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< 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 A Cautionary Tale of Risk Management in This Time of Bank Failures Gisele Manole Mar 30, 2023 Defining roles and responsibilities and continuing education help ensure appropriate coverage. While the news surrounding the failings and futures of Silicon Valley Bank and Signature Bank remains in the headlines, we are learning a great deal about the role that rising interest rates, cryptocurrency and governance played in each organization’s demise. The federal government reacted quickly to minimize panic that might have destabilized the entire banking industry, and National Credit Union Association Chairman Todd Harper was quick to assuage the fears of our nation’s credit union members, saying “No one has ever lost a single penny of insured share deposits within the credit union system.” And while there is much debate about who or what is ultimately at fault, there are important lessons to be learned from these examples about the risk management responsibilities inherent within your own credit union’s system of governance. The International Organization for Standardization defines risk as “the effect of uncertainty on an objective”—a direct correlation to a credit union’s strategic plan. A secondary definition of risk is simply, “managing uncertainty.” This perspective brings front and center the human dynamics at play in measuring and managing risk. And while enterprise risk management can be clearly defined by the Committee of Sponsoring Organizations of the Treadway Commission, each individual credit union must have its own understanding of risk, or more specifically, its appetite for organizational risk. Ensure that your board, in constructive partnership with your CEO and senior management, has defined an explicit risk tolerance statement that indicates the level of risk your credit union is willing to take. Who’s Responsible for Risk Management? Remember that risk management is not the responsibility of just one entity within your credit union; it should not solely fall upon the shoulders of your internal auditor or your supervisory or audit committee. It is a function of your board, CEO, internal auditor, senior management, and the supervisory or audit committee working in constructive partnership. The board approves the credit union’s risk profile and oversees its ERM program. However, the risk profile itself is developed by the credit union’s board, CEO and senior management during the strategic planning process. Address risks in your strategic planning process by scanning your credit union’s internal and external risks. Does your credit union have a charter for its board-level risk management committee and a job description for its members? Like all best practices, this one is essential. Clearly defining roles and responsibilities around risk management ensures appropriate coverage and a system of checks and balances that won’t leave the credit union unnecessarily exposed. Additionally, a job description will ensure you have the right talent with a collective finger on the pulse of what is happening in our world that will impact the credit union and present opportunities for growth and failure alike. Uncertainty about whether your credit union has the right people in the right seats may indicate a need for a director’s skills assessment that can recommend further education and training. Look to Committees and Director Development Allen DeLeon, CPA, founding partner of DeLeon & Stang , and adjunct consultant with Quantum Governance, advises boards to ask whether their management-level asset/liability committees and board-level finance committees are meeting regularly and having robust conversations about liquidity and asset/liability management. “Make sure that both members of the board (through your finance committee) and senior management (through ALCO or ALM committees) are knowledgeable and experienced and that you are monitoring your rates during this time while the banking sector is under some level of instability,” he says. Lastly, once you have the best and brightest serving your credit union, ensure that you have continuing education requirements and resources at the ready to help your ERM committee stay on top of the shifting sands of cybersecurity, cryptocurrency, regulatory changes and interest rate hikes. To help you in your risk management efforts, you can purchase Quantum Governance’s ERM Policy , which is part of our library of policies, charters, procedures and job descriptions. 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 Advice from My Hero Michael Daigneault Mar 26, 2019 Six key responsibilities of every board, gleaned from my conversation with world-renowned expert Ram Charan. There’s nothing like meeting your hero. For some, that might equate to a football player or a musician or maybe a politician — a well-known celebrity type, whose mere physical presence is immediately recognized by all. For a governance geek like me, heroes are fewer and farther in between. But they do exist and when they do, they rise like giants. Thanks to my good friends at CUES, I met my hero a few months ago on the eve of the 2019 CUES Symposium in Nassau, Bahamas. And because they are, indeed, good friends, I was lucky enough to be afforded some private time with Ram Charan, the world’s leading expert in corporate governance. Along with some members of my team, I explored some of the most pressing concerns of the day with him — challenges that perplex even the most skilled and tenured credit union board members and CEOs. I've got the picture to prove it! I imagine I’ll be mining the notes from our conversation for quite a time to come, and I look forward