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< Back Defining Consensus Michael Daigneault Nov 16, 2022 'Five finger consensus' allows all directors to weigh in on key decisions. It seems that almost every credit union we’ve been working with lately has been struggling with the idea of consensus. They all seem to want it, most of them claim to be experts at coming to it, and yet few of them know what it really means. One of our favorite facilitation techniques is what Michael Wilkinson calls “five finger consensus.” It goes like this: We’ll call a question, something like “Moving forward, XYZ Credit Union should charter a Governance and Nominations Committee.” Next, we charge the board members to vote their minds: “Hold up five fingers if you strongly agree that your credit union should charter a Governance and Nominations Committee; four if you agree; three if you can live with it; two if you disagree; and one finger if you strongly disagree.” (At this point, we’ll tell them to be mindful of which one finger they hold up, which is typically greeted with a round of laughter.) Then, we’ll ask directors at either end of the spectrum—those who voted with one or two fingers or with five—to share their thoughts. After additional discussion, we’ll then re-call the question and the vote. Sometimes the vote will change, and sometimes it will remain the same, but in either instance, those who voted will have had the chance to express their thoughts, and if the threes, fours and fives are in the majority, then that decides the issue. Is five-finger consensus a formal way to obtain a board vote, you ask? Usually not, but it is an engaging way to take the pulse of the room, ask for input and discussion, and then call a vote—all of which is consistent with building a broader consensus. Could you apply the same process to your board discussions and votes? Absolutely. What is consensus? Merriam-Webster defines it as “a general agreement about something.” Consensus involves coming to an agreement to support a decision that is in the best interest of the whole. It affords everyone an opportunity to share their thoughts and opinions. Consensus, in the end, is a decision-making process informed by the shared wisdom of the group. It takes courage, humility and respect among all of the group’s members. It may require a measure of letting go for the greater good. Those who voted with only one or two fingers may be outvoted, and that has to be okay with them once they have had a chance to voice their concerns. When we facilitated the five-finger consensus recently at a board retreat, one attendee, who was taking a minority position, said, “I’m satisfied. I just wanted to be able to have the conversation, and we’ve done that.” Sometimes, people just want to be heard. Consensus doesn’t require unanimity. It isn’t talking through an issue again and again until 100% of you and your colleagues on the board are in agreement. Credit union boards are not held to the same standard as a jury in a criminal trial—come to a unanimous decision or end in a mistrial as a hung jury. If every director does not agree, that doesn’t mean a decision cannot be reached and the issue must be put on hold indefinitely. Consensus doesn’t mean you have to be ultra-polite, never disagree with your colleagues and vote accordingly just to get along. On the contrary, a measure of disagreement, in a respectful and appropriate way, is healthy for a board. In fact, we would be concerned if directors never disagreed. Boards that are in complete “harmony” and never experience conflict or disagreement are just as dysfunctional as those that experience complete “anarchy” and find themselves in total conflict. There should be an appropriate degree of conflict, or challenge, on your board, particularly when you are wrestling with difficult strategic issues. That’s why we have boards. It would be much easier (and more efficient) if a credit union were simply run by its CEO or a single trustee. But society is not built that way, and neither are our organizations. We value diverse thought and input. Our organizations are stronger because they rely on a system of checks and balances. If you are not challenging each other—if there is no one on your board voting with one or two fingers and offering their thoughts along the way—what true value are you offering to your colleagues on the board, to the CEO and his or her management team—and ultimately to the members you represent? Just be sure to disagree in an agreeable way, and remember that the idea of consensus, as the Quakers would say, is ultimately about “unity, not unanimity.” Previous Next

< Back The Board And The CEO Should Play Doubles Tennis Michael Daigneault and Jennie Boden Apr 23, 2019 The constructive partnership between directors and the chief executive is a lot like teammates on one side of the court. If you’ve spent any amount of time with us folks at Quantum Governance—either at a large, general session at a CUES conference or in a private, retreat setting, you know that we talk a lot about the importance of the “constructive partnership” between the board and the CEO. We spend a key portion of our governance training covering this very issue—framing the dynamic balance of authority between the two and suggesting that a key to mutual success is that they focus on working together as “teammates.” What do we mean by that? Well, we often ask participants to picture the great tennis players Venus and Serena Williams playing together as a doubles tennis team. Yes, each should bring her unique abilities to the challenge, but that does not mean one sister should overwhelmingly dominate the play on their common side of the net. When out on the court playing a doubles tennis match, they cannot (in the moment) be