< Back Get Your House in Order—Now, If Need Be Michael Daigneault and Jennie Boden Aug 30, 2018 There is no ‘wrong’ time to deal with fundamental governance issues. We read with interest a recent article about governance that discussed the importance of boards not addressing their governance issues “in the wrong places at the wrong times.” The authors suggested that many times boards discuss governance issues during precious time in sessions dedicated for other important work—such as strategic planning. They posit that this is distracting and a poor use of time for those taking part and to the goals of the session. They have a point. On one hand, the limited time a board spends together should be treasured– and treated as a resource to be judiciously and appropriately allocated. Strategic planning discussions with management need to happen and are a vital aspect of a board’s role. But on the other hand, if your credit union’s governance challenges are so real that they are clouding your ability to strategize or otherwise effectively lead, there may not be a “wrong” time to deal with them. If governance discussions arise in the context of other discussions, unresolved issues may exist that need to be effectively dealt with ASAP so that governance differences or issues don’t unduly interfere with how you successfully execute your governance roles and responsibilities—strategic planning included! A Need for Conversations on Governance Our recent study, The State of Credit Union Governance, 2018, Five Data-Driven Recommendations for Future Success , found evidence that a good number of credit unions are struggling with governance issues. Of our six key findings , two help tell the story of when to discuss governance: 1. Board members and CEOs frequently differ on their perceptions of governance, with board members and CEOs differing on 84 percent of the survey’s key questions, agreeing on only 16 percent of them (with the exception of the supervisory committee survey section, where more agreement was found). 2. CEOs and senior staff perceive lower levels of trust, with just 27 percent of senior staff and 25 percent of CEOs reporting that their boards were very effective at building a leadership culture of trust, compared to 53 percent of supervisory committee members and 44 percent of board members. We see evidence of these challenges and more in our work with credit unions. Time and time again, we’ll incorporate a strategic and governance assessment and a planning session into one engagement. After all, what could be more strategic than getting your governance house in order? At a recent strategic planning session, a client spent some time in a facilitated executive session, building trust between the board and the CEO. From our point of view, this discussion was probably one of the most important, strategic steps this credit union could take. More and more credit unions are opting to include a strategic goal on governance in their strategic plans. This is not to suggest that you should completely eclipse your normal agendas for all things governance. The article’s authors made some relevant points, and we agree wholeheartedly with most of their recommendations: Dedicated time for governance training is a must. Focus on board member education and governance issues—and to this we would add strategic matters—at every board meeting. Give permission to each other (not just to the CEO or senior staff) to check each other (appropriately) when boundaries are crossed. And as already mentioned, we could support the idea that governance issues not take over every meeting unless the governance issue is so fundamental (i.e., a loss of trust between the board and the CEO; a lack of engagement among board members; critical disagreement on roles and responsibilities, etc.) that it would derail all other discussions or progress. If this is the case, you must have the courage to change course. Agendas are important. Timelines, yes, are meant to be kept. But, remember the saying, “culture will eat strategy for breakfast,” and it’s true. Get your governance house in order. Now’s the right time to do so! Previous Next

< Back Assess for Success Michael Daigneault Jul 27, 2015 8 surefire times you need to evaluate your board’s performance In a recent study conducted by Quantum Governance , only 22 percent of credit unions rated themselves as “effective” or “very effective” at conducting a regular process of self-evaluation. Comparatively, 34 percent felt they were ineffective or even “very ineffective ” in doing so. With the long tenure of credit union board members and the continually evolving business climate that faces today’s credit union, remaining relevant, current and ahead of the curve is more important than ever. In fact, it is incumbent upon every credit union director to do so. A board assessment is a critical component in an ongoing process of board renewal, strengthening and improvement. Done well, it can provide an objective and comprehensive perspective that ultimately will help your board and senior management team focus your efforts, activities and precious resources. Together, you will identify your credit union’s strengths and challenges and, in doing so, find ways to move forward collectively to the betterment of your members. You can frame your issues in a new way, generating bright ideas and insights that will lead your credit union effectively into the future. Plus, you will build a baseline against which you can measure future progress. You should definitely consider a board evaluation in the near term if you: have a new credit union board chair or CEO want to elevate your credit union’s