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< Back A New Credit Union Model with Classic Principles Focuses on Social Purpose Michael Daigneault and Caitlin Hatch Oct 1, 2018 Reclaim the ‘why’ of credit unions by deeply embedding social purpose in all your activities. Most modern credit unions significantly under-leverage their cooperative model. A key reason for this is the way the leaders of most credit unions conceive of “success.” Our thinking a few years ago was that the perspective of all CU leaders about success fell somewhere along a spectrum we could define (see graphic). On one end of this spectrum, CU leaders were very “member-centric” in their approach. “After all,” they would say, “credit unions exist for their members. Success is providing member services and benefits that improve people’s lives—sometimes at the expense of better financial results or ratios.” These CUs’ cause was to—first and foremost—benefit the member. They did so while prudently ensuring the ongoing viability of CU operations. On the other end of the spectrum, CU leaders were strongly focused on their CUs’ “financial performance”—fundamentally oriented toward financial success, growth and sustainability. “You can’t help members if you don’t exist” was a perspective such credit unions often shared. They did not ignore their members by any means, but ultimately, success for credit unions on this end of the spectrum was primarily based on classic financial measures, sometimes at the expense of rewarding members first. Their “cause” was to ensure the ongoing financial health of the credit union so that it might, in turn, offer products and services to members and their families. Still other CUs were in the middle of our success spectrum and took a “balanced approach.” These CUs did all they could to thoughtfully harmonize the member-centric and CU-centric approaches. They saw the essence of their success as an ongoing balance of excellent service and strong financial results. Sometimes service was paramount in their thinking. Sometimes financial strength had to be the priority. Overall, however, the careful balancing between the two would lead to true success. These CUs’ “cause” was twofold: to benefit members and craft a strong financial cooperative. More recently, as we have talked to other CUs about ways they could take greater advantage of their cooperative model (and what it truly means to be a CU today), we learned that a few were thinking in a new way about success. These CUs reported that the essence of their approach was to include their relationship to their communities in their thinking about every one of their programs. These CUs have a new cause orientation and new success metrics. After talking with these CUs, did we need to revise the entire spectrum? The answer was a resounding yes and no. We’ll explain. ‘Revising’ the Spectrum The much more robust and comprehensive “community focus” that these CUs were taking didn’t seem to fit well on our initial spectrum. On the other hand, this new approach remained closely related to the fundamental CU ideas of member service and financial strength. What we ultimately learned is that by adding a third focal point—community —to the member-centric and financial performance focal points, a new way of framing success for credit unions emerged, one that is a direct descendant from the movement’s foundational principle of people helping people. At this point, some of you may be thinking, “Hey, maybe we are already a social purpose credit union. We already do lots of good things in the community.” You are not alone in suggesting this, but the social purpose approach goes much farther than nearly all of the community engagement efforts we have seen to date. As Coro Strandberg , former chair of $21.7 billion Vancity , Vancouver, British Columbia, and a corporate social responsibility pioneer, explains, “It is not uncommon for credit unions to find that they are not as far along toward becoming a social purpose organization as they think they are. It is because they already have the philosophy built into their DNA. [But, because of that,] they think they are doing more than they actually are!” The Social Purpose Model The social purpose approach—fully executed—means integrating social purpose into everything a CU does. It has a direct connection to the values and underlying principles that propelled the CU movement many years ago. In this model, the CU commits “a substantial portion of its assets to social finance projects rather than having social investment as an ancillary corporate social responsibility plan,” wrote Sean Geoby and Olaf Weber in a 2013 article in the Journal of Sustainable Finance and Investment . In other words, the focus on community impact becomes the driving vision of the CU, which then embeds social purpose values into all aspects of its governance, strategy and operational efforts. This does not mean that a CU should abandon its members nor the credit union’s financial health. Rather, to really serve members and substantially grow the credit union’s financial strengths, shifting to a broader focus on community can help rally many more people and organizations to the “cause” of the credit union. To do this, Strandberg advises, “As a board and management team, you need to determine what your purpose is. Why are you here?” The answer, she suggests, should not be to just meet member financial needs, but to go beyond such needs and—in a targeted manner—address some of the broader societal issues negatively impacting members and their families. And yes, this may mean helping others in the community who are not yet connected with the CU. As Simon Sinek challenges us all in his book, Start With Why: How Great Leaders Inspire Everyone To Take Action , organizations need to both examine and reclaim their “Why?” CUs should certainly serve their members and their families with excellent products and services—what Sinek terms the “what.” They should also effectively execute their cooperative business model and maintain strong and sustainable