focused on “Who is in charge? or “Who is the better tennis player?” No, they’re understandably focused on who is in the best position to return the next shot as it comes over the net. Indeed, they are hyper-focused on working together as a team to bring out the best in both of their abilities! The same is true in the board-CEO relationship. There are roles and responsibilities that fall into the board’s side of the court (i.e., hiring the CEO). In the same vein, it should remain the CEO’s sole responsibility to hire his or her management team and staff. But what about when it comes to determining the strategic plan that will drive the future of the credit union? Doubles tennis best defines this part of the effort to be sure, with the board, CEO and management team working in constructive partnership to co-create the best strategic plan for their credit union and its members. One of the key findings in our report “ The State of Credit Union Governance, 2018, Five Data-Driven Recommendations for Future Success ” was that this all-important team (the board and the CEO) frequently differ on their perceptions of governance. And that difference in perception is great, with little agreement on 84% of their responses on the vast majority of the survey’s key questions. This finding led us to recently add a new question to our governance survey: How effective is the board at maintaining a good working relationship with the CEO? On a scale of 0-4, the responses thus far have varied wildly, with one credit union scoring a perfect 4.0, and another scoring less than a 1.0. How would you rate your board’s relationship with your CEO? Consider all of the facets. Is your board appropriately staying out of the weeds? Are you working in constructive partnership in the areas that really count? Do you have a high level of trust with your CEO? Are you giving your CEO genuinely effective performance feedback? Is your board asking the hard questions that need to be asked, as you “trust but verify”? And is your CEO comfortable with your hard questions and in agreement with you in your collective understanding of the role and responsibilities of the Board? The law vests the ultimate authority and responsibility for the credit union in the board, Ram Charan put it this way in his book Boards that Lead , the real role of the board is to understand: 1) when to lead, 2) when to delegate and 3) when to partner with your CEO and his or her management team. Are these three areas crystal clear for you and for your CEO? If not, we fear that your score would be far from that perfect 4.0 on our new governance survey question, and this is likely one of the most important and critical governance challenges that your credit union must identify and overcome. Previous Next

< Back The Need for Evolution: One of Today’s Central Governance Challenges Jennie Boden Jun 7, 2024 If your credit union has grown have you re-considered the balance of authority between your board and CEO? I spent the morning interviewing another credit union board chair. It’s one of my favorite parts of the job. I always learn something new, and I leave every encounter feeling a little in awe that they candidly share what’s on their minds … and most importantly, how they think their credit union’s governance could be improved. Sometimes our interviewees don’t actually know much about formal governance best practices. At other times, given the long tenure of most credit union directors, I’ll note a resistance to change. But this morning’s interview was different. Yes, the chair was a long-tenured board member—even serving on the credit union’s supervisory committee as a precursor to board service. In fact, their service had started when the credit union’s assets were just about $125 million, and today, they are cresting $2 billion. It’s safe to say that this chair had seen a lot of change during their tenure. When I posed one of our standard questions, “What would success look like for you?” they were clear: “I think that we all need to get on board...What are our jobs as board members now? And what will they be as we continue to grow? Sometimes, we get bogged down in the little things. That might have been okay when we were checking the repo lot, but not anymore. Now, there are just bigger fish to fry.” “I’m sorry,” I interrupted in disbelief. “Were you actually on the board when they were checking the repo lot?” “Yes,” was the short answer. (Well, the supervisory committee to be precise.) And when they checked the teller’s drawer monthly and reported to the board the number of envelopes that they stuffed the previous month. “ We were a lot smaller then,” the chair explained. A lot smaller to be sure. But here they were, still vitally contributing to the life and governance of the credit union and identifying one of the most prevalent governance challenges that we see today: the need for governance evolution. In our State of Credit Union Governance, 2023 , we reported that mid-size (with assets between $500 million-$900 million) credit unions identify their governance as above average, with a score of 3.2. Critically, that same study found that as credit unions’ assets grow, their board members’ sense of governance effectiveness diminishes. Credit unions with assets between $1 billion-$2.99 billion reported only an average score of 2.8 when asked about their governance effectiveness, and the score dropped even more (2.7) for those credit unions with assets of $3 billion or more. So, what’s at play here? As we reported, those mid-sized credit unions are “seemingly sitting in their governance ‘sweet spot,’” with “few prepared for the governance changes that occur at the next level of growth—where the board’s focus shifts in earnest from not only the fiduciary to encompass strategic