to bringing you the fruits of those labors in future blogs. For now, I am pleased to share with you six key responsibilities central for every board outlined by Ram as he spoke to the board chairs and CEOs assembled at the Symposium: Ensure effective board composition. This is one of your board’s most fundamental roles and responsibilities. Board renewal at its core is also one of the most difficult. The State of Credit Union Governance, 2018, published by Quantum Governance and CUES found that a full 46% of respondents described their effectiveness in finding, recruiting and nominating new talent to their board as only adequate or less than adequate. Do you have the right directors and the right officers for your board? Don’t just hire your CEO, coach him or her for success, too. If you are lucky enough to have the right CEO, take care not to lose him or her. Ensure that you have a strong relationship with your CEO, as well as a succession plan in place on day one. Develop the right strategy to lead you into the future. Here it’s important to work in a full, constructive partnership with your credit union’s CEO and management team. Focus on the vision, mission, culture, strategic goals, objectives and metrics, and then let your CEO and his/her management team worry about operational work plans that support effective implementation. Keep an eye toward the horizon. Are you clear that you see things today will build the future tomorrow? Look for opportunities; many will fail but many will grow. The board adds value in asking questions of opportunity and in sowing the seeds. Stay current on important trends. Allocate enough time at the board level to learn about industry trends so that you can contribute to the strategy effectively. Study FinTech, digital corporations, consumer trends and more — anything that will give your credit union an edge over its competitors. Monitor the credit union’s performance. Rely on your CEO and his/her management team to deliver the data you need to monitor performance. Ensure that you are asking questions that “trust but verify” the credit union’s position and progress. Be sure to rely also on empirical data, and finally, ask yourselves these questions. In the last quarter: What three things: 1) Have we done very well; 2) Have we not done well; and 3) Will we do differently? Previous Next

< Back Surfacing Assumptions Michael Daigneault Mar 14, 2014 Knowing what you're assuming can boost board strategic thinking. Edgar Schein presents culture as a series of assumptions a person makes about a group in which he or she participates. “We tend to think we can separate strategy from culture, but we fail to notice that in most organizations, strategic thinking is deeply colored by spoken and unspoken assumptions about who [these organizations] are and what their mission is,” writes Schein, a professor at MIT’s Sloan School of Management. Hence the famous phrase, “culture eats strategy for breakfast.” Schein groups assumptions into three basic levels: 1. Artifacts all the things you would first see, hear or feel when you encounter an unfamiliar group; observed behavior, routines (easy to see–hard to decipher their true meaning). 2. Espoused beliefs and values ideals, goals, articulated values and stated aspirations; ideologies; rationalizations. 3. Basic underlying assumptions unconscious, taken-for-granted beliefs and values. Each assumption can have an article–or book–written about it. Here are just some of the possible assumptions credit union leaders should challenge: Vision & mission: Why are we all here? What are we collectively trying to achieve? What is our credit union’s purpose? Strategic goals: What strategic goals do we set as part of trying to realize our vision and mission? What is the process for setting the goals? Who really does it? Means to achieve goals (structure, systems and processes): How do we actually go about realizing our goals? Do we have systems and procedures in place at the management level? At the board and committee levels? Measuring goals and results: How will we know if we achieve our goals? How do we identify and measure success? What results are we trying to achieve? What information should we gather and share about our results? Failure: What do we do if something does not go as planned? How do we define failure? If something does fail, do we have a plan? Do we just react to the circumstances? Do we genuinely learn from our failures, or do we simply try to put them behind us as quickly as possible? Common language and information architecture: What are the common words and language we use to refer to things? What is the common framework of communication? What are all the ways we communicate with each other and receive information? Individual and group boundaries: How do we respect each other’s and the collective group’s boundaries? How do we know what those boundaries are? How do we know when someone has “gone too far?” Accountability, rewards and punishments: Do we hold each other accountable? How do we consciously or unconsciously reward desirable behavior and punish behavior deemed unacceptable? Rules of engagement: What are the understandings or assumptions for how we interact with each other? With members? With those outside the credit union? Power, authority and status: Who is responsible for what? What are the delegations of authority? How do we determine what gets done, how it gets done–and who has the authority to change the direction of things? Can such assumptions be identified in the board room? Yes, Schein says. “If we combine insider knowledge with outsider questions, assumptions can be brought to the surface, but the process of inquiry has to be interactive, with the outsider continuing to probe until assumptions have really been teased out and have led to a feeling of greater understanding on the part of both the outsider and the insiders.” Previous Next

