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The State of Credit Union Governance, 2018: Six Key Findings

Jennie Boden

Feb 27, 2018

We’ve been regularly surveying credit union board members, supervisory or audit committee members, CEOs and senior staff for the past five years. And for as many years as we’ve been surveying them, we’ve dreamed about the notion of pulling together a “state of the state” of credit union governance report – both to forward our own understanding of what we are seeing in terms of broad trends in the field, but also so that we can share the combined results with you, our friends, colleagues and clients in the credit union community.

Earlier this month, we were so pleased to release the culmination of that dream – The State of Credit Union Governance, 2018: Five Data-Driven Recommendations for Future Success. The report is a summary of data collected by Quantum Governance from 70 US-based credit unions from December 2012 through August 2017, located in 31 states. The credit unions range in asset size from $38.5 million to $4.9 billion, with nearly 60% of the respondents reporting assets of $1 billion or greater. Seventy-five percent (75%) of respondents are board members, followed by 12% senior staff, 7% supervisory committee members and 5% CEOs.

Here are its six key findings. We hope that you will be challenged by them – to increase your focus on the effectiveness of governance and leadership at your credit union – all toward the betterment of your credit union and its members.

Board Members and CEOs Frequently Differ on Their Perceptions Regarding Governance. Board members and CEOs differ on 84% of the survey’s key questions, agreeing on only 16% of the survey’s key questions (with the exception of the Supervisory Committee survey section, where there is more agreement).

Board Member and CEO Perceptions Diverge Based on Tenure. Board members who have served on their boards for a long period of time have more positive views than those board members who have less tenure. Conversely, CEOs with longer tenures tend to be more negative than CEOs with shorter tenures.

Bigger Really May Be Better. For 18 of the 21 key questions asked, board members and CEOs of credit unions with assets of $1 billion or greater had statically significantly higher survey scores overall indicating a more positive view, than those credit unions with assets ranging from $500 million to $999 million. That is, larger credit unions tend to rate their governance practices higher than those of smaller credit unions.

Credit Unions That Don’t Undertake a More Comprehensive Assessment May Receive a Skewed Perception. Those credit unions that participated in Survey-Only Assessments, opting not to include interviews, a document review and a retreat as a part of their assessments, tend to have more positive scores in many of the areas that we assessed.  While the exact reasons for this more positive viewpoint are unknown, it is a finding that is of genuine concern as it is simply not helpful to receive a “rosier” view of the credit union’s governance efforts.  Such a skewed – overly positive – viewpoint could cause some credit unions not to take corrective actions when, in fact, some action may be prudent.

Respondents Are Concerned About Recruiting Future Board Members. Survey participants expressed concern with the board’s effectiveness in Attracting the right people to serve on the Board in the future, with a full 46% of respondents describing their effectiveness in finding, recruiting and nominating new talent as only adequate or less than adequate.

CEOs and Senior Staff Perceive Lower Levels of Trust. Just 27% of senior staff and 25% of CEOs reported that their boards were very effective at Building a leadership culture of trust, compared to 53% of supervisory committee members and 44% of board members.

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