issues, but also generative questions to ensure continued relevance and efficacy.” But it goes beyond merely the board members’ focus; if your credit union has grown like my interviewee’s, have you re-considered the balance of authority between your board and CEO? Are you still overseeing the compensation and benefits of the senior management team? Have you considered potential, needed changes in your board-level committee structure? While still addressing your fiduciary responsibilities, have you turned the corner to spend more time on where the credit union should go, rather than how things are being done? The good news is that if you haven’t been asking yourselves these questions, it’s not too late, and you are definitely not alone. Take note, however. This is one of today’s most central governance challenges. As you grow, whether from $125 million to $250 million or $750 million to $1.5 billion, ask yourselves this central question: How does the board need to evolve to most effectively govern at this new level? And what are we doing to get there? Previous Next

< Back Embracing our New (Virtual) Reality Caitlin Hatch May 22, 2020 The new virtual reality is changing the way we do business. I saw an interview recently in which author, American diplomat and former State Department official Richard Haas observed that the COVID-19 pandemic is not so much a turning point for our society, but an accelerant. His comments alluded to the idea that trends only just beginning to emerge before the pandemic, have been “fast-tracked” and their significance amplified as we unlock the ways and means of our new normal. Perhaps the best and most accessible example of this phenomenon is our new fluency in virtual or video conference meetings and even social gatherings. At Quantum, we’ve operated as a virtual organization from the beginning, conducting much of our work via telephone, video conference and the miracle of the Internet. However, an important and transformative element to our work often culminated in traveling to meet clients, sometimes one-on-one but frequently in groups of 20 or more. And the public speaking engagements at conferences to even larger groups…how does that work continue, or does it? As so many of you have, we decided to take a case-by-case approach postponing our in-person retreats and workshops at first but quickly pivoting to 100% virtual via Zoom, Meet, WebEx and the myriad of other apps that have become as familiar to us as centuries-old brands like Kleenex and Clorox. As it happens, we have been in the regular practice of video conferencing with an international nonprofit organization who asked us to conduct individual board orientations with their multi-national Board. We had previously aided them in updating their core governance structures and establishing a better understanding of their core identity and purpose —orientation of their newest directors was the next meaningful step forward. This afforded us a unique opportunity to put into practice a new way of conducting board orientation…100% virtually! In the recently published The State of Credit Union Governance 2020 Report we identified that “a significant number of board members believe their boards must improve their current onboarding process.” Less than half of the directors surveyed for the study felt that they were “using an effective process to orient new board members to the work and dynamics of the board,” with 30% categorizing it as “adequate”— hardly a ringing endorsement. Thus, we developed a virtual board orientation, a solution for boards who struggle with finding enough hours in the day, volunteers to manage the effort, or simply engaging ways to orient new board members effectively and meaningfully. So we “upped our game” so to speak. Doing more video conferencing in particular around board orientation, and we’re creating more recorded video segments and interviews. Check out our Facebook and LinkedIn for the latest and greatest! We upgraded our typical teleconference to a video conference where face-to-face from our own homes has increased the intimacy of our client relationships in a way that would make Getting Naked author Patrick Lencioni proud of both our clients and of us. Caitlin Hatch previously served as a senior consultant with Quantum Governance and has worked with credit unions for the past eight years, focusing on governance and strategic planning. Prior to that, she served for 25 years as general counsel and corporate secretary for the largest anthracite coal company in the United States. 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 Building Your Associate Board Member Program, From The Philosophy Up Jennie Boden and Gisele Manole May 1, 2021 The groundwork for success includes commitment from the start. The debate over the best governance practices for board succession rages on. It is a routine topic in every single engagement and interview we conduct. The issues of diversity and term limits are especially prominent lately, and the daunting task of building the board of the future feels, as with many other responsibilities, like a full-time job for the credit union’s volunteers, all of whom have limitations on their time. The State of Credit Union Governance 2020 found that almost half of board members surveyed (45%) thought that their board was only adequate or less than adequate at attracting people who have the right skills. So, what does it take to marry talent with your board and governance culture? Mina Worthington, CEO of $796 million Solarity Credit Union in Yakima, Washington, describes how her credit union answered the question. “Ultimately our success was in finding the right way to meaningfully involve associate board members in the work of our board,” she says. “They are board members