leadership or strategy to the “next level” have been experiencing very high or very low board member turnover need to address issues or concerns with your current governance structure, policies and/or practices are getting ready to launch a new strategic planning initiative (or revise your current strategic plan) are considering a merger or acquisition have experienced significant change, growth or “crisis” within your credit union or board have not undertaken an evaluation in the last three years 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 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 To Pay or Not To Pay Michael Daigneault Sep 22, 2015 Deciding whether to compensate credit union and CUSO directors is a hard question. There’s been a lot of buzz recently about whether credit union board members should be compensated. For a long time, this notion was taboo. For many, it literally seemed to go against the very essence of a cooperative credit union. Then the idea of compensation seemed to shift from being taboo to being merely uncommon. Though federal credit unions can provide compensation only to one member of their board, usually the treasurer, some state-chartered credit unions may compensate more broadly. A recent study published by Filene Research Institute (and underwritten by Quantum Governance and CUES, among others) notes that there has been a new and significant shift, with many beginning to support the notion of paying their boards, “with some even believing that doing so would soon be crucial to their ability to attract and retain effective board members.” The study, aptly titled Should Credit Unions Pay Their Directors? , goes on to report that “At 145 credit unions in 12 states, directors earn somewhere between $60 and $37,597 annually.” The report’s author, Matt Fullbrook, manager of the Clarkson Centre for Business Ethics and Board Effectiveness at the University of Toronto’s Rotman School of Management shares that while “In most states, credit union director compensation is dwarfed by fees paid to directors of commercial banks …the pay trend is slowly catching on, especially among large credit unions.” On the one hand, such a trend makes some sense. Credit unions deserve engaged board members who feel appreciated and perhaps, at times, fairly compensated for their significant efforts. They bear significant burdens. They are, for example, legally responsible in ways that even the CEO isn’t. And I don’t have to tell you that there is a lot at stake: millions of dollars in assets for most credit unions and even billions for an increasing number in this age of consolidation. Credit unions need the best and the brightest board members to meet the tremendous challenges of the day, but it has become increasingly hard for many credit unions to recruit high-quality, dedicated directors. If compensation can help in that regard, perhaps it is one tool that should be utilized. Yet on the other hand …there is a rich tradition of board members serving their fellow members in a voluntary capacity. Indeed, you and your colleagues are in the business of running a cooperative credit union on behalf of your members. What About CUSO Boards? Like a credit union board member, directors of credit union service organizations are tasked with providing good governance, effective oversight, strategic vision and the like. But unlike credit union board members, they are guiding for-profit entities. And therein lies a very significant difference. CUSOs were created as “outside-of-the-box” business solutions – creative ways for credit unions to effectively address effective business needs. One argument for compensating a CUSO board certainly is that in order to attract and retain the most creative, “out-of-the-box” thinkers, compensation is a must. But as in the credit union community, there are also cons to the practice of compensating CUSO board members, many of whom are credit union CEOs themselves. That con list includes: the argument that the CEOs are already handsomely compensated by “the community”; that while the CUSO is a for-profit entity, it exists to serve a cooperative community and should, therefore, follow cooperative principles; and that it may send the wrong message to credit union members or the community, among others. The long and the short of it is this: There is no simple answer to the question for either credit unions or CUSOs. The notion of compensating a CUSO board (despite its for-profit status) can be just as perplexing. What I can tell you is that for both credit union boards and CUSO boards, answering the compensation question does require a board that doesn’t shy away from asking the hard questions. All of us should consider the long-term implications, as well as pros and cons of compensation at the board level, and dig deeper to find common ground on this challenging issue. Previous Next

