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< Back 5 Data-Driven Recommendations for Governance Success Michael Daigneault Jan 29, 2018 Core Recommendations from a New Report The State of Credit Union Governance, 2018 is the culmination of five years of data collected from credit unions across the United States and a dream long held by everyone at Quantum Governance. The research yielded a number of key findings which we’ve shared previously on our blog . And now we can also share some data-driven recommendations that emanate from those six key findings. We hope that the information shared by credit union board members, CEOs, supervisory committee members and senior staff nationwide will help you and your credit union colleagues further mission success. You can find the Report here: The State of Credit Union Governance 2018, Report . These five core recommendations may help you strengthen governance policies and practices at your credit union: 1. Prioritize governance excellence at your credit union. If you haven’t been taking governance seriously at your credit union, it’s time to do so. And if you have been, it’s time to kick it up a notch. Whether you’re functioning at Governance 101 or 601, it’s time to find out what Governance 201 or 701 looks like for your credit union. 2. Eliminate any perception gaps between your board, supervisory committee and senior staff. If we know one thing, it’s this: Gaps between the board and senior staff will eventually be destructive. We highly (underscore highly) recommend a strong, constructive partnership between the board, supervisory committee and the senior staff—all working collectively to govern and lead the credit union. There were so many gaps in perceptions between these positions throughout the report that it surprised even us, and it should definitely concern you. 3. Ensure you have a plan for board (and committee) rejuvenation. The longer a board member serves, the more positive his or her perception is. While this may sound like a positive finding, it actually concerns us. Are long-serving board members losing their ability to ask the hard questions? At the same time, the number of potential board members among us—if we look strictly at the census numbers—is shrinking. Ensure that your credit union has a viable plan for leadership continuity. It is one of the most critical responsibilities a board holds. 4. Focus on your credit union’s leadership culture. While you may be spending countless hours ensuring that your board members have the requisite training, your committee structure is in place and operating well, and your plan for board rejuvenation is fully up-to-date, don’t forget about building a positive board culture. It takes time and conscious cultivation to ensure a positive outcome here. 5. Charter a governance and nominations committee… fast . Over the years, nominations committees have morphed—first into board development committees and now into what is considered governance and nominations committees. If your credit union doesn’t have one, it’s behind the curve, and you need to get one. Fast. Today’s governance and nominations committee is chartered to address board roles and responsibilities, composition, knowledge and learning, and effectiveness and leadership. We believe this recommendation is so important that a sample governance and nominations committee charter is an appendix to the report. Previous Next

< Back A Continuously Bigger and Better Box Jennie Boden and Dr. Alexander Stein of Dolus Advisors Feb 1, 2022 Like a nautilus, Hudson Valley Credit Union’s board evolves beautifully into its next stage of governance. The nautilus is a shelled sea creature known for renewing itself in a most beautiful fashion. It builds a new chamber inside the cover of its shell, moves out of the compartment in which it has been living, and seals off the old. As it progresses over time, the nautilus creates an amazing spiral shell with many sections. In an ideal world, credit union boards would renew themselves as the nautilus does—building on the old to create a new, more expansive governance space. But how many credit unions engage in conversations about building the next era of board governance? In the 2020 State of Credit Union Governance , we reported that almost 25% of all board members have held their positions for at least 20 years. That’s okay to some extent because historical continuity is good. Institutional knowledge and accrued wisdom are important to tackling today’s complexities. On the other hand, we’ve seen directors who perpetuated a negative culture for decades and boards where members were battling serious age-related health issues. We’ve also seen boards struggle under the weight of training too many newcomers, people with insufficient experience joining the boards of $2 billion credit unions, and recent additions who didn’t understand the difference between governing and managing. How do credit union boards transition to their next stage more like the nautilus—gracefully striking a balance between historical continuity and the next right steps for the board and the organization overall? When leaders at $6.5 billion Hudson Valley Credit Union , Poughkeepsie, New York, decided it was time to take a fresh, top-to-bottom look at the board’s nominations process, we were privileged to accompany them and provide our professional guidance along the way. We are grateful to them for letting us tell you their elegant and effective story of board renewal. “As our credit union continued to grow to over $6 billion, we knew we needed to transform our governance,” says Board Chair Nancy Kappler-Foster, a CUES member. “Through our work with Quantum Governance and Dolus Advisors on increasing the effectiveness of our policies and practices—and in particular the constructive partnership between the board and the CEO—we understood the next step was to focus on the ideal board and supervisory committee of the future and then build a state-of-the-art nominations process to achieve that.” Getting Started Led by Kappler-Foster, the board began by chartering a new governance and nominations committee, integrating the original nominations committee as a subcommittee within a broader governance committee charter; redefining the roles and responsibilities for board members; and reevaluating its board-level committee structure overall. Next, the board examined its entire nominations process from recruiting to onboarding. We facilitated workshops with the board, management and supervisory committee that enabled Hudson Valley CU’s volunteers and management team members to commit to a new process that: Developed an overall vision for the nominations process, attending to group dynamics, tone and culture, trust, psychological safety and, of course, good governance. Leveraged decision science, combining business tactics, technology and behavioral sciences through a collaborative approach to help leaders make optimal, data-driven decisions. Surveyed the decision landscape, identifying and evaluating the credit union’s needs and ultimate goals at the board and supervisory committee levels and forecasting the probable consequences of its decisions. Challenged everyone involved to overcome their biases and blind spots, subordinating their own personal interests to the credit union’s best interests. Valued character in the boardroom as highly as key performance indicators, identifying not only hard skills and expertise but also character traits and attributes to drive the identification and prioritization of candidates. Identifying Needed Skills and Attributes We helped Hudson Valley CU’s leaders clarify the skills and attributes they sought in new board and supervisory committee members. Like many CUs, Hudson Valley CU’s leaders hadn’t revisited their wish list in ages. (See Hudson Valley Credit Union's Call for Board Candidates Refresh for the CU’s “before” and “after” calls for candidates.) We looked to data to guide the way toward a new standard. The 2020 State of Credit Union Governance report found significant differences between what credit unions sought in their candidates and the skills and attributes they actually valued in the boardroom. And Hudson Valley CU was no different. When we surveyed the CU’s board, supervisory committee members and management, we found they had been prioritizing skills in financial literacy, professional services and operations. However, the perceived value of those skills in the boardroom was significantly lower than for human skills like being able to focus on the future, do critical thinking and be independent-minded. We recommended that the CU prioritize (in both its recruitment and nominations processes) what its leaders value most in the boardroom. In actuality, the shift was likely long overdue, as it is for most credit unions. Following an analysis of their survey data and focused work with both the volunteer and management leadership, Hudson Valley CU developed a new call for candidates that delineated specific skills, attributes and character traits that matched the credit union’s changing governance needs, culture and core values—in alignment with what board members actually value in the boardroom. (See sidebar, “Hudson Valley CU’s Call for Candidates Refresh.”) “I was so gratified to see the change in focus from fiduciary- to strategic-related skills for our new board members,” says President/CEO Mary Madden, CCE, a CUES member who has announced her retirement effective Jan. 2, 2023. “As we look to the future and the $10 billion threshold (by 2027), the management team will be looking to our board to ask the hard questions that need to be asked from a strategic point of view, while we’re overseeing the day-to-day operations. Certainly, board members need to continue to be responsive to their fiduciary duties, but strategically, there are a lot of critical, strategic decisions in front of us.” The Candidate Process Historically, Hudson Valley CU used traditional routes for board recruitment—issuing the call for candidates on its website and in member statements and posting it in its branches. The CU’s nominations subcommittee leveraged AVP/PR and Corporate Communications Lisa Morris to help get the word out in new ways. Morris placed ads on LinkedIn, sent word out to the area’s largest chambers of commerce, and conducted outreach through other specialty membership organizations and associations