in every way possible except for the vote.” What does an associate board member program look like? And are some key ways that associate board members can be brought successfully into your fold? At Solarity CU, associate board members are partnered with a “board buddy” to help orient them to the credit union and the culture of the board itself. Proper board orientation is oftentimes overlooked or treated as a “self-help” effort, lacking a strategy for continuing orientation past reading the governance manual, bylaws and policies and meeting with the CEO and senior management. An associate board member at Solarity CU explains: “Right after I joined, my board buddy reached out and called me. We sit next to each other in the board meetings. She’ll whisper historical things to me and follow up with me after the meetings to be sure that I understood everything. I’ve only been on the board for about two months, but I already feel respected, and I definitely feel like my voice is heard.” Another hallmark of Solarity CU’s success with its associate board member program has been the institution of regular monthly meetings between the CEO and associate board members before the board meetings to review the meeting materials and answer any questions. Worthington says, “Investing the time in building those relationships with associate board members was just as important as making sure that they knew what was going in the meeting materials each month—the message being, ‘We want to learn about you as much as you want to learn about us.’” Another hallmark of a successful associate board member program is access to training and conferences that give associate members a broader look at the issues, innovations and ever-evolving best practices in credit union governance. Think of this as an investment by both parties in the future of the credit union. A multitude of resources are available—from online trainings and workshops to conferences and certification programs. Some are even free! So, the underlying philosophy of a successful associate board member program must be, “We’re 100% committed to you,” instead of thinking of associate members as engaging in a protracted interview process that can sometimes go on for years. From our experience in working with thousands of credit unions, an associate board member program that engages, orientates, educates and invests in its volunteers in meaningful ways is the best way to ensure the future of your credit union. In the coming year, if you haven’t explored an associate board member program to support a healthy balance of board renewal at your credit union, maybe 2021 is the year to do so. Just be sure, as with everyone in your boardroom, that you are open and committed to helping those volunteers develop into exceptional stewards of your vision and mission, too. You can purchase Quantum Governance’s Associate Board Member Job Description, as well as other policies from their Policy Library here . 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 Two Of The Five Top Questions Board Chairs Have Michael Daigneault and Jennie Boden Oct 23, 2018 1. Should chairs vote? 2. What’s the best way to ask a director to move on? Quantum Governance recently had the privilege of spending a few days with nearly 100 credit union board chairs, vice-chairs and others when we conducted the Board Chair Development Seminar for CUES in Amelia Island, Fla. In this article, we put forth two of the top five questions we learned were on their minds and make an attempt to answer them. Question 1: Should board chairs vote on all regular matters? This first question surprised us. We were amazed to find that 50 percent or more of the board chairs in attendance said they didn’t vote unless there was “a tie in the boardroom.” Remarkable. They, in turn, were stunned when we told them that this practice was simply wrong. Digging further, their assumptions behind their abstention made some sense and evidenced an important desire for fairness. For example, they were concerned that: “A board chair, in expressing his or her opinion, might unduly sway the will of the whole,” and “Our board chair is the most senior member of our board and everyone looks to him; it wouldn’t be fair.”These are valid points, and we wholeheartedly agree on the need to ensure fairness and the ability to hear everyone’s voice in the boardroom. However, even board chairs have rights! The No. 1 question on Robert’s Rules of Order ’s online FAQs is: “Is it true that the president [also meaning chair] can vote only to break a tie?” Robert’s Rules of Order says “No, it is not true that the president [again, here, they also mean a chair] can vote only to break a tie. If the president is a member of the voting body [which the board chair of a credit union is], he or she has exactly the same rights and privileges as all other members have, including the rights to make motions, to speak in debate, and to vote on all questions ….” When you and your colleagues on the board address conflicts of interest, your efforts are not about eliminating them, but mitigating them. Similarly, your board chair not only has rights, but also a governance duty to independently express his or her opinion on matters before the board. He or she should also share experience, thoughts and perspectives which you likely want to consider. Follow some basic steps and you’ll be fine: Elect individuals to the role of chair who can be fair, objective facilitators. Ask the chair to share his/her thoughts at the close of the discussion, not at the beginning. Unless the vote is a private ballot, the chair’s vote should be rendered last. (Note that we found this voting issue to be so important that we’re working on a full white paper on this topic, and it will be published soon!) Question 