< Back Many Board Problems Boil Down to Communications Challenges Michael Daigneault and Jennie Boden Jan 22, 2019 Directors need to ask good, hard questions—to ‘trust but verify’ in a respectful and professional manner—all toward the good of the credit union. A great number of the governance challenges that we come across in the work that our firm, Quantum Governance, L3C, undertakes with credit unions can be boiled down to matters of communications. Are your board members crossing over into day-to-day operations? Well … have their roles and responsibilities been clearly defined, updated and effectively communicated to them? Are there two or three members of your board who are coming to meetings ill-prepared each and every month (or even just one)? It’s probably time for your board or governance committee chair to have a heart-to-heart, one-on-one conversation with those directors. Is the relationship between your board and CEO riddled with micromanagement, executive sessions and a lack of trust? It’s possible that you stopped having authentic, open dialogue far too long ago. After years of surveying credit union board members, supervisory committee members, CEOs and senior staff members, Quantum Governance, along with CUES, recently published The State of Credit Union Governance 2018: Five Data-Driven Recommendations for Future Success . In it were three key findings relative to the need for more open, trusting communications that both surprised and troubled us. We encourage you to take notice of them and discuss these key findings with your board. If your credit union is struggling with any of these issues, it might be time to polish your own communications skills—individually and as a group. Key Finding No. 1: More than a third of respondents surveyed reported that their board does only an adequate or less than adequate job of asking the hard questions that need to be asked. Key Finding No. 2: Thirty-nine percent of respondents reported that their board is only adequate or less than adequate at holding each other accountable. Key Finding No. 3: And only 25 percent of CEOs and 27 percent of senior staff reported that their boards are very effective at building a leadership culture of trust—compared to 53 percent of supervisory committee members and 44 percent of board members.So , what’s happening at all of these credit unions? We were recently working with a credit union that received what we would term below average scores on survey questions regarding “accountability” and “asking the hard questions.” “Where do we begin?” they asked. Luckily for them, their score on the “trust” question was particularly high—a good starting ground and a place from which to build. They were quick to say that they all got along and worked well together—maybe too well together, perhaps? How many of your board votes are unanimous? Are your board members held accountable when it’s appropriate? And, how many hard questions are you asking in your board meetings? The mark of a good board is not unanimity or harmony 100 percent of the time. Your job as a board member is to ask good, hard questions. To trust but verify. In a respectful and professional manner. All toward the good of the credit union. Be authentic. Be direct. Be open. Keep your promises. Keeping promises builds trust, and you’ll need to rely on strong relationships of trust while you’re holding each other accountable in the boardroom. Speaking of accountability: Hold each other accountable as board members. Ask the hard questions that need to be asked. It’s among your most fundamental roles as board members. Previous Next

< Back What Key Factor May Be Working Against Your Interest in Raising Board Engagement and Accountability Jennie Boden Aug 7, 2024 Discover the hidden factor sabotaging your board's engagement and accountability, and learn how to address it effectively. In 2023, we identified four elements of good governance in our State of Credit Union Governance Report : 1) board members fulfilling their roles and responsibilities; 2) engagement; 3) accountability and 4) trust. Our study found that these four elements were VERY strongly correlated, meaning that if one of these elements was weak within a board, it was very likely the other three were as well; the reverse was also true. If a board was scoring well in just one or more of these areas, then it’s likely that all the elements were markers of a high-functioning board. We were thrilled. The findings were so strong (with correlations equal to or greater than 0.79) that it now meant that we could identify the weakest link among our clients, focus on that element, and the other elements would become stronger as well. But that marked just the beginning of our work. How does one build engagement, accountability and trust? And why might these scores be low in the first place? The study also found that among all four of these elements, engagement was the lowest across all respondents. Our work started to change after the release of this study and when we began assessing our clients through this very lens: How are our clients fairing among these four elements? And which of the four are the lowest scoring among them? In particular, I’ve been thinking a lot lately about the element of engagement. I once wrote about the phenomena of workplace bullies, noting that “The [Workplace Bullying] Institute reports that 30% of all adult Americans have been bullied at work. More than 48.6 million of us have been bullied on the job – but a total of 76.3 million workers (or 49% of all Americans) have been affected by workplace bullying. That