in the CU’s region. For the first time, board members took a more active role in recruiting. All told, Hudson Valley CU received 18 applications for three open seats for its board last year. In the end, new board members came from board and volunteer referrals and Morris’ outreach to the Professionals of Color Network Hudson Valley . Morris believes casting the net wide was a value-add. “Any additional outreach we do as a credit union—whether it’s marketing for a new product or issuing the call for candidates to and through a new association—means we’re reaching potential new members,” she says. A CEO once told Quantum Governance that his board was so concerned that he would “stack the deck” in his favor, he wasn’t even allowed to know how many applications his credit union received in response to the call for candidates. We took the opposite tack, recommending that Hudson Valley CU include Madden in the entire process. As a result, she participated as an ex-officio, non-voting member of the nominations subcommittee, lending her decades of expertise in interviewing, evaluating and vetting high-level professional candidates. “At first, we were all a bit skeptical about including Mary in the process,” said Julie Majak, the current chair of Hudson Valley CU’s nominations subcommittee. “But having her participate was an important, positive change. After we reminded ourselves that she had a voice—not a vote—we all quickly moved on to benefit greatly from our CEO’s expertise and insights. Her participation is now a given moving forward.” We also recommended the nominations subcommittee add a peer evaluation for any incumbent candidates, as well as psychometric testing in the form of the EverthingDISC Workplace Profile and expand interviews from 20 minutes to an hour. We also helped the committee develop strategic interview question sets to be used for all candidates to test the issues most important to the credit union. Importantly, the nominations subcommittee approached each interview with a new, elevated perspective of what was required and a clear understanding of what the board was looking for in new volunteers. We recommended Hudson Valley CU use a five-point scale for evaluating candidates based on the outcome of the assessment. Future board members should be: skilled enough to be board chair (even though it might never be right for them to be chair, see January '22 Good Governance article ); critical and strategic thinkers; independent-minded; consensus-builders; and of unimpeachable integrity. We also suggested the nominations subcommittee prioritize diverse candidates and individuals with previous board experience and expertise in the financial realm. The nominations subcommittee selected five of the 18 candidates to interview, ultimately nominating three candidates who were later elected to the board. The subcommittee also launched an associate board member program. (At cues.org/boardpolicies , see package 1). This enabled bringing in a strong fourth candidate as an associate director, creating the opportunity to increase the candidate’s general knowledge of CU governance over time, while benefitting immediately from the candidate’s attributes and expertise. The Onboarding Process Not content with improving only the nominations process, Hudson Valley CU’s leadership also focused on enhancing its onboarding program for new volunteers. A small task force comprising both board and staff was created and led by an expert in training from the CU’s HR department. The task force expanded the CU’s original, skeletal onboarding process into a robust program that includes a 15-plus hour, four-session orientation curriculum with homework assignments and between-session learning. The program also includes a variety of training modalities and sources, including online modules from CUES; in-person presentations from staff and board members; and written materials. Beyond the orientation curriculum, Hudson Valley CU has committed to at least a 12-month onboarding process that includes regular check-ins by the board chair, committee assignments and access to the CEO, and management representatives who can provide tools, answer questions and serve as subject matter experts to help new directors understand the nuances of the CU industry, the CU’s budget, executive compensation and the economy, plus learn how their strategic decisions apply to and impact operations and results. Hudson Valley CU eventually aims to have all its volunteers and supervisory committee members participate in the onboarding process. The Human Dimensions of the Process We would be remiss if we didn’t address the challenges that such a significant amount of change raised. Implementing this multi-phase process was a massive undertaking for Hudson Valley CU’s board, supervisory committee and nominations subcommittee, and it represented a gap-leaping progression in the leaders’ ability to meet members’ needs. (For more, read, “ Key Outcomes and Lessons Learned From a Board Renewal Effort ”.) Successful organizational change involves more than good processes and procedures. People are the pivotal element, and enabling them to integrate new ways of thinking about and doing things is often the most challenging task. The starting point for change is recognizing that it’s needed. Implicitly, there must have been reasons, acknowledged or not, why any action hadn’t come sooner. The reasons change is hard and the right ways to contend with oppositional forces are unique to each situation. Still, Hudson Valley CU’s journey was not uncommon. Its particulars aside, we hope—as does the CU’s leadership—their story will be helpful for others contemplating similar enhancements. Board composition did shift over time at Hudson Valley CU, so a stagnated boardroom cohort was not the main board renewal problem the credit union faced. Rather, the board had not empowered the previous nominations subcommittee to function as a strategically important committee—recruiting the best candidates, helping to refresh the strategic makeup of the board and revitalizing its vision. While today the nominations committee is viewed by the board as one of its most consequential committees, it had been for years reduced to a group of people who executed the simple task of managing the logistics of the nominations process, with little to no strategic input or impact to the overall makeup of the board. Another consequence of that legacy was a contingent that strongly believed that maintaining the status quo was in the CU’s best interest. In their view, the introduction of innovative tools and processes to enhance Hudson Valley CU’s culture and governance posed a threat to the long-held assumption that the nominations process needed to be completely independent from the board and even management. Although the board had signed off on the innovations, some members of the nominations subcommittee concluded that the changes would be detrimental. “Some members of the committee were uncomfortable with the amount of dramatic change the consultants were looking to implement so quickly,” says CUES member Misty Decker, chair of the governance and nominations committee. In such a situation, building trust and giving the naturally conservative individuals the courage to try are what’s needed more than anything else. The antidote to resistance and anxiety-driven risk aversion is assurance, not force. Our approach was to mobilize a small group of institutional leaders—the board chair, the CEO, and the governance and nominations committee chair—to join us in a conversation with the nominations subcommittee members. We acknowledged that the proposed systemic changes were indeed a substantial and understandably frightening departure from the past. We heard their concerns, validating rather than dismissing their impassioned drive to guard normed cultural traditions, and we invited them to question and reconsider the benefits to change. “We were ultimately successful,” Decker adds, “because we had established trust in Quantum Governance’s experience addressing board issues with other credit unions and in Dolus Advisors’ expertise in driving organizational culture change.” Of course, the realities of dealing with stakeholder pushback are rarely straightforward. Navigating opposition can get hot and messy. Agreeing to disagree, building or re-establishing trust, and defining workable pathways to compromise can be arduous. But there is no more important work. And this work is and has been a powerful reminder that high-performing boards are a combination of capabilities and practices coupled with human dynamics and culture. Each of these areas entails differently defined tools and solutions to enhance or repair as well as to strengthen and elevate. They also require a healthy dose of humility to accept—and even celebrate—that the changes we embrace are actually only a work in progress. Alexander Stein, Ph.D . , is founder of Dolus Advisors , a consultancy that helps leaders address psychologically complex organizational challenges. Previous Next