financial fundamentals—which Sinek calls the “how.” But they should also think deeply about their core societal purpose—the “why”—a societal purpose that embraces members’ needs, but also extends far beyond just members in its ultimate reach and impact. This helps to transform the entity from one that simply provides a service or a commodity—like so many others in the marketplace—into a social movement. A cause! When helping the community becomes part of your core product line, and you think about it that way and it's part of what you are doing, focused on it on a daily basis, you are starting to arrive. -- Brett Martinez, Redwood Credit Union Social Purpose CUs Vancity : Chief Governance Officer and Corporate Secretary Karen Hoffman says the CU defines success as “building healthy communities and increasing and preserving the well-being of our members.” Under this vision, the CU has achieved 25 percent market share in one of Canada’s most sophisticated and international financial cities. Vancity does not focus on community simply because it has the “luxury to do so” due to its large asset base. It is so large today—and has gained such a passionate and loyal membership—due to its courageous decision to improve the Vancouver community. The CU has succeeded in transforming itself into a cause to improve Vancouver—a cause that many people in the city and its surrounding areas can truly believe in and actively seek to be a part of. For example, one of the CU’s most important efforts is its high-impact community investment loan that supports affordable housing; social purpose real estate; local, natural and organic food; the environment and energy efficiency; as well as social enterprises and social ventures. The CU’s social finance portfolio dwarves traditional corporate social responsibility efforts at many institutions. Vancity’s journey toward the social purpose model was sometimes two steps forward and one step back. The CU’s leaders had to experiment to see what would work. Other CUs can learn from its experience and take inspiration from its success. University Federal Credit Union , Austin, Texas : Under the banner of “When Our Community Is Strong, We Are Strong,” $2.3 billion University FCU has elevated its already strong community efforts to a new level. “This demonstrates where the heart of UFCU is—with our members and our community,” says Heather McKissick, VP/community impact and a CUES member. “In only its first year, our DO GOOD program has rallied our employees’ efforts around our community partners and made a real impact on the people they serve.” The credit union’s CEO, Tony Budet, understands that the model has its challenges. “We needed to attract new leaders to our board who were from within the community and had an interest in it, and it was a culture clash at first,” the CUES member says. “It’s difficult to go through that. A lot of credit unions will have this challenge if you don’t have an anchor or a group of people on the board who are part of the community you serve. It needs to be board-driven.” Lake Trust Credit Union , Brighton, Michigan : David Snodgrass, CCE, CEO and a CUES member, says: “We were talking about our strategy, culture and our business plan and we were wrestling with answering the question, ‘Why?’ We started reflecting on, ‘Why we are here?’ and ‘What is our purpose beyond just the traditional banking services we offer?’ It is still a journey we are on today.” $1.8 billion Lake Trust CU pursued a number of avenues, including forming a 501(c)(3) foundation to encourage charitable participation in some of its community endeavors, pursuing a grant from the U.S. Treasury’s Community Development Financial Institutions Fund. “Our CDFI grant request is to help seed a micro loan fund for small businesses in rural communities across the state of Michigan and to help us to take more risk than we would otherwise in our standard business practice—take a chance on a single mom who wants to open a hair salon, a young man who wants to open a pizza shop, in an effort to breathe economic opportunities into our smaller communities across the state,” Snodgrass says. Like Budet, Snodgrass also emphasizes that a social purpose model needs to be driven at the board level. Lake Trust CU has recently added four new board members and two associate directors from the non-profit sector with very deep roots in the community. “The contributions of our new board members have been multiple,” he explains. “It has invigorated the leadership team … to think even bigger about where we can go. They have opened up their networks to us and connected us to other thought leaders or other social purpose enterprises. That has been priceless. Having partners is part of this—we can’t do it all ourselves.” Redwood Credit Union , Santa Rosa, California : Sometimes pressing circumstances demand new approaches. Last year $4.3 billion Redwood CU found itself at ground zero in one of the most destructive wildfires in California history. CUES member Brett Martinez, CEO, says that the CU’s historic response was a result of having reacted to earlier fires in 2015 and 2016 and the recognition that the CU was able to react in an emergency to meet its communities’ needs. Because of its already deep relationships, Redwood CU was able to raise $32 million from 41,000 donors and help ensure the funds got to the right hands. “The state senator knew the areas, what the needs are, and the newspaper helped to communicate, get the word out and manage the communication, and that helped us being able to take in and distribute the money,” Martinez says. “Affordable housing is a huge issue,” he adds. “We didn’t do construction loans. We didn’t do agriculture lending either. There were other people doing that, and there wasn’t a need. Now, we are doing them, and we intend to keep doing them, even after recovery is completed. When helping the community becomes part of your core product line, and you think about it that way and it is part of what you are doing, focused on it on a daily basis, you are starting