< Back In Search Of The Strategic Board Paul Dionne Jul 16, 2024 Discover how credit union boards can become agile strategic partners and lead their institutions to future success. “Plans are worthless, but planning is everything.” – Dwight D. Eisenhower “I always say don’t make plans, make options.” – Jennifer Aniston Credit union board directors often ask me how they can improve the way their boards provide strategic oversight and support. They describe member expectations growing as quickly as the new channels, products and services being offered by competitors. Consumers expect more convenience, bespoke service, and assurance that a provider has their financial back. Or else! As the financial services ecosystem faces ongoing disruption, credit union leaders see a need to become more agile and better prepare for multiple uncertainties. Board directors must get involved if they want to support their credit unions becoming more nimble and resilient as part of their long-term strategic direction. How can boards become better strategic partners? As credit union board directors learn during their first onboarding session, directors carry fiduciary responsibilities and bear ultimate responsibility for ensuring the safety and soundness of their credit union. But fiduciary responsibilities are often where board meetings go to die. It is so easy to fall into a “report-out” agenda with Q&A that takes up all of a board’s time and energy deliberating over what happened in the past. Boards must also devote their time to strategy. And strategy is all about the future. In order to fulfill their role as leaders of their credit union, boards must provide strategic focus and direction. In Quantum Governance ’s The State of Credit Union Governance, 2020 study, we asked What are the skills that add the most value in the Boardroom? The top answer from leaders was “Ability to focus on the future” with 76% of respondents checking that box. Boards can begin supporting strategy by developing and applying their long-term perspective to help prepare the credit union for the future. Dialogue on strategy should be ongoing, not reserved solely for the annual strategic planning retreat. Are you finding ways to keep directors informed about the future of financial services so they understand emerging risks and opportunities? Do your board meetings have substantial blocks of time dedicated to strategic dialogue? Are board directors equipped to ask future-oriented questions that enhance planning and preparedness? Returning to those fiduciary obligations, boards are typically well versed and skilled at risk mitigation for safety and soundness. But risk also comes in another form: the judicious taking on and managing of risk to gain strategic advantage. Every strategic plan includes risk! Strategic boards understand that addressing risk taking in a mindful and calculated manner is an essential element of strategic planning. A failure to pay attention to risk taking hampers a board’s ability to provide both fiduciary and strategic oversight. Consider, for example, how a credit union might advance a strategic goal by taking on more lending risk. Would extending loans to lower grades deepen member engagement, contribute to growth goals and support the mission? Or will it over-extend your lending team, balloon charge offs, and damage your reputation? What is the right balance to strike? This type of deliberation is best addressed when a board and CEO/senior management are working in concert. I am not suggesting boards take the strategic planning steering wheel out of the hands of their CEOs! Boards need to know their lane. For example, operational planning still belongs to the CEO. Boards should endeavor to engage in regular dialogue with their CEO/senior management (and likely others) on high-level strategic matters. Boards can provide constructive feedback and help ensure accountability. Credit unions enjoying a healthy constructive partnership between the board and CEO are likely to make better strategic decisions. If we are to take Ike’s and Jennifer Aniston’s quotes at their word, credit union boards would do well to learn how to contribute to their credit union’s strategic planning. Boards that understand and support their credit union’s strategy and the risks being taken can help create parameters that foster greater operational agility for staff. The benefits can make the difference between a credit union set to thrive in spite of an unknown future versus one slowly drifting into irrelevance. Strategic boards provide the kind of understanding and support that empower CEOs and their teams to execute the strategy more nimbly and confidently. Planning is indeed everything, and boards should play a central role. When that unexpected storm blows in your face, the planful credit union will be able to review the options that were developed, pivot, and keep moving forward. All with the confidence by staff that their board understands the game plan, the risks being taken, and has their back. Previous Next

< Back Leadership Matters: Choosing Humility Jennie Boden Aug 16, 2023 Acknowledge your power in the workplace and strive to have open and humble conversations that encourage other voices to be heard. I’m starting to see, more and more, why so many people shy away from conversations about diversity, equity, inclusion and belonging. They’re complicated. And confusing. And as one of my former colleagues once said, it’s easy when the decision making is clear—when there’s a distinct right and wrong, a simple “this way” or “that.” It’s the shades of gray or the competing values that make decisions and the discussions that surround them tough. I was feeling this way recently when I was talking with a colleague of mine about power differentials. Specifically, mine. As the relatively new CEO at Quantum Governance, my colleague was making the point that, like it or not, I was now seen as someone with power over my coworkers. Yuck. But at some point, we’ve all had some power over someone or something else—whether it’s our employees, our children, students that we’ve taught … even our pets. (Although my dog, Toby, regularly ignores me like a toddler in a candy store.) Some revel in it, while others would rather not acknowledge it. And some use it to support those with less. My entire life, I’ve aspired to grow up in the spitting image of my father—probably the most humble person I’ve ever known. Many claim