variables he measured:

  • Personality traits included extraversion (assertive, ambitious, sociable); conscientiousness (hardworking, achievement-oriented, detail-oriented); emotional stability (calm, confident, not prone to stress); openness to new experiences (imaginative, curious, open-minded to different approaches); agreeableness (cooperative, friendly, empathetic).
  • Leadership skills included relationship building, and the ability to complete tasks and plan/implement strategic change.
  • High-productivity work practices (HPWPs) are a collection of human resources practices that have shown to improve job satisfaction, reduce turnover, increase productivity and overall organizational performance. Examples include merit-based incentive pay; performance appraisals for coaching and to clarify goals/expectations; Internal/external equity in compensation; and involving employees in problem solving, increasing efficiency and overall performance.

The research also sought to determine how the variables—alone or in combination—of personality traits, leadership skills, and HPWPs predicted credit union success, which itself was broken down into three elements: transformational leadership behavior, employee engagement, and organizational performance.

Personality is More Important Than Skills

Another surprise to the researchers was which personality traits were most important.

Some highlights:

  • A CEO’s overall personality traits were more important than leadership skills in two of the three success factors: organizational performance (48 percent of the overall predictors were personality traits, while 39 percent were leadership skills) and employee engagement (47 percent personality; 21 percent skills). The third measurement of credit union success, transformational leadership, leaned more heavily on the CEO’s leadership skills, with the top three predictors (plan/implement strategic change; relationship building, and task completion) accounting for 55 percent of the overall predictors of success.
  • The highest predictors of employee engagement, by far, were the use of high-productivity work practices (33 percent) and the CEO’s conscientiousness (32 percent)
  • The top two predictors of a credit union’s overall performance were the CEO’s emotional stability (30 percent) and the CEO’s relationship-building skills (18 percent)

Here are the three measurements of credit union success used in the study, broken down by the variables most likely to predict them:

Organizational Performance

(Net worth to total assets; delinquent loans to total loans, net charge-offs to average loans, and return on assets)

  • 30% Emotional stability (personality)
  • 18% Relationship building (skill)
  • 13% Overall employee engagement (success measure)
  • 9% Task planning/completion (skill)
  • 7% Conscientiousness (personality)
  • 7% Transformational leadership (skill)
  • 6% Agreeableness (personality)
  • 5% Plan/implement strategic change (skill)
  • 4% Extraversion (personality)
  • 2% Openness to experience (personality)
  • 1% HPWPs (Success measure)

48% TOTAL PERSONALITY TRAITS
39% TOTAL LEADERSHIP SKILLS

Employee Engagement

  • 33% High-productivity work procedures (success measurement)
  • 32% Conscientiousness (personality)
  • 12% Transformational leadership (skill)
  • 5% Openness to new experience (personality)
  • 5% Emotional stability (personality)
  • 4% Task completion (skill)
  • 4% Agreeableness (personality)
  • 3% Relationship building (skill)
  • 2% Planning/implementing strategic change (skill)
  • 1% Extraversion (personality)

47% TOTAL PERSONALITY TRAITS
21% TOTAL LEADERSHIP SKILLS

Transformational Leadership

  • 22% Plan/implement strategic change (skill)
  • 17% Relationship building (skill)
  • 16% Task completion (skill)
  • 14% Agreeableness (personality)
  • 11% Emotional stability (personality)
  • 8% Conscientiousness (personality)
  • 8% Openness to new experiences (personality)
  • 4% Extraversion (personality)

55% TOTAL LEADERSHIP SKILLS
45% TOTAL PERSONALITY TRAITS

Three Personality Traits to Recruit for and/or Improve

Among the report’s recommendations is to develop a CEO’s strengths across three key personality traits: conscientiousness, emotional stability, and agreeableness. Although Barrick acknowledges that changing a CEO’s personality is unlikely, it’s possible to improve the behaviors captured by these traits.

Suggestions for improving behaviors include:

  • Set and publicly commit to fewer but more important goals (conscientiousness);
  • Manage stress levels through diet, exercise, relaxation, and visualization techniques (emotional stability); AND
  • Rely on inquiry, not just advocacy, and work to identify more effective ways to give feedback to others (agreeableness).

The report also recommends comprehensive 360-degree feedback reports every 18 months for executives, to give them a clear sense of their skills and behaviors.

Overall, we know there’s no one formula for a good credit union CEO—we can’t create them in a lab to match with these research conclusions. But watching for these key attributes can help you recruit the best executive talent, and train the people who are already leading your credit union.

Ben Rogers is the research director for the Filene Research Institute. Reach Ben at benr@filene.org.

Strategic Link is the NWCUA’s wholly-owned service corporation, using the power of aggregation to provide the Association’s member credit unions with exclusive high-quality, competitively-priced products and discounted services. Contact Director of Strategic Partnerships Craig Reed today to find out how Strategic Link can help your credit union save money while meeting its goals in 2014 and beyond: creed@nwcua.org.

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