means those workers have either been bullied or witnesses to it, which has its own impact, too. Sixty-seven (67%) of the bullies in our workplaces are men and 33% of them are women, and same-gender bullying accounts for 61% of it all. In fact, I was prompted to write about these bullies after being bullied myself by a colleague in the field. And recently, I was on the receiving end of some unpleasant behavior in a client retreat, and I found myself so stunned, I could do little more than tilt my head in disbelief, thinking, “If this director responds to me, an invited guest, in this manner, how might they respond to their colleagues with whom they disagree?” After the room had cleared, I shared my thoughts with the board chair and CEO: “This is likely the kernel of our low engagement among the directors. You have a bully in the boardroom, and the other directors are afraid of being called out by the individual in question.” Since then, I’ve started paying attention to how many “bullies” sit on boards with low engagement scores. And it’s a lot. And guess what? That number also correlates with a low level of accountability, meaning that no one is calling out the bad behavior. No one is saying, “Knock it off,” or “Don’t talk to John or Sally or whomever that way; that’s against our values,” or “If you continue to use foul language in the boardroom, there will be repercussions.” And those are extreme cases. Sometimes the uncivil behavior can be as subtle as the rolling of eyes, dominating the dialogue or dismissing a colleague’s perspective. And very few are saying a word. One of the board chairs with whom we worked was actually being bullied by their CEO. This board chair went so far as to conceal the bullying in an effort to protect the rest of the board, which gave way to a higher threshold of tolerance for the uncivil behavior and allowed the CEO to bully the staff too. But boards and cultures can change. I’ve seen it happen. I’ve seen a board that tolerated a bully for nearly two decades move swiftly – within a matter of weeks – to address (appropriately, professionally and sensitively) the inappropriate behavior of one of their own. Think of the message that this significant shift sent to the board as a whole and to the staff: these are our values; this is what’s acceptable and what’s not acceptable. If there’s a bully in your midst, solve for that to level up your engagement and accountability. 2021 Workplace Bullying Institute U.S. Workplace Bullying Survey. Single Page Results Flyer. https://workplacebullying.org/ . Retrieved on December 5, 2021. Previous Next

< Back Board Size Michael Daigneault Jul 28, 2015 There's no one-size-fits-all answer to how many directors you need. One of the questions I’m asked most often by credit union directors and CEOs is this: “What’s the best size for our credit union board?” There’s no fast and easy answer but, essentially, you want your board to be large enough so you can appropriately govern and help lead the credit union, and yet small enough so you function effectively as a cohesive leadership team. For your credit union, what size might that be? Our experience is that credit union boards of seven, nine or 11 appear to be most effective. Here is the essence of our reasoning: Boards of five or fewer are efficient but committee work, diversity and inclusiveness may suffer. With five or fewer members, the work of the board tends to be accomplished as a “committee of the whole.” This framework may be sufficient for certain small or relatively uncomplicated credit unions, but it quickly becomes a very real and limiting factor when considering how much work a small board can realistically accomplish. While we do not believe credit union boards should have an excessive number of committees, it does increase the board’s capacity to accomplish vital work when directors can divide themselves into a few committees and task forces. Having committees and task forces also helps develop a somewhat larger group of volunteers who can be potentially called upon to become board members in the future. Additionally, credit unions are cooperatives of many different types of people. What very small boards of five or less offer in terms of ease and efficiency, they typically lose in terms of diversity and inclusiveness. This lack of diversity is evident not only in terms of gender, nationality and race, but also will likely result in a lack of individuals who are of a different age or who can bring additional, valuable skills, perspectives, experiences, and the like to the board’s efforts. Boards of 12 or more can be complicated to manage, can pose challenge to trust-building, can be more expensive to run, and can make it harder to gain true consensus. Boards of this size do exist in the credit union community, but they are rare. They often arise for such reasons as : (1) mergers and acquisitions that combine two boards; (2) a desire to offer more members the opportunity to serve; (3) a lack of will or desire to “kick” long-term colleagues off the board as new members are added; and (4) a “representative mindset” that supports having a board with folks from a variety of stakeholder groups or geographic areas. If your board is on the larger size, do not let the executive committee become a “board within the board.” It will upset the balance of power, and often results in an “insider” vs. an “outsider” dynamic that can cause some directors to be too passive or disengage altogether. In all, size is a nuanced question, with a nuanced answer. The exact size that’s best can shift from credit union to credit union depending on many factors, such as the role the board is playing, the number of board committees, the complexity of the credit union, the history of the credit union, and the quality of its leadership. In the end, keep in mind that the role of your credit union’s board is to govern in constructive partnership with your CEO. In most circumstances (as long as you remain in the sweet spot of between seven and 11 members), the exact number of board members ends up being less important than your directors’ collective ability to work effectively, add real value and help move the mission of your credit union forward. Previous Next