< Back Help Your New Chair Move Up Michael Daigneault and Jennie Boden Jul 1, 2017 Here's what a top board leader needs to know to be successful—and what you need to know to help. Credit union boards often talk about ways to orient new directors. Many lament not having a defined process. Others have the CEO give an orientation on the credit union and its management team that doesn’t go so deep as a true board orientation. Such limited approaches leave new board members adrift in uncharted seas, and it can take years for them to find their governance sea legs. Another vital orientation process gets even less attention—the one for orienting new board chairs. Be honest. How much time have you given to thoughtfully defining the role of the chair and then—as objectively as possible—assessing and orienting the person who would best fit the role moving forward? If you are like most credit union boards, the answer is, unfortunately, “We really don’t do that.” Most CUs—maybe including yours—can do better with chair orientation. A first step for all directors to consider (since they could all become chair eventually) is to define the responsibilities of a chair, so your CU can map training to what the chair needs to know. Here are six key things your “board manager in chief” needs to be able to do or support. 1. Build a Positive and Healthy Board Culture and Structure Being able to meet this responsibility is driven partly by the chair’s character, values and beliefs. The culture of your credit union over the years also plays a critical role. But do not rely on your credit union’s culture alone. The incoming chair must buy into the current culture wholly and add to that his or her own commitment to a healthy and deepening culture. On the structure front, ensure that your board chair commands a keen knowledge of governance best practices, including roles and responsibilities of board members and officers, committee structures and charters, board meetings and information architecture. 2. Inspire and Engage the Board Inspiration is the ability to “fill someone with the urge or ability to do or feel something, especially to do something creative.” Is your incoming chair an inspiration? Does he or she bring personality, charisma and values to the table? Are they, themselves, inspired to lead? Beyond the personal, ensure that your board chair is adept at building relationships, reading people and identifying a match between skill level and challenge. Add to these skills the right committee structure, clear charters and appointments to those committees based on talents and interest, and you have a great recipe for engagement. 3. Set and Model High Standards for the Board and Staff Some education about ethics and compliance issues will be necessary. We are finding more and more that credit unions would benefit from maintaining a code of ethics (also called a code of conduct), and we encourage you and your board to consider the development of one. Ensure that your incoming chair understands the difference between ethics (standards of conduct or principles arising from an organization’s core values about how we ought to act or decide) and compliance (following or obeying a law, rule, regulation, policy or procedure). Both are important and both need to be adhered to by the board and staff. Finally, ensure that your incoming chair embodies and adheres to the highest ethical standards and practices. Not only will your board members be watching, but the staff will take note (and follow suit), too. 4. Craft and Effectively Facilitate Meetings Everyone thinks this is the easy part of the job. But trust us, it’s not. Of the credit union board and staff that we’ve surveyed, only about a third believe that they do a very effective job of allocating enough time at board meetings to discuss important strategic issues, and more than a third of the same respondents report that they are doing a less than effective job of achieving the right balance between strategic versus operational discussions in the boardroom. Effective board meetings begin with the creation of the board agenda—a task best practice assigns to the board chair and the credit union’s CEO. How often do you ask “What’s the purpose of the next board meeting?” A board chair should be trained in strategic thinking and planning, to ask good (and hard) questions, and to keep the big picture in mind. Seldom, if ever, do board chairs receive formal training on meeting facilitation. This can be worthwhile. Also, consider exposing potential chairs to leadership roles at the committee level. To help develop potential chairs, you might also identify portions or segments of board meetings that could be facilitated by vice-chairs and other emerging leaders. 5. Act as the Key Liaison With the CEO Some management experience or awareness of basic HR principles will be helpful as your board chair gets started in the role. This difficult task is made more challenging by the fact that the CEO does not report only to the board chair. The board as a whole has the power to hire or terminate the CEO, and thus, the CEO reports to the full board, not just one individual or committee. But the chair does play a critical role in the board-CEO relationship. He or she should serve as the coordinator of activities between the board and the CEO—setting a tone for communications, helping to identify priorities and providing high-level guidance and counsel as needed. The chair should also ensure that a fair and effective process of evaluating the CEO’s performance is regularly conducted. Such a process should be transparently agreed upon by the board as a whole—and the CEO. The evaluation should be one where all board members provide genuine input—not just the chair or a small subset of the board. 6. Serve as One of the Credit Union’s Chief Ambassadors In partnership with your credit union’s CEO, your board chair will be expected to serve as an ambassador-in-chief. Rarely does a chair ascend to the position fully briefed and trained on how to deal with the public, let alone the media. This position will require that and much more. Consider formal training on dealing with the media and communicating with the public. 7. Ensure an ‘Optimal’ Chair Now that you’ve defined the job, you will want to ensure that your incoming board chair’s skill level matches the requirements of the job. Do not just assume that the current vice-chair is ready to be chair or is the best person to assume the position at any given time. Some vice-chairs are great in the vice-chair role but falter when they take the helm. This is particularly the case if they have not had the experiences or training designed to assist in making the transition as smooth as possible. Further, be mindful of the state of your credit union when identifying a new chair. If you are in the midst of a big merger or acquisition, it would be great to have someone in the chair role who has experience with such endeavors. Similarly, a candidate for chair with a background in human resources may not be the perfect person to lead the credit union through a financial crisis but might be a terrific resource if you are experiencing rapid growth or a major shift in the management team. Clearly, a great chair for one period of time in your credit union’s history might not be the right chair as circumstances change. It reminds us of the title of a great book by executive coach Marshall Goldsmith: What Got You Here Won’t Get You There . Being board chair demands a high degree of responsiveness that is particularly vital in times of swift and unpredict-able change. Credit unions need a chair that can effectively steer the board in a manner consistent with the rapid changes impacting your credit union, as well as being the right leader for where your credit union is on its unique journey. Finally, be sure to institute a mentoring program for emerging leaders, including your chair. Consider including your immediate past chair or an effective chair emeritus in the process. Individuals who have “walked the path” can be tremendous resources for those just beginning their journey. It can be lonely to be chair. If a mentor is not available, consider a coach for your new chair. Much like executive coaches for CEOs and other credit union senior staff, coaches can be helpful in guiding new chairs to acclimate and flourish in their new role. Very few board chairs come to the job fully trained and ready to go. Most of what your current board chair knows was likely learned on the job. But you can change that for future chairs and help them (and your credit union) step up to success. Previous Next

< Back Millennials Are Many Things, Including Your Future Board Leaders Michael Daigneault and Gisele Manole Jun 26, 2018 Getting to know them can aid your recruiting. If you had a crystal ball that allowed you to peer into the future, my guess is that a number of you might use it to—among other things—help ensure your credit union’s success. Critical to any such success, however, is the answer to the question: Who sits on your Board? Perhaps one of the most alarming things we at Quantum Governance discovered in our research for The State of Credit Union Governance 2018 was that a full 46 percent of respondents describe their credit union’s effectiveness at finding, recruiting and nominating new board talent as only adequate or less than adequate. The ongoing challenge to attract the best talent to serve on your board is as old as it is evergreen. So, while a crystal ball may be helpful in identifying who holds the keys to your credit union’s future, it likely falls short of providing you with a practical means to actually recruit future board members into service—particularly the younger generations of potential board members. As anyone who has endeavored to recruit talent to their board can attest, you have to know a thing or two about who you’re looking for. So who are your credit union’s future board leaders and how might you connect with them? As the large Baby Boomer generation (1946-1964) retires from board service, Generation X (1965-1980) does not have the numbers to fill their seats. As such, the Millennial generation (1981-1996) will have to be invited to serve in leadership positions as soon as possible. Don’t underestimate them...many are ready to serve effectively right now! Millennials are, of course, a unique generation and it’s more important than ever to understand the types of things that set them apart from previous generations. They are most effectively recruited by...other millennials. You should use any millennial board, associate board, board committee and staff members you may already have to actively recruit effective new young leaders. You can also reach out to connected members of the credit union and to key players in business, government and nonprofit organizations in communities where your credit union operates. Even if you don’t know them yet, find a way to reach out, make new friends, and actively introduce your credit union to them. They are the most ethnically diverse generation in U.S. history. We often hear that boards are striving to look more like their membership. The millennial generation embodies the diversity needed to ensure that members are properly and culturally represented. They are early adopters and technologically savvier than previous generations. As your membership migrates online, so do many of your products and services. Engaging your members through contemporary, user-friendly, and secure mobile and digital interfaces will help grow your credit union and attract younger members. They are optimistic about the future and educated. Positivity fuels productivity. Millennials see possibilities and have an eye trained on the future—which is exactly where you need to set your sights in order to succeed in fulfilling your credit union’s vision and mission. Millennials are often keenly interested in professional development opportunities. You can suggest that board service is certainly a great one! They are interested in helping people and supporting causes. To date, many millennials have been relatively unattached to religion or organized politics (although that may be changing). This leaves a critical mass of them open to the social purpose and mission-centered credo of credit unions. Sure, focus on excellent products and services, but don’t underestimate the power of “cause” and the good work a credit union can do. Ultimately, inviting new ideas and fresh thinking to your board meetings will have consequences. Appreciate the renewed energy and passion it brings. Appreciate also millennials’ talents. Be patient as you work through the challenges and questions that will also arise. As you bring on new board members, it’s important to remember that a robust orientation to your credit union and board service is essential to a successful transition. We are confident you will find that millennials are a vital human and leadership “investment” for your credit union that will pay off extremely well now—and far into the future. Previous Next

