Through my work on strategy and enterprise risk management across the industry in all sizes of financial institutions, I have noticed an alarming issue that has and will have broad and deep implications for our credit unions.
Across the economy, companies have flattened their structures and stretched spans of control. The scope of managerial work has expanded sharply: in many firms the typical manager now oversees two to three times as many people as just a few years ago, leaving less time for coaching, career development, and succession building.
This is playing out acutely in credit unions. Smaller institutions often let vacancies go unfilled and spread the work across remaining managers. Larger institutions have pursued deliberate de layering. Either way, the outcome is the same: a thinner leadership bench and executives pulled into operations.
Consolidation is a visible symptom. The industry saw 162 mergers in 2024 and 80 more in the first half of 2025, for which lack of succession planning was noted as a primary driver.
It’s No Mystery
Why this is happening is not mysterious. Cost pressure and efficiency programs encouraged flatter org charts. Digital tools automated parts of oversight and gave leaders confidence to widen spans of control. At the same time, a cohort of veteran CEOs is retiring, yet fewer managers are getting the development and scope they need to be ready for the top job. The net effect is less strategic time at the top and a weaker pipeline, just as the operating environment becomes more complex.
AI may potentially compound the situation. Through 2026, Gartner forecasts that 20% of organizations will use AI to further flatten their structures, eliminating more than half of current middle management positions. If boards allow AI adoption to become an excuse for further de layering without rebuilding leadership capacity, spans of control will widen again and on the job development will shrink.
Used thoughtfully, AI can streamline reporting and workflows, but it does not replace the human work of coaching, judgment, and culture.
The Implications
What are the implications today and tomorrow if nothing changes? Today, strategic priorities slip as senior leaders spend more hours on operational firefighting and fewer on growth, innovation, and market positioning.
Operational risk inches up when overstretched managers have limited time to proactively work on the business. Culture weakens as managers lose capacity for regular 1:1s and performance conversations.
Looking ahead, the implications are likely to grow. The strategic position will erode as innovation slows, roadmaps slip, and faster competitors peel away members. Risk will concentrate in a few indispensable people, creating single points of failure. Financially, operating costs may even rise with added operational rework and handoffs and rising recruitment expenses for roles that can no longer be filled internally. Culturally, burnout and attrition among remaining managers will drain institutional knowledge, leadership diversity will shrink, and a coaching deficit will erode frontline performance and consistency.
The Levers to Pull
Boards have levers to pull if they act now.
Right size spans of control.
Ask management for a current map of manager to team ratios and authorize targeted rebuilds where supervisory loads are unsustainable. The point is not bureaucracy; it is restoring the supervision and mentoring that produces future leaders.
Mandate a leadership development and talent management strategy. Require a board approved plan that identifies critical roles, readiness levels, rotational pathways, mentoring, skills development, and budget.
Institutionalize succession planning.
The NCUA’s final rule requires boards of federally insured credit unions to adopt written succession plans, and was effective January 1, 2026. Treat the rule as a floor. Extend beyond the CEO to CFO, COO, CIO, CRO, and key operational leaders, with documented development and contingency coverage.
Align merger & acquisition decisions with leadership depth.
When consolidation is on the table, weigh leadership benches, manager ratios, and retention plans alongside financials and markets. Favor combinations that strengthen talent depth on day one, not just balance sheets.
Not a Resource Issue
Encourage leadership to implement a “recruit to the middle” strategy that focuses on attracting talent with the skills and acumen to fill key middle management roles in the near term, and the potential to advance in the long term.
The disappearing middle is not a resource issue. It is a structural leadership challenge that touches strategy execution, safety and soundness, member experience, and independence. Organizations that rigorously focus on building and sustaining strong leadership breadth and depth will be well positioned to grow and thrive in the future.
Originally published in the CU Board Brief. REACH OUT for more information on how to sign up for this monthly newsletter written specifically for credit union board members (discounts available to Rochdale clients)!