< Back Start Onboarding Pre-Election Michael Daigneault Nov 24, 2015 Eight steps supporting new board members' success Many credit union boards think the new director onboarding process starts when new board members have been elected to serve. But really, the key to building an effective onboarding program is not to wait for the election to take place. Just like board meetings run best when advance work is done to set them up for success, onboarding of new directors is greatly facilitated by steps boards can take before your members elect new directors. Consider taking the following key steps before the board election: Develop a matrix of your “ideal board” for achieving strategic goals. Create a skills matrix outlining the attributes and skills your board members currently have. Then, create a separate matrix showing those skills directors will need to carry your credit union successfully into the future. Be sure to do this with your strategic plan in mind. Identify board composition gaps. Compare your board’s current skills matrix with the skills matrix of your future, ideal board. What weaknesses do you see in your current board? Conduct a gap analysis. What attributes or skills are limited – or missing? Identify potential board candidates. Given the gaps you identify in step 2, what types of directors should you actively seek? You can even consider looking beyond existing credit union members and recruit board members from the community. Remember, they can always join the credit union, and they might add real value to your efforts. Involve, engage and educate potential directors. Show them the love! Ways to bring potential directors into the fold might include having them be a part of an associate board member program, or inviting them to a local community event. At the very least, you will want to be sure they visit a local branch and meet with the CEO and some of your credit union’s best and brightest staff. Do a background check and talk to references for potential board members. Remember, your potential, new volunteer will be responsible – legally and financially – for the credit union. Do your due diligence. Gauge the prospective director’s level of Interest. Here’s where you can begin to introduce your potential candidate to your other directors. Begin to take his or her pulse more formally to gauge his or her interest in candidacy. Confirm the potential director’s interest in and willingness to serve. Have a candid conversation about what time and knowledge is involved. Talk about the risks, too. Formally invite the potential director to stand for election. Here’s where your hard work pays off. Make the ask. If your candidate agrees to run—and is ultimately elected—you’ll need a process in place for orienting him or her to the work of your board. Previous Next

< Back Director Onboarding Post-Election Michael Daigneault Dec 22, 2015 9 steps to take to help new directors serve well In a previous Good Governance column on CUES , I talked about the importance of having a process in place to identify potential board members, introduce them to the credit union and, eventually, ask them to run for the board. Once directors are elected, you’ll need to build a robust, comprehensive onboarding program that includes such elements as: Public announcement of the election. Kick off your orientation program (and a welcome to the board) with a public announcement of your new colleague’s election. Use this opportunity to get to know your new director and for him or her to know the credit union more closely. Hold both formal and informal board orientations for the board and staff. This is the easy part. Schedule formal briefings with both the board and staff for your new director. From our experience, this is where most credit union orientation programs start … and, sadly, where they also stop. Appoint a mentor or guide. Identify a seasoned director to mentor and guide your new colleague for the first year. The mentor can answer questions on a one-on-one basis, accompany the new board member to credit union events and generally help shepherd the new director through the first year. Schedule regular check-ins by the board chair or mentor. Have regular de-brief conversations to “check in” with your new board members to answer any questions and take their pulse within the first two months. Schedule an informal meet and greet event. To introduce your new director to the full board, host an informal event, either before or after his or her first meeting, to welcome your new director to the ranks. Have the chair appoint the new director to a committee or taskforce. After a period of time, and in consultation with the new board member, appoint him or her to a board committee or taskforce. Be sure he or she is well oriented and welcomed by the committee or taskforce chair. Schedule regular check-ins by the board chair and/or mentor. Schedule another check-in at three to six months. Encourage participation in external educational opportunities. Expose your new board member to external educational opportunities, such as national conferences offered by CUES. Schedule regular check-ins by the board chair or mentor. Schedule another check-in in the 6- to 12-month time frame. In addition to the steps outlined above, some credit unions have developed associate director programs in which new directors join in a non-voting capacity before any official positions become available. Still others use their supervisory or audit committees as effective training grounds for new board members. Remember, ultimately, you are bringing a new colleague into the fold. I know that for many of you, it may be difficult to remember back to your first board meeting. For some, it may have been 20-plus years ago. And the times have changed dramatically. What you needed to know then and what your new colleagues need to know now is night and day. Develop a plan. Be persistent. Be patient. But above all, prepare your new board colleagues well. Previous Next