< Back Mentoring … Because If We Don’t, Who Will? Jennie Boden Dec 17, 2021 Supporting other women as they advance is important. A year ago September, after Ruth Bader Ginsburg died, I wrote an article for Advancing Women called The Thin, Strong String that Ties Women Together about how successful women have long helped the next generation find their footing and be better able to succeed. I thought of the thin, strong string piece when I heard that—quietly, with no fuss or fanfare—one of my newest colleagues had set about checking in weekly with one of our more junior female staff members. I’m proud to say that Lynette Smith , the recently retired CEO of $131 million TruEnergy Federal Credit Union in Springfield, Virginia, has joined the ranks here at Quantum Governance as a lead consultant, and we are the better for it. Even though the junior staff member in question reports directly to me, I heard about Lynette’s calls to her through the Quantum grapevine. There are times when the grapevine at small organizations can be … well, you know. But this time, I was happy to have heard about Lynette’s kindness in this way. My father used to say that the truest kindnesses are those that you extend when no one is looking. And certainly, Lynette’s regular check-in calls were never intended to be known by anyone else—let alone did she expect that they would surface in this article. But they have. Like most organizations, we’re not perfect. We have our foibles. (Yes, even consultants have foibles too.) But I felt lifted when the grapevine brought me news of Lynette’s calls to our staff member. The thin, strong string that ties women together went from Lynette to our staff member and then to me too. There is so much more work to be done. More mentoring to offer and to receive. More quiet, under-the-radar phone calls to make. And we must all do our part. For the ones that come after us and alongside of us, and even for those who are above us. Because after all, if we don’t, who will? And then I started to think more about that thin, strong string and all the women that I’ve known throughout my career—the women that lifted me up and the women that didn’t. I wondered, what does being a mentor really mean, anyway? The word comes from ancient Greek mythology—a class I skipped more than I attended when I was studying literature at the University of California at Berkeley. When Odysseus left his wife and son to fight in the Trojan War, he placed his son under the care of a man named Mentor, with directions to protect and guide his son. The war was a long one, and Odysseus was gone for 10 years. During his absence, Mentor failed miserably at his one and only job. It was a woman, of course, the Greek goddess Athena, who finally came to the rescue. Impersonating Mentor, she helped to save Odysseus’ son. Athena, the goddess of wisdom and practical reason. The city protectress. The goddess of handicraft and warfare, too. In the Middle Ages, I found in a resource by Roche for this course , the notion of mentoring “’became common practice in the time of the guilds and trade apprenticeships when young people, having acquired technical skills, often benefited from the patronage of more experienced and established professionals.’ In the 1970s, business people and researchers started to recognise ‘the vital role mentors play in the development of corporation executives’ (Roche, 1979).” How many mentors have you had? I mean really, truly good mentors? People who had your best interests at heart, even when you might not have known what your best interests were? And how many of them were women? How many authentic, open relationships with women at work have you had? Was there a woman who was your “protectress?” Or, like another colleague recently shared with me, did the goddess of warfare show up when it was time to present your good idea to the boss? Earlier this year, CUNA published a study that found that 51% of all credit union CEOs and 33% of all board members are women. This is good news, given that only 3% of CEOs and 16% of board members at our nation’s banks are women. But is it good enough? Women make up 51% of our nation’s population , and the 2021 State of Credit Union Governance report, COVID-19 and DEI: Revolution & Evolution in the Credit Union Community , finds that 47% of credit union board members report that gender is a low priority when recruiting new directors. There is so much more work to be done. More mentoring to offer and to receive. More quiet, under-the-radar phone calls to make. And we must all do our part. For the ones that come after us and alongside of us, and even for those who are above us. Because after all, if we don’t, who will? Previous Next

< Back The Benefits of Board Committees Michael Daigneault Nov 1, 2016 Get the most out of them by applying these bright ideas. If there’s one thing that board members and management often share, it is a disturbing sense of uncertainty as to the real benefits of board committees. From a board member’s point of view, committee meetings can sometimes be seen as another meeting to travel to, one more report to read, or—worse yet—an additional PowerPoint presentation to sit through. To top it off, it can frequently appear to volunteer leaders that “all their hard work” on a committee is—at times—somewhat less than appreciated by both their fellow board members and management alike. Of course, the challenge of committee work is not exclusive to board members or other volunteer leaders. Management has the responsibility of assigning staff (who already have full-time jobs) to assist the work of the committees, helping to gather information, coordinating schedules, writing reports, preparing presentations as well as developing motions and updating or crafting new policies for the committee’s (and board’s) final consideration. Staff is regularly “rewarded” for their efforts by then being asked to assist in implementing the to-do list of items that emerge from an affirmative vote at the board level. You may ask, “Does this mean that board committees should be abolished?” “No,” we would respond. “But,” you might think, “to overcome the types of burdens described above, committees better have some real benefits!” Fortunately, if done well—they do provide some very real benefits. If not done well, however, they are not the “value-add” they are intended to be. Do you know whether your committees are truly effective? When is the last time you evaluated your board committees (as well as the overall committee structure) to ensure that they are providing genuine value to your credit union? When established, charged and composed effectively, board committees can be a valuable asset to both your board and your management team by helping to: identify and examine key issues, concerns and questions ahead of board meetings. give laser focus to a project delegated by the board and/or helping to get things done more quickly and efficiently than would be possible for the full board. more equitably distribute the board’s work, since committee assignments can be dispersed among board members. facilitate trust-building between board members and management through their combined efforts. (It’s always a good idea to include relevant members of your management team on your board committees, too!) increase engagement among individual board members and help them make a more meaningful contribution to the board and to the credit union. But, what does it take to establish, charge, and compose your board’s committees effectively? The State of Your Committees There’s no right or wrong number or kind of committees for each CU board. In fact, we would argue that beyond supervisory committees for federal credit unions and some state-chartered CUs and audit committees for other state-chartered credit unions, there really isn’t a must-have list of committees for credit unions. In establishing or reviewing your board committee structure, the two rules of thumb that we would have you follow are these: Board committees should be established to do the work of the board, not the work of the staff; and Establish standing, board committees only when there is sustained, permanent, ongoing work for the committee members to undertake. Otherwise, we encourage you to use ad-hoc committees and task forces to accomplish your work early and often. Ad-hoc committees are likely to exist for more than a year, but not intended to be permanent. For example, a CU board may create a “new headquarters committee” that would exist for several years. Its purpose would be to help the board understand and oversee the important process of: 1) identifying the need for a new headquarters; 2) outlining the central benefits and challenges of doing so; 3) identifying or constructing the new building; 4) managing the financial implications of the new headquarters; and 5) overseeing the transition plan to move to the new building. At the end of its work, once the credit union has successfully moved into the new building, the committee would be dissolved. Task forces are even more temporary. They almost always exist for less than a year, and they are