humility, but few actually live it authentically and actively . I believe it is one of the most worthy endeavors to which one can aspire. The word “humble” has modest beginnings. Its Latin origins stem from the word “humus,” meaning ground or “humilis” meaning “low” or “lowly.” In fact, in Graeco Roman ethics, being humble was definitely not a good thing. If you expressed humility before someone who was of equal or lesser stature than yourself, then you were considered “debased.” But that’s not what my father thought or what he, as a minister, taught his flock or his four daughters, and the notion of my having some sort of “power” or that a kind of differential resided in me made me uncomfortable. Even the mere discussion of it felt somehow disrespectful of my colleagues. Inside, I certainly don’t feel different. Sure, I make decisions for the firm and for our clients on a daily basis. And I feel fully comfortable doing so. I always have. But I believe to my core that my voice is simply one of many, that good ideas can and should come from everyone and anyone in the room. Yes, I’m opinionated, but I love it when someone challenges me, too. I shudder to think that anyone on our team would see a difference in me and, as a result, remain silent. And yet, it happens all too often. It happens to me, and I’m sure that it’s happened to you. But here’s the thing. It’s there, whether I like it or not. I am the CEO. I am—except for our founder, the oldest person on the team—the second most experienced. I’m the ultimate decision-maker. And there’s no getting around those facts, regardless of how I feel about them. So, what am I to do? What are any of us who hold some sort of “power” to do? First, be conscious of it. Don’t assume, like I did, that just because you don’t like it that it’s not there. Second, be open to conversations about it, even when it makes you uncomfortable. In fact, be the one to raise them. Calling out the differences can make it easier for those around you, those who may have less “power,” to feel more comfortable sharing their voices. Third, ensure that you take time to reflect on your own thoughts and feelings about it. Fourth, and most importantly, as my father always did, choose humility. Previous Next

< Back The State of Credit Union Governance, 2018: Six Key Findings Michael Daigneault and Jennie Boden Jan 23, 2018 Use them to increase your board’s focus and effectiveness. We’ve been regularly surveying credit union board members, supervisory (“audit”) committee members, CEOs and senior staff on the executive team for the past five years. And for as many years as we’ve been surveying them, we’ve dreamed about the notion of pulling together a “state of the state” of credit union governance report—both to forward our own understanding of broad trends we’re seeing in the field, and also so that we can share the combined results with you, our friends, colleagues and clients in the credit union community. The culmination of that dream is The State of Credit Union Governance, 2018: Five Data-Driven Recommendations for Future Success . Today, we are pleased to share the report’s key findings with you. We hope that they will challenge you to increase the focus on effectiveness of governance and leadership at your organization—all toward the betterment of your credit union and its members. Key Findings We identified six key findings in total: Board members and CEOs have differing perceptions of governance . Their answers differ on 84 percent of the survey’s 21 key questions, fundamental to good governance—with the exception of the Supervisory Committee survey section, where there is more agreement. (Please note: Percentages throughout the report are rounded up to the nearest decimal; therefore, figures may not total 100 percent.) Board member and CEO perceptions diverge based on tenure. Board members who have served on their boards for a long time have more positive views concerning governance than those board members who have less tenure. Conversely, CEOs with longer tenures tend to be more negative than CEOs with shorter tenures. Bigger really may be better. For 18 of the 21 key questions asked, board members and CEOs of credit unions with assets of $1 billion or greater had survey scores that were statistically significantly higher overall (and therefore more positive views of the CU’s overall governance) than those credit unions with assets ranging from $500 million to $999 million. That is, larger credit unions tend to rate their governance practices higher than those of smaller credit unions. Credit unions that don’t undertake a more comprehensive assessment may have a skewed perception. Those credit unions that participated in survey-only assessments, opting not to include interviews, a document review and a retreat as a part of their process, tended to have more positive scores in many of the areas that we assessed. While the exact reasons for this more rosy viewpoint are unknown, it is a finding that is of genuine concern: Such a skewed—overly positive—viewpoint could cause some credit unions not to take corrective actions when, in fact, some action may be prudent. Respondents are concerned about recruiting future board members. Survey participants expressed concern with the board’s ability to attract the right people to serve on the board in the future, with a full 46 percent of respondents describing their effectiveness in finding, recruiting and nominating new talent as only adequate or less than adequate. CEOs and senior staff perceive lower levels of trust. Just 27 percent of senior staff and 25 percent of CEOs reported that their boards were very effective at building a leadership culture of trust, compared to 53 percent of supervisory committee members and 44 percent of board members. Previous Next