2: How do I talk with a board member about moving on? In our recently released State of Credit Union Governance, 2018 , 74 percent of respondents reported that their boards are effective or very effective at having the right mix of skills or experience to accomplish its governance roles and responsibilities. And yet, still, asking a board member to move on remains one of the top issues on board chairs’ minds. We get it. It’s a hard one. Without term limits in place at many credit unions, board members may serve far beyond their time. We know it sounds harsh, but it’s true. We had a client once warn us that there were one or two members on the board that might have dementia, but they did not ask them to move on for fear of upsetting them. From a human perspective, we understand it. But from a governance perspective, one has to ask whether those board members are able to aptly fulfill their legal duties and governance roles and responsibilities. We offer these five tips to help you engage in the hard conversation when it’s time for a board member to transition off your board. Have your chair, along with at least one other trusted board member, engage in a private conversation, and: Be respectful and open; approach the conversation with a genuine desire to learn. Try to understand where the board member in question is—what his or her perspective is and what might make a transition easier. Focus on what you’re hearing and not on what you’re saying. This isn’t about you. This is about your board member. People will respond better if they are feeling heard. Be direct and get to the point. We know it’s a hard conversation, but don’t “beat around the bush.” Don’t put it off! When you know that you need to have the conversation, have it. You’ll be doing everyone a favor. Don’t wait until you get to the point of having a member with dementia—even possible dementia—on your board. Expect a positive outcome, even if that outcome may be that the board member moves on; it could be good for him/her and the board. Not all transitions are bad. Don’t assume that the outcome will be bad for the board member. Look for a graceful exit and transition for all. We felt that all five of the top questions on board. chairs' minds were vital—and that if they were on the minds of the board chairs, they were likely on the minds of other directors and CEOs, too. (Are they on yours?) Previous Next

< Back Assessing Staff's Strategic Planning Path Jennie Boden Aug 2, 2017 The challenge is helping front-line credit union folks see the big picture. Should credit union staff members beyond the senior level be included in strategic planning? If yes, when and how will such involvement be most beneficial for a credit union? The diagram at right will help you consider the answer to this question. The board and senior management team should work in constructive partnership to set the credit union’s overarching vision, mission, culture (or values), strategic goals, objectives and metrics (see the items in the accompanying graphic in blue). Work plans (see items in red) are then developed and executed by the senior management team in partnership with the rest of the staff, based on the original work set forth on the vision, mission and culture. There are a few caveats, of course. The senior management team should be recused from some parts of the strategic planning process with the board when (a) the board anticipates that it may need to make a CEO change and wants to discuss it as a part of going in a “new strategic direction”; (b) the board discusses the possibility of restructuring the senior management team with just the CEO; and/or (c) there are important governance issues concerning the board, which could morph into a strategic effort focused on the board or governance-only issues, that they want to first discuss among themselves and (usually) with the CEO. Figure 1: Strategic Planning Elements Including more staff in the visioning process can, at times, be limiting, so the board and senior management team should consider whether this might be an issue. Staff can tend to think more along operational lines, and the purpose of strategic planning at the board and senior management team level is to think, to think big, and to think beyond what is happening today. However, some staff, especially individuals with specialized skill sets and knowledge, could be included at the board and senior management team level of planning, and all staff can and should be included in up-front brainstorming, research and data gathering. Additionally, they are vital to fully developing the more detailed operational work plans (the items in orange) that flow from the board-level strategic goals, objectives and metrics. Finally, they would need to be involved as a vital stakeholder group in the communications effort articulating the strategic planning efforts of leadership. After all, they will be asked to embrace and execute the plan. 