generally subgroups made up of both board and staff, but they may also include other volunteers or even outside experts or consultants. Task forces are charged with focusing on (and learning more about) a particular issue, question, opportunity or challenge and then reporting back to the board their thoughts and findings within a defined period of time. Sometimes task forces may simply report back the information they have gathered. In other cases, they are also asked to provide one or more recommendations for the board’s consideration. Once they have provided their recommendations, unless the board asks for further work from the task force, they are dissolved. What’s a Committee to Do? Charging your committees—that is setting their course of action—is an important board responsibility. Did you notice that we said board responsibility and not management responsibility? This is key. Board members need to determine what you want your committees to accomplish. In the spirit of constructive partnership, we encourage you to ask your CEO and management team for their input. Once you know what you want your committees to accomplish, we suggest you set it down in a committee charter. Include these key sections in the charter document: Prologue: A brief overview of the committee’s key function. Meetings: A statement on how frequently the committee must meet. Members: The required number and qualifications of committee members. This may include restrictions on committee membership. For example, if you opt for an executive compensation committee, you would likely not want a member of the management team to serve on this committee. Committee leadership: Outline any position requirements and responsibilities for the committee chair and/or secretary Role of the CEO: Outline the roles and responsibilities of the CEO vis-à-vis this particular committee. Charge: Detail the roles and responsibilities of the committee, including reporting requirements to the board. The most important thing to know about all of your board committees is this: Unless it’s explicitly stated, your board’s committees do not have decision-making authority; they can only provide recommendations to the full board for their action. Let us repeat that: Unless it’s explicitly stated, your board’s committees do not have decision-making authority; they can only provide recommendations to the board for their action. Finding the Right People to Serve Unless governmentally regulated (such as for supervisory or audit committees), there is no hard-and-fast rule about the number of members a committee should have. Three to five members is often optimal. Committees generally have more credibility if there is some diversity of opinions and experiences. Too many opinions and duplicative effort can result when a committee grows too large. This is particularly the case with credit unions that have fairly small boards. If the committee grows too large, efficiency may be lost. The ideal composition of a committee depends on a variety of factors, such as the committee’s purpose, charter, size, chair and even the experience of its members. It’s best to have at least one board member on a committee. But including non-board members or community members on board committees can be an effective way of reaching out and potentially beginning to build your bench for future board members. Each committee should also have an official non-voting staff liaison appointed to help carry out its efforts. Your board chair and the CEO should also be treated as ex-officio, non-voting members of all board committees unless the substance of the committee’s deliberations would be in conflict with their attendance. (Consider our previous example where a CEO would not attend a meeting of a committee doing an analysis of his or her performance and compensation package.) Other than these basic parameters, be bold. Cast your net widely, and don’t assume that your strategic planning task force should be filled with only strategic thinkers. Remember, there are other aspects to strategic planning that are important, such as developing a realistic budget for those strategic goals. Thus, a financial mind would be a good addition to your strategic task force, too. Our guess is that if you are like most credit union boards, you are probably secretly worrying about your board committees. Shed some needed light on them. Don’t just carry on with the same committee structure that you’ve always had, just because you’ve always had it. Board committees are a significant component of your credit union’s governance structure. And they draw a significant number of staff resources. Be sure that you are using them wisely. Do you have the right committees? Tasked with the right responsibilities? Composed with the right folks and aided by the right staff? Be brave. Ask yourselves these questions—and more questions like them. You’ll be very glad you did. Previous Next

< Back Double Your Fun: Tracking Strategic Planning For a Brighter Future Paul Dionne Feb 21, 2025 When it comes to strategic planning, I often start with guidance from Harvard Business School professor Michael Porter. Porter was the first to develop a research-based understanding of competitive strategy, and his approach begins with the dramatic premise that operational effectiveness is not a strategy ! Of course, to have a shot at sustainability and success, any enterprise would do well to focus efforts on running an effective shop. But simply improving how you do business is not sufficient to succeed over the long term. Porter’s claim was meant to be provocative because he wanted strategists to avoid falling into the operations trap. The trap is solely focusing on running an effective shop, which can be imitated by competitors all of whom are also working to improve their operations. When you consider immensely larger competitors such as big banks or fintechs, competing on operations alone probably won’t work. I can assure you that your budget and staffing for your new banking app is tiny compared to what Bank of America is spending on theirs. And yes, credit unions certainly want to offer competitive rates to members and potential members, but good rates alone won’t cut it either. Porter notes that firms who rely on operational effectiveness alone will inevitably be outflanked by competitors who can be similarly effective and are also building strategic advantages such as product differentiation and/or a deep focus on meeting the needs of specific consumer segments. Credit unions need to walk and chew gum – they should run an effective shop and also identify, choose and develop a competitive strategy that rests on being different. How can your credit union create unique value for members and potential members that is difficult for others to copy? The Future Demands Strategic Differentiation In strategic planning, credit unions often throw everything into a single process. The outcome can be muddled and end up over-indexed on the side of objectives that seek to improve operational effectiveness. Far less common is a holistic strategic plan that explicitly seeks to achieve competitive advantage. Operational effectiveness is important, but it is not sufficient to ensure future sustainability. What is also really important is figuring out how you are going to connect with new, especially younger members and provide next-generation financial services that fulfill their needs. That is where “running a tight ship” will fall short over the long haul. The credit union of the 20th century (bless our brilliant and creative forebears!) will not survive the 21st century without major upgrades to a competitive strategy and value proposition that speaks meaningfully to members hailing from the 21st century. It is their century, after all. Old fuddie-duddies like me are just living in it until our kids take over. What is to be done? To ensure you are covering both bases and building a clear and coherent strategy, divide your planning into two tracks. Tracking for Success An alternative approach to strategic planning calls for clearly dividing the process into two tracks, one focused on improving operational effectiveness and one devoted to developing long-term strategic advantage. The first takes into account all those analyses and enhancements to identify and leverage efficiencies, strengthen processes, and find ways to match or beat peers on operational metrics. The second track is more focused on changes that will position the credit union for a bright future. Senior Management and the Board should understand both efforts and learn how to support each of them from their unique perspectives. Track One: Operational Effectiveness The first track is always in play and strategy sessions should result in an annual plan for improving operational effectiveness. The key question is: How can we run a tighter ship? The types of questions and initiatives might include: How can we lower our efficiency ratio or NIM? How can we grow inexpensive, longer-term deposits? Is it time for a core conversion? These efforts can be measured, benchmarks set, and KPIs measured by Senior Management with oversight from the Board. Track Two: Competitive Strategy The second track toward building competitive advantage over the long term is where credit unions often fall short. Devote time to this work! Start from your mission and map out where you want to be in 5, 10, 25 years. The key question is: How can we be viable in the future? The types of questions and initiatives are broader and might include: What financial problems will our future members have and how can we help solve them? What makes us truly different from our competitors and how can we strengthen that difference? What should we stop doing to better advance our priorities? This effort is more difficult to measure, but it is critical to long-term success. One example might include an integrated community development approach that combines household financial well-being, targeted “healthy community” philanthropy and small business investment to create a value proposition that promotes robust communities and economic prosperity for all. Don’t fall into the trap of avoiding long term investments into changes that cannot be easily quantified or that will not deliver in a single annual cycle. Advancing strategy requires vision, discipline, and a willingness to sometimes sacrifice short-term gains. Continuity of purpose and effort are critical here. Combine, Measure, Socialize Does a two-track planning process lead to two business plans and scorecards? Ideally not. After the heavy rocks have been identified and set into place, build a combined business plan for the coming year that clearly defines and includes next steps from each track. This is where the work of integrating the two tracks is finalized and where you should build in mutually-reinforcing activities. Metrics and KPIs are essential for first track goals. A combination of metrics and milestones are often more relevant for second track goals. Socializing both the long-term vision and the short-term business plan across the credit union is another important step. Each staff needs to have an understanding of the work to be done and how they can move the needle. By delineating two tracks in your planning process, you will not lose sight of needed reflection and problem-solving for both business and strategic improvements. You get to double your fun. Don’t avoid the challenging work of designing and implementing changes that will create strategic advantage for your credit union over the long term. Adopting the two tracks in your strategic planning process means you will be more directly and clearly addressing the credit union’s short-term needs and opportunities for the coming year and, at the same time, identifying and building a pathway to longer term success. Previous Next