< Back The Sophisticated Art of Ensuring Your Board Grows Alongside Your Credit Union Gisele Manole Dec 27, 2022 Four areas to focus on. Whenever we interview credit union directors or senior leadership and ask about strategic priorities, we hear them talk about some version of growth—asset growth, membership growth, loan growth, SEG expansion, and the list goes on. We rarely hear about growth as it relates to the board. As credit unions continue to grow operationally, boards just seem to be along for the ride. Some are keeping up, but many are not. Would you hire the same CFO or director of finance for a $5 billion credit union as you would for one with $5 million in assets? Of course not. You know that as your credit union grows operationally, your staff must have the experience and expertise to do their part with excellence. So too, must your board. One of the situations that should prompt an assessment of your credit union’s governance is growth itself. As your credit union’s assets crest $1 billion, $5 billion and especially $10 billion , regulatory requirements change, the complexities of your institution’s financial structures will increase, and your board will be challenged to govern quite differently than it once did when your institution was smaller. CUES member Chris Parker, president/CEO of $1.5 billion Northeast Credit Union commented recently that “for so long we have all focused on working with our boards. We need to shift our foci now to working on our boards—bringing our boards along as our credit unions grow operationally.” This struck a chord with us. Yes! How are you growing as a board to complement the sophistication and expertise of your credit union’s executive team? Beyond the continuing education that so many dedicated board members diligently pursue, what are some of the things you should consider and important questions you and your board need to ask to ensure that your board is growing and keeping pace with your credit union? Four Areas for Board Governance Growth Committees. Has your committee structure evolved to inform the strategic work of the board? Ten years ago, governance committees were a rarity. We are happy to report that whenever we ask a room full of credit union directors how many of them have a governance committee, at least half if not a third of their hands go up. A formal governance committee provides boards with a specialized forum in which to oversee critical issues, including nominations and renewal, monitoring board performance, and ensuring that board policies and procedures are relevant and contemporary. These are all deeply important to ensure the continued achievement of your credit union’s vision and mission. Developing an active and forward-thinking governance and nominations committee is one of the most strategic and forward-thinking moves a credit union can make. Policies. If you are regularly hosting hybrid or even fully virtual meetings, do you have a policy on virtual board meetings? As countless boards talk about the importance of diversifying their boards, how many of them have a formal DEI policy? Governance policy manuals are not evergreen. Look beyond updating what you already have and ensure that your board-level or governance policies support your strategic growth and direction. Board Meeting Agendas. In The State of Credit Union Governance, 2020 , published by CUES and Quantum Governance, directors revealed that they spend only 26% of their time in board meetings on strategic matters. Further, our review of credit union board meeting agendas and minutes suggests that 26% might be an overestimate. Boards must become deliberate in allocating time to strategy regularly, and board chairs and the CEO must collaboratively master the fine art of developing agendas to prompt strategic and even generative discussions. Consider the use of digital technologies, for example, to approve budgets or conduct trainings. Meeting tools such as consent agendas and dashboards can speed the transfer of data and reports. Then, with the time you have left, ask yourself, are our board meeting agendas routinely focused on strategic matters? If not, how do we modernize and change them to keep up with our evolving governing role? Board Composition. Just as a $5 billion credit union wouldn’t hire a CFO that didn’t have an appropriate level of expertise or experience, your credit union board needs directors that have the mix of skills and experience needed to effectively advise your CEO and executive leadership. You can’t know if you have the director talent and expertise your credit union needs unless you develop matrices that illustrate where your directors currently have strong skills as well as areas of needed development. Does your credit union have a plan for retiring directors who are unable or unwilling to contemporize their skills and practices to keep up with the growing needs of your credit union? Don’t suffer gaps on the board because you are urgently filling a board seat, either. Plan carefully and properly for director departures. Thoughtfully onboard new directors with knowledge of what they as unique individuals bring to the table and how their talents and expertise may translate to your credit union’s vision and mission. Previous Next