to arrive.” Redwood CU’s response to the disastrous fires has helped to propel it to a whole new level. Its leaders acknowledge they will never be the same after this experience. Future plans include more fully integrating the lessons learned—a hallmark of a maturing social purpose model. Pursuing the Model Snodgrass acknowledges that really understanding community needs and developing authentic relationships with community partners can be challenging. “Deciding to do this requires a degree of humility,” he says. “It’s not about you—all of your energy is directed to others. We were meeting with a social purpose organization in downtown Detroit. They are doing some amazing things: employing homeless women, designing jewelry, creating products. We wanted to understand how we would could add value and support them. We were met with a degree of skepticism. When you start engaging in community organizations, they don’t expect that somebody really cares. They expect that this is some sort of propaganda play.” Much work remains to be done to fulfill the promise of CUs’ social purpose model, which offers a blend of classic CU principles, an innovative community-centered approach and the promise of re-energizing the “why” of CUs in a way that appeals to young people. The approach also appears quite flexible and allows for both incremental development and a broad reach. It also stimulates innovation and a renewed passion from credit union leadership in how they design the credit union to be a meaningful cause—a cause that genuinely invites others to collectively reclaim the “why” of a credit union and create positive impact for members, their families and communities. 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 Dealing with Divisive Directors Jennie Boden Jun 27, 2023 Honor the principle of democratic member control even when you need to remove a board member. Like a lot of things in life, governance challenges seem to come in threes. There was the year that we had three clients struggling with their representative boards. Last summer, the trials were three different mergers and acquisitions. This spring, three of our clients have been grappling with how to hold a problematic board member accountable. And not just problematic board members, but very problematic ones. We’ve seen this before—and not just in threes. Let me begin by saying that, as a believer in exceptional governance, I value the cooperative principle that “credit unions are democratic organizations owned and controlled by their members. One board member equals one vote, with equal opportunity for participation in setting policies and making decisions.” But sometimes you run into a board member whose presence completely derails the democratic process. What to do when removing such a member would actually improve governance, the operation of the board and contribute to stronger organizational outcomes? The Principle of Democratic Member Control: Pretty Drastic The democratic member control principle drives three of the paths available to credit union boards when they believe that it’s time for one among them to leave their ranks. (These are the options available to federally-chartered credit unions as outlined in National Credit Union Administration federal credit union standard bylaws. Additional options may be made available for state-chartered credit unions by their regulators.) Article VI. Board of Directors, Section 8. Attendance and removal. a. If a director or a credit committee member, if applicable, fails to attend regular meetings of the board or credit committee, respectively, for 3 consecutive months, (choose one of the following) ____ or 4 meetings within a calendar year, or ____ 4 meetings within any 12 consecutive months or otherwise fails to perform any significant duties as a director or a credit committee member, the board may declare the office vacant and fill the vacancy as provided in the bylaws. Article IX. Supervisory Committee Section 5. Powers of supervisory committee—removal of directors and credit committee members. By unanimous vote, the supervisory committee may suspend any director, board officer, or member of the credit committee. In the event of a suspension, the supervisory committee must call a special meeting of the members to act on the suspension. They must hold the meeting at least 7 but no more than 14 days after the suspension. The chair of the committee acts as chair of the meeting unless the members select another person to act as chair. Article XVI. General Section 3. Removal of directors and committee members. Notwithstanding any other provisions in these bylaws, any director or committee member of this credit union may be removed from office by the affirmative vote of a majority of the members present at a special meeting called for the purpose, but only after an opportunity has been given to be heard. If member votes at a special meeting result in the removal of all directors, the supervisory committee immediately becomes the temporary board of directors and must follow the procedures in Article IX, Section 3. These are drastic paths to have to take, and they put into play reputational risks for both the board member and the credit union. But there are other options besides the most drastic ones. Other Pathways, Starting With Accountability The name of the game, ultimately, is accountability—setting clear roles and responsibilities through the development of both board member and officer job descriptions (I encourage you to develop job descriptions for the supervisory/audit committee chair and members too); outlining expectations for behavior in a board member covenant and even a code of ethics that applies to everyone throughout the credit union, from the board to the tellers; and implementing accountability mechanisms to ensure that everyone is doing their job within the boundaries of the covenant and the code. But what do you do when that fails you? Here are some tried and true steps that you can take, in increasing order of seriousness: Solicit the help of the board