< Back 'Quantum' Board Engagement Michael Daigneault Jul 22, 2014 Six questions to help you more fully get your board engaged The board meeting is a good place to start working on board engagement, as I discussed in my last Good Governance column . However, you’ll need to go well beyond the board meeting experience to really make headway on director engagement. At Quantum Governance, L3C , we recommend answering these six key questions to help you more fully engage your directors in their work toward fulfilling the mission and vision of your credit union: Are your directors emotionally connected to your mission? The roots of the credit union movement are deep. For more than 100 years, credit unions have been providing quality financial services to their members. Are your directors aware of and committed to the cooperative principles that drive the movement? Are they committed to democratic member control? Voluntary and open membership? Cooperation among cooperatives? Do your directors understand what they can do to help? Does each board member have a sense of the value that are contributing? But for their active contribution, how would the work of the board and credit union be less? This question also reflects on the very purpose of board meetings and how their agendas are crafted. Don’t just focus on telling or reporting – this tends to foster a type of passive oversight from your directors. Are they working at the appropriate skill and ability level? Nothing dampers someone’s interest more quickly than feeling like they’re either over- or under-whelmed with the task at hand. Be sure your directors are adequately briefed and appropriately assigned to the right committee or taskforce, one that matches – and engages, their interests, skills and abilities. Are you sustaining their involvement throughout the year? This question extends beyond your monthly meetings. Are directors actively engaged between board meetings? Are you exposing your directors to other aspects of your credit union’s business? Are they attending outreach and community events? Are they serving as enthusiastic ambassadors and representing the credit union with real pride? Do you and your colleagues challenge yourselves to improve everyone’s performance? Not surprisingly, the notion of continual learning and improvement is often a key to sustained engagement. Stagnation begets stagnation. This is particularly a key issue in the credit union community where board turnover takes place slowly. As such, it is even more important for you and your fellow directors to participate in a regular process of self-evaluation and improvement. Is your leadership constantly building the web of relationships you need to succeed – both internally and externally? Focus on the resources available to you and your directors – from members of your senior management team to community resources and national educational resources like those offered by CUES. There are about 7,000 credit unions in the United States and more internationally. It’s safe to say you are not alone in your experiences and questions. Reach out. Actively engage, share what you have learned and keep learning from others. The rewards will be plentiful – for you – for them – and for your members! Previous Next

< Back A Matter of Culture Michael Daigneault Apr 1, 2014 What drives yours? Here are 10 elements to shoot for in your board room. I ask credit union leaders a lot of questions… Indeed, asking questions is one of the best things effective consultants do. Some of my questions have proved fairly easy to answer; some, much more difficult. In recent years, one of the most challenging questions for many credit union CEOs and board leaders has been: “What type of organizational culture are you trying to foster at your credit union?” The difficulty in answering this question has led me to ask a second question, which has proved even more vexing: “What type of leadership or governance culture are you trying to foster at your credit union?” I have tried to discover what makes it is such a challenge for leaders to answer to these fundamental questions—particularly at the CEO and board levels. Perhaps the notion of organizational or leadership culture is something they haven’t had the chance to think a great deal about? Perhaps they have been focused on other things—like survival, economic shifts, new regulations or financial ratios? Maybe culture is something credit union leaders simply accept as-is—or take for granted? Maybe the very notion of organizational culture—as applied to a credit union or its governance—is confusing and needs to be clarified? (It is a fairly new construct, dating back perhaps just a few decades.) Or maybe it is all of the above? Uncovering why it is so difficult to answer the “governance culture question” has taken me on a recent quest to figure out what organizational culture is at a deeper level—and to try to better understand why many experts feel culture is so important to organizational success. For example, in 2010 organizational culture guru Edgar Schein warned that “cultural understanding is desirable for all of us, but it is essential to leaders if they are to lead.” Jim Dougherty wrote in a 2014 Harvard Business Review article that “company culture is part of your business model,” and “the single most important attribute to successful companies.” If these experts are right—and culture is somehow central to success—then we should try to uncover the hurdles CU leaders face in understanding, articulating and building the culture of their institutions. In particular, we should try to identify and overcome any leadership and governance culture challenges leaders may face. What is ‘Organizational Culture?’ Every credit union has a culture. Just what that culture is can be hard for its leaders to describe—even if they have been with the credit union for a long time. Although long-tenured board members often feel they understand their CU well, they are frequently too close to it to really take a step back and identify the unconscious beliefs and assumptions that have been guiding their decision-making. It is, as such, a real challenge for board leaders to really see their own organizational culture. This can be the case concerning the CU overall (where leaders do not always have the kind of institutional access to pick up key cultural cues) and at the governance level (where leaders may be too personally involved to identify the underlying assumptions with any degree of objectivity). In his book Organizational Culture and Leadership , Edgar Schein formulates a formal definition of organizational culture, the essence of which is this: “what a group learns over a period of time as it solves its problems of survival in an external environment and its problems of internal integration.’ This leads us then to a new pair of questions you should yourself ask about your credit union: How much is your organizational culture simply an unconscious by-product of your founders’ or key leaders’ leadership style? And, on the other side of the coin: How much is your organizational culture the result of a conscious attempt to shape its values and assumptions? This last question brings us to look deeper into how credit union leaders can work together to improve their organizational and leadership culture. How Do Leaders Create or Change Culture? If you have been trying to make changes in how your organization works, you need to find out how the existing culture helps or hinders you. Accordingly, you need to determine what assumptions operate within the existing culture. Schein groups assumptions into three basic levels: 1) artifacts—all of the surface things you would first observe, see, hear or feel when you encounter an organization; 2) stated beliefs and values; and 3) basic underlying assumptions—the unconscious, taken-for-granted beliefs and values of the group. In 1983, Schein wrote that when organizations first form, there are usually dominant figures or “founders” whose own beliefs, values and assumptions provide a visible and articulated model for how the group should be structured and how it should function. As these beliefs are put into practice, some work out and some do not. The group learns what parts of the founder’s belief system work and which should be left behind. This learning gradually creates shared assumptions. Founders and subsequent leaders continue to attempt to embed their own assumptions, but increasingly they find that other parts of the organization have their own experiences to draw on and, thus, cannot be changed. Increasingly the learning process is shared, and the resulting cultural assumptions reflect the total group’s experience, not only the leader’s initial assumptions. But leaders continue to try to embed their own views of how things should be and, if they are powerful enough, continue to have a dominant effect on the emerging culture. Board members need to be able to take a step back and reflect on how your