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 Parity In The Boardroom Takes Patience, Planning And Process Jennie Boden Jun 25, 2021 But putting in the effort can definitely make a difference. I have to admit I’m not a big fan of publications like Advancing Women . I mean, I’m honored to write for it, but why, after all these years, do we still have to have special publications with a special focus on advancing women? I mean, really. You’d think we’d be further along by now. Women started pursuing equality way back in 1850, when the first convention for women’s rights was held in Seneca Falls, New York. Sixty-eight women and 32 men attended the convention that demanded a woman’s right to vote in the U.S.; sadly, the convention didn’t address the racism and oppression faced by Black women and other women of color. In 1872, Susan B. Anthony and 14 other brave women were the first of their gender to cast votes in a U.S. election—and they were arrested for it. It wasn’t until 1919 that the 19th amendment was signed into law. And it passed the Senate by only two votes. Worse yet, it wasn’t until 1965 that Black and Latinx women were able to vote. That was the year before I was born. And today, so many voting rights are being threatened and even rolled back in some states. And that’s just the challenging path to voting. Women Leading Businesses A 2018 study by Deloitte and The Alliance for Board Diversity found that women held only 25% of board seats in Fortune 100 companies. And just more than 3% of bank CEOs are women. In The State of Credit Union Governance 2020 , published by Quantum Governance and partners CUES and the David and Sharon Johnston Centre for Corporate Governance Innovation, we reported that the average credit union board has nine members, three of whom (36%) are women. This is better than the Fortune 100 companies by 11%. 2021 data from CUNA shows that a majority (51%) of credit union CEOs are women – more than 15 times higher than the rate of women CEOs at banks (3%); among U.S. banks and credit unions between $1 billion to $5 billion in assets, 13% of credit union CEOs are women versus only 2% of bank CEOs; at both banks and credit unions, women CEOs are relatively more common at smaller institutions; and a board member of a credit union is about twice as likely to be a woman—33% of credit union board members are women as opposed to 16% of members of bank boards. We’re clearly doing something right in the credit union community. But we’re not there yet. A soon-to-be-released special report from The State of Credit Union Governance series, COVID-19 and DEI: Revolution & Evolution in the Credit Union Community , found that while more than a third (34%) of credit union board members in the U.S. are women, that percentage falls well short of the total percentage of women in the country (51%)—a difference of 17 percentage points. I guess I have to admit, as much as I wish parity of all types were just inherently so, that if we’re going to make more progress, we need to do so intentionally and consciously—that gender parity, like any parity, doesn’t just occur naturally. That’s why we need publications like Advancing Women and organizations like Women in Governance , headquartered in Montréal, Québec. The nonprofit was founded to “support women in their leadership development, career advancement and access to Board seats.” In partnership with McKinsey& Company , Women in Governance developed a parity certification program that is now being offered in the U.S. The program helps “organizations increase the representation of women in sectors where they have historically been underrepresented, as well as in executive leadership positions.” It’s a shame that we need a parity certification program to ensure that women are seen as being as capable as men to hold leadership positions within an organization, just as it’s a shame to think that we need laws to combat racial bias in policing. But we do. And there’s proof from other fields that, with focus and intentionality on those areas where we want to have a positive impact, we can make a difference. A Success Story From Science In 1966, only 2% of the total doctoral graduates in the physics disciplines were women, and that number increased marginally to just 5% for those graduating with a bachelor’s degree. Leaders in the field, including at the American Institute of Physics and the American Physical Society, spearheaded a program led from the board-level focused on gender parity. While that’s still a work in progress, they have experienced tremendous success over the years. Source: APS125 By 2018, both percentages had risen to 22%, still below the overall percentage of women in the U.S., but a vast improvement. While it’s disheartening to think that gender parity, and all types of parity, aren’t just inherently a given, we can be reassured that with focused intent and effective processes and programs put into place, we can make a difference—even if it takes a little longer than we might like. Previous Next

< Back A Deep Definition of Governance Michael Daigneault Jun 3, 2015 How does your board use its formal and informal authority for the good of the credit union? While there are as many definitions as governance as there are consultants in this world, here at Quantum Governance , we believe that governance ultimately deals with the legitimate distribution of authority throughout a system--whether it’s a country, a corporation or a nonprofit like a credit union. We believe governance is ultimately how organizational leaders use both the formal and the informal authorities vested in them. How they think, make decisions, develop strategy, persuade, develop future leaders, structure their board and execute initiatives. How they communicate with key stakeholders ... with their staff … with their customers … with their marketplace … with their constituents … and even with each other. Good governance also applies to how your board oversees your CEO; tracks its own performance and the CU's results; conducts its budgeting process; allocates its resources; addresses membership or constituent needs; moves in and through its community; adheres to ethics and financial integrity standards. And, yes, good governance is even about thinking in a genuinely strategic manner. There are some who say “good governance” centers on legal issues--bylaws and conflict-of-interest policies--and how an organization’s board oversees its audit process. But at Quantum Governance, we ask our clients to look much deeper, to how well the board is doing on the many aspects of governance outlined above. Previous Next