< Back Board Engagement Needs A Boost Michael Daigneault May 27, 2014 Strategies to use in your monthly meetings In a recent set of surveys conducted by my firm, Quantum Governance, L3C , only 42 percent of credit union board members across the United States thought their boards were “effective” or “very effective” in engaging their directors. Sadly, this means more than 50 percent of directors said their boards were only “adequate” or even “less than adequate” at engaging the full board. What is really going on at these credit unions that is not engaging for a critical mass of board members? My team and I actually review hundreds of credit union board agendas and meeting minutes annually. Based on this, I can understand why directors are walking away feeling less than fully engaged. Many agendas are fairly routine, with some opening remarks by the chair, a fairly detailed report by the CEO, followed by financial reports, committee reports and maybe (if you’re lucky) an update on the business or strategic plan. Reports, reports and more reports. The tone tends to be formal. Month to month, many agendas don’t vary much. The focus frequently tends to be on “telling” the board information, providing fiduciary oversight and holding credit union management “accountable.” Sound familiar? In my last Good Governance column , I encouraged you to begin to expand your agendas beyond merely the fiduciary—to engage in strategic dialogue, early and often. But, let’s go further. Let the tone of your board meetings vary to include not only formal informational and oversight elements, but also genuinely engaging, persuasive and influential opportunities at the highest levels. (To be clear, I am not suggesting that the board be invited to provide input at the operational or tactical level.) Author Peter Senge provides a very helpful spectrum of the levels of dialogue in a meeting context: At the lowest level of engagement, he suggests that dialogue focuses on telling – telling the board what has been done or what’s about to be done. At a slightly higher level of engagement he suggests that the focus shifts to selling – or advocating an idea to the board. Higher on the engagement spectrum is the notion of testing – testing out an idea with the board to identify its position. Beyond that, Senge urges that there be opportunities for what he terms consulting – or genuinely asking the board’s opinion, with the idea of improving or modifying an idea. Lastly, and at the very highest level of engagement, he recommends discussions designed to encourage participants to co-create an idea or the key elements of an initiative. Vary your agendas based on future needs and important trends. While there has to be some telling and selling, talk also about some element of your strategy each and every meeting. Make time to engage in authentic dialogue. Focus not only on the necessary elements of oversight – but also make sure questions are asked that invite input from board members at the testing, consulting and—when appropriate—co-creating levels of engagement. This means regularly engaging the board in vision, mission and forward-looking questions that everyone knows will make a real difference as your credit union moves forward. Previous Next

< Back Is Your Organizational Success An Accident? Gisele Manole & Jennie Boden Nov 22, 2022 New study suggests where to look for the answer. We’ve been studying credit union governance for more than a decade now and amassed mountains of data on credit unions of all asset sizes and from all over North America. Perhaps the most frequently asked question we hear is some variation of, “How do we know when we’re getting it right? Our assets are increasing, and our membership is growing so we must be governing ourselves well. Right?” As we prepare to publish The State of Credit Union Governance, 2023 Report, we looked closely at the data to see if it was clear to us what the key indicators were that a credit union was governing itself well—that as a credit union’s assets and membership grew, the organization’s governance practices were evolving too, both in terms of meeting changing regulations and best practices. What we learned focused our attention on four things: 1) board members meeting their roles and responsibilities; 2) members of the credit union’s governing system (board and supervisory/audit committee members and senior leadership) meeting high accountability measures; 3) strong levels of volunteer engagement; and 4) building and maintaining a leadership culture of trust. We found there is a significant positive correlation among each of these four areas of governance—meaning that if a respondent reports that their credit union is highly effective in one of the governing elements, they generally report that they are highly effective in the other three elements, too. Therefore, the four elements—accountability, board member roles and responsibilities, engagement and trust—are inextricably linked and together provide tremendous insight into the strength of your credit union’s governance. Figure 1: The Four Elements of Good Governance These findings identify the four elements as likely keys to unlocking the secret to good governance and creating a high-functioning board. In addition to pinpointing areas of focus, our findings suggest that actions to improve the effectiveness of one of the four elements may lead to improved effectiveness in the other three elements. So, as we begin to more succinctly answer the question, “How do we know when we’re getting it right?” we can look to these four areas of governance for some indication of whether your credit union’s board and executive leadership are “getting it right” or not, and whether further study is necessary to identify which element of your governance needs your focus to ensure the continued success of your vision and mission. Previous Next

< 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