organization either challenges (or doesn’t) these assumptions. Be aware that your response will be tainted by your own influence on the culture you have helped to build. This is where an unbiased third party who can remain objective and observe your board’s dynamics may be helpful. If you are trying to examine (or change) your governance culture, you may also find yourself fighting against the organization’s design and structure; organizational systems and procedures; the design of physical space, facades and buildings; stories, legends, myths and symbols; and formal statements of organizational philosophy, creeds and charters. Changing culture can be difficult, particularly because sometimes culture can act as a protective mechanism, with each existing assumption working to reinforce and support the other. If you try to change one assumption in isolation, the others will push back to reinforce the status quo. Assumptions are also driven by the individuals or groups who have influence within the organization. If you want to change the culture, you sometimes have to foster a culture change within your organization’s current leaders, or modify the organization’s core governance philosophy as well as its policies and procedures. While often the most effective, changing the behavior of key leaders can be so hard that modifying the core governance philosophy is often the best opening move. When all else fails, a change in personnel may be required. But there is hope. Change can happen. It takes a focused effort and commitment to the following types of primary mechanisms: what leaders pay attention to, measure and control; how leaders react to critical incidents and organizational crises; deliberate role modeling and coaching; operational criteria for the allocation of rewards and status; and operational criteria for recruitment, selection, promotion, retirement and expulsion. 10 Elements of an Effective Culture Once you and your colleagues—both the board and the senior staff leaders–have effectively recognized and thoughtfully discussed the underlying assumptions driving your current credit union leadership culture, you can turn your attention to identifying any weaknesses or gaps and shape a more effective leadership culture for the future. I challenge you to address each of the following 10 key elements to build an effective board culture for your credit union. 1. Commit to a culture of engagement. Nothing really improves unless the board and senior staff are actively engaged in the process. This means leaders have to do more than just attend monthly meetings and listen. It means they have to do their homework, and be genuinely prepared. It means they have to show up and actively engage in discussions. That way, they can co-create with senior management the future of their credit union. It’s the responsibility of senior staff leaders and all board members to be familiar with the credit union’s key programs and strategic initiatives. It’s also the responsibility of leadership to work together to improve them. To do so, you must be engaged. 2. Join with management to foster a culture of teamwork. There is a lot of literature in the business world on the importance of teamwork, but seldom is it applied directly to boards. Taking a page from Management 101, you and your colleagues must join together to foster a culture of teamwork. And not just among yourselves—be sure to include members of your credit union’s senior leadership. Who else will work with you, shoulder to shoulder, during times of challenge? Evaluate opportunities with you? Celebrate the successes with you? Share the burdens? 3. Build a culture of curiosity. Socrates was recognized by Oracle at Delphi as one of the wisest men on earth because he was a genuinely curious man who was open about what he knew and—perhaps more importantly—what he did not know. Bring your own humility to the board room. Come with an open mind and learn from both your board and senior staff colleagues. Curiosity is one of the most important attributes a director—and a board as a whole—can have. 4. If you are able to develop a culture of curiosity , you’ll likely also foster a culture of learning. You and your colleagues will bring to the table your own personal curiosities and, combined together, you will move in the direction of what Peter Senge, a leading 21st century management theorist, has called a “learning organization.” Indeed, you can then begin to look at board room (and many committee meeting) experiences not through the lens of “necessary data exchange,” but the lens of “collective learning.” Culture is a learned experience and learning models should help us to better understand culture creation and change. 5. To support your learning, you and your colleagues will need to foster a culture of inquiry. You will need to revise the very nature of your board meetings so they encourage a genuine dialogue and exchange of ideas, a culture in which great questions are recognized and appreciated. Gone should be the days of stale committee reports or—worse yet—committee reports that simply mirror the written briefing materials. 6. All this communication requires that CU leaders maintain a sincere culture of respect. Respect does not mean agreeing to everything anyone else suggests. It does not simply mean being “nice.” It does mean deeply listening to—and honoring—other leaders’ voices in the process of decision-making. It also means valuing others’ contributions and knowing the boundaries of the role you each are carrying out. 7. Be mindful that you have all committed your time, talents and expertise to the CU board for the same reason—to be of service. Focus on that commitment. Build a culture of service, remembering that the roots of the CU movement are deep. For more than 100 years, credit unions have been providing quality financial services to their members. Above all else, we are driven as a movement by our commitment to cooperative principles. Voluntary and open membership, member economic participation and rewards are at least as—or more important than—the bottom line. 8. Because you are stewards of other people’s funds and have committed to a culture of service, you and your colleagues should—and will—be held to a very high standard. You will need to, therefore, build a strong culture of diligence. Some components of this part of your culture will be informal. Together you and your colleagues will determine mutually agreed-upon standards and expectations for how you will act and govern the CU. Other, more formal standards will be imposed upon your CU by regulators. In either case, you and your colleagues must pledge that together you will be eternally vigilant on both the formal and the informal standards guiding your decisions and actions. 9. As stewards of other people’s funds, and because as a CU you are committed not only to a culture of service but also to cooperative principles, you must commit to a culture of accountability. Of course, you must hold each other accountable and, clearly, accountability extends to your credit union’s CEO and, ultimately, the staff. You must model a culture of respect from the top-down, the same way you must model accountability. 10. Ultimately what every organization wants to build is a culture of trust. You want a trusting relationship with your members, your staff, your regulators and with the public. It’s the right thing to do and can only benefit your business bottom line as well. In all, building a culture that breeds success for your CU will not be an easy journey, but is certainly one that’s worthy of the effort. Challenge your organization’s long-held assumptions. Commit yourself. Be engaged. Ask your questions. Leave your ego at the door. Respect one another. Hold each other accountable. And do the right thing. Having done so, you will earn the trust that your members place in your leadership! Previous Next

< Back The Ever-Elusive Millennial Director Michael Daigneault Mar 28, 2017 Tailor your message and medium in recruiting younger board members. An almost universal goal among credit union boards in recruiting new directors is to improve their outreach to millennials. A common expectation is that prospective directors from the generation born from 1981 through 1997 would better understand and represent the needs of younger members. Moreso than previous generations, millennials are deeply immersed in the digital age and intuitively appreciate the new ways commerce and communications have morphed. In addition, younger consumers now spend $600 billion annually; by 2020, their total annual spending is projected to grow to $1.4 trillion annually, representing 30 percent of total retail sales. They are an economic force that must be reckoned with. Challenges in recruiting millennial candidates may be a reason only one in five board members we’ve surveyed report that their credit unions are “very effective” in attracting people with the attributes identified as desirable to stand for election as directors or to serve in other capacities. Our surveys also find that the average age of directors is on the rise, as is the average director tenure on boards. The combination of these factors puts the need for board rejuvenation at many credit unions at a critical tipping point. At the risk of being bearers of additional bad news, board recruitment won’t get easier in the years to come. Basic demographics are a reason that recruitment of younger candidates will become even more difficult. The Pew Research Center reported in April 2016 that the baby boomer generation (1946–1964) has been the largest in the United States to date, with a whopping 76 million births. Gen X (1965–1980) fell far short of that mark by nearly 21 million births. To some extent, then, the recruiting challenge boils down to numbers: There are simply fewer adults in the gen X age group. In addition, those born after 1964, perhaps because they have been submerged in the technological revolution throughout most of their lives, often engage with or give back to their communities in ways very different than previous generations. As Beth Kanter put it in her book The Networked Nonprofit, “Social media use is becoming ingrained in the way that people relate to one another and work together. In particular, social media are shaping the way that young people think, connect, engage, and work together.” Assuming this is the case, how should your credit