Leadership Resources Finding Balance in Board Meetings Efficiency vs. Engagement Read More A Matter of Leadership CUs need to pave a new road to ensure a strong, high-performing board over time. Read More Nine Leadership Challenges The board of the future will need the strength to overcome these. Read More No Higher Calling The challenge of effective CEO evaluation Read More 'Quantum' Board Engagement Six questions to help you more fully get your board engaged Read More Board Engagement Needs A Boost Strategies to use in your monthly meetings Read More A Matter of Culture What drives yours? Here are 10 elements to shoot for in your board room. Read More Surfacing Assumptions Knowing what you're assuming can boost board strategic thinking. Read More Fiduciary AND Strategic Thought Needed Finding the right balance between operational oversight and visionary dialogue in your boardroom is worth the struggle. Read More

< Back Supporting Healthy Board Rejuvenation Michael Daigneault Jan 26, 2016 A healthy amount of board rejuvenation is important—but not too much and not too fast. For many credit unions, a long-tenured board is a normal course of business. In fact, many credit unions have had a director or several in place for 20 or more years. While the long-standing tenure of these volunteers is certainly valuable from experience and historical perspectives, it can sometimes hinder a credit union’s ability to grow, innovate, evolve with the times and genuinely grow or pivot strategically. Additionally, CU boards that find themselves facing wholesale director turnover in a given year or two will likely not find that situation ideal, either. In the credit union movement, one in four directors self-report that their boards are “less than effective” at having the right mix of skills/experience to accomplish their governance responsibilities. If that’s what is self-reported, could the actual situation be even more problematic? A healthy amount of board rejuvenation is important – but not too much and not too fast. What are the most effective tactics for accomplishing this pace? Here are five steps we recommend for building your board: Institute term limits Though long disliked in the credit union movement, more and more credit unions are successfully instituting term limits for board members. The key to using term limits effectively is to implement them with a phased-in approach so you don’t “term out” all your board’s talent (and history) in one or two years. You might consider a three-year term with an option for a three-term renewal or perhaps a two-year term with the same renewal option. Such a term (with the renewal option) still retains a great deal of historical continuity . Choose your board officers thoughtfully. While most credit unions already have term limits in place for their board officers, we find that far too often, who’s next in line for the various positions is predetermined. And it shouldn’t be. Consider what’s ahead for your credit union when choosing your next chair, not simply whose turn it is. If you are heading into a period of mergers, wouldn’t it be helpful to have someone at the helm with experience in this regard? And, in the same vein, a director with a storied career in human resources may not be the best candidate to oversee your credit union during a financially turbulent period in its lifecycle. Provide ongoing training opportunities . Remember that keeping your board fresh and on the leading edge requires, by definition, including a robust training program for your directors. Provide all your board members – not just the new ones – with ongoing board training . Don’t include just one-on-one experiences at the regional and national levels; include sessions for you and your colleagues to experience (as a team) at the board level. Have the hard conversations. Far too often we find that chairs, CEOs and even individual directors are fully aware of the weak links. They talk in hushed tones about the need to move certain individuals off the board, but rarely have the courage to address their colleagues directly. Don’t shy away from the hard conversations. They are important for healthy board rejuvenation, and certainly they fall squarely upon the shoulders of the chair. You may even find that there’s a good reason for the “weak link,” and one that can be easily addressed (and mitigated) through a frank, open conversation. Conduct and act upon regular board assessments . The most effective boards regularly assess their own practices and take actions to step up their game. Even those boards that are operating at a high level—“Governance 501”--are continually asking, “What does Governance 601 or even Governance 701 look like, and how do we get there?” Aiming for excellence and taking steps to get there is a critical component of board rejuvenation, and if your board isn’t taking a critical look at itself, and acting accordingly, whether you are at Governance 101 or Governance 701, you’re doing your credit union a disservice. Previous Next