union overcome the vital governance challenge of attracting future board members? The vast majority of boards will need to work much harder—and differently—to attract those elusive gen Xers and millennials. First and foremost, keep in mind that people in their 20s, 30s and 40s are as committed as older Americans to social good. However, they are inclined to engage in the world in very different ways, and they may be motivated by different factors. Gen Xers and millennials also may “join” in different ways than previous generations. They tend to: want to help others, but often not through a formal institution. support social issues, but less so the organizations affiliated with them. take small preliminary steps before fully committing to a cause. be strongly influenced by the decisions and behaviors of their peers. treat things they value (free time, money, friends, their network, key social missions, etc.) as having relatively equal value in their lives. experience an organization’s work—and offer their own time and talents—without having to be at a particular place. A strong commitment to mission is central to millennials. In your recruitment efforts, talk about your credit union and the cooperative movement as offering economic freedoms and opportunities in ways that will tap into their passion. Go well beyond the business aspects of what they will focus on as board members to emphasize the greater good. Another strategy is to recruit gen X and millennial candidates in multiples. It is hard to be the only younger person in a leadership position. Many young adults are influenced by the decisions and behaviors of their peers, and networking is as important for them as it is for your current directors. Finally, never treat younger candidates and directors as tokens or underestimate their skills. Depending on their age (and yours), they may be as young or as old as your own kids, but in the context of board service, they are your peers. Though their level of experience on a credit union board may be limited, the abilities, experiences and perspectives of gen X and millennial directors may offer extraordinary value in board discussions, planning and deliberations. Remember, millennials stand where you once stood, and your relationship with them should be one of genuine mutual support and commitment to the betterment of your credit union’s members—and your community. Previous Next

< Back The State Of Credit Union Governance 2020: A Summary Jennie Boden Apr 2, 2020 For years, we’ve dreamt of studying the state of credit union governance. We know what you’re thinking: Dream bigger. Some people dream of European vacations. Fast cars. Beach houses. But for governance geeks like us, it’s often all about the data. In 2018, we were fortunate to partner with CUES to realize our dream, and The State of Credit Union Governance, 2018 was published. We made some groundbreaking discoveries, like reporting that board members and CEOs frequently differ on their perceptions about governance—and that their perceptions diverge even further based on tenure. We even found that bigger really may be better: Board members and CEOs of CUs with assets of $1 billion or greater had statistically and significantly higher survey scores overall on 18 of the 21 key questions asked concerning matters of governance. And we were satisfied, for a while. But our compendium of data kept growing, and our drive to create more information for you, our colleagues, clients and friends throughout the credit union community, was compelling. Today, we are pleased to announce The State of Credit Union Governance, 2020, which provides updated figures for 2018-2019 and draws on data from the governance assessment of 115 additional credit unions—114 in the U.S. and one based in Jamaica—to enrich the findings from our 2018 report. This year’s report is a collaboration between CUES, Quantum Governance and The David and Sharon Johnston Centre for Corporate Governance and Innovation at the Rotman School of Management, University of Toronto. Our findings are also derived from a supplemental online survey conducted in September 2019 with responses from 320 directors and CEOs across 170 U.S. credit unions. While many of the key findings from 2018 still ring true today (if you haven’t read the 2018 report , we encourage you to begin there), the 2020 report is full of new discoveries that will challenge you and your credit union to new levels of governance excellence. 2020 Key Findings Board Structure and Composition: Demographic diversity was identified as the number one priority for credit union board recruitment (53%). The next highest priority identified when recruiting new members to credit union boards was an ability to focus on the future (51%). (See Figure 1.) Board members continue to think that soft skills, such as an ability to focus on the future (76%) and independent mindedness (66%), are most valuable in the boardroom. Credit union boards are more gender-diverse than their counterparts in other sectors. The average credit union board has nine members, of which three are women (36%) and one is a visible minority (16%). Board Governance: Credit union boards that focus on bolstering their governance tend to adopt a governance committee more readily than those that do not have a concerted focus on good governance. When looking closely at the 1,060 director responses in our sample, we found that directors on the same board would often report very different—and sometimes opposing—perspectives on their board’s effectiveness in four fundamental areas of board renewal: 1) periodic governance assessment; 2) the action plan based on governance assessment outcomes; 3) the director onboarding process; and 4) the frequency of board member renewal. Board Leadership: Survey respondents identified seven important leadership functions for board chairs that fall within two primary categories: 1) establishing processes (e.g., allocating time, setting the agenda, etc.); and 2) working with people (e.g., appointing committee members and chairs). Although most survey participants report that their boards do not limit the number of terms a board chair can serve, we found that more than a third do. Term limits for board chairs can range anywhere from a year to more than 10 years. More than half of the participants whose boards have a term limit in place for their chairs reported limits of less than five years. An impressive 92% of all surveyed board members report that their board is effective at maintaining a good working relationship with their CEO. However, as in the 2018 report, the average board member and CEO differed on how effective they thought their boards were on a range of key governance measures. In 2020, across the 81 surveyed CUs that provided a CEO response, we found that there’s disagreement between the board and CEO regarding the board’s effectiveness on 22 out of 49 survey questions, on average. Credit Union Strategy: We found that 32% of survey respondents do not feel that their board is effective in helping to develop the credit union’s vision, mission and strategy. Most survey respondents say they should slash—by a third—the average time they spend on routine items and operational oversight (i.e., items that do not require debate or can be approved with a single motion as on a consent agenda) and invest an average of 10% more of their time on strategic matters. (See Figure 2.) Decision-Making: Many credit unions have at least one director who says that the board is ineffective at asking hard questions (53%), holding each other accountable (54%) or engaging all members in the work of the board (49%). While directors had misgivings about how decisions are reached, most believe the decisions their boards made were ultimately good, and they could stand by them and speak with one voice. Recommendations Since many of the findings from the 2018 report remain relevant, we encourage you to revisit those recommendations as a baseline; they will serve you well as strong building blocks for any governance program. From there, we would encourage you to consider our newest recommendations from the 2020 report: Board Renewal: Focus on strategic thinking and independent mindedness. Your credit union is a complex financial institution navigating the era of greatest change in the history of the credit union movement. As a result, your board requires meaningful financial literacy, business acumen and specialized skills in such specialties as law, accounting and human resources. However, even boards with the most skilled members will fail to add value without independent mindedness and strategic thinking. Board Diversity: More than ever, credit unions are acknowledging the value of demographic diversity among board members, including gender, race/ethnicity and age. However talking about it as a priority is not enough. To ensure that your board is truly diverse, you will need to be clear in your objectives and work hard at executing them. Once you know the demographic balance you are looking for, you will need a plan to help you find the right people. Board Leadership: Take your board chair position very seriously. Although your CEO is responsible for carrying out your credit union’s strategy on a day-to-day basis, no individual in your credit union has more potential to add value than your board chair. Ensure that you have a robust, concrete job description in place for this important position. Board Governance: Build alignment around what “effective” truly means. It is both normal and constructive for board members to disagree. One might argue that without disagreement there can be no excellent decisions. In too many cases, however, our data highlights boards where one or more directors have assessed the board’s effectiveness at polar opposite ends of the spectrum. Ensure that you are engaging in these types of conversations in the boardroom—what does “effective” really look like for you? Strategic Thinking, Learning and Planning: Invest more time in strategic matters. The most valuable skill identified in credit union boardrooms today is the ability to focus on the future, yet we found that 32% of survey respondents do not feel that their board is effective in helping to develop the credit union’s vision, mission and strategy. Ensure that your board is doing everything it can to be effective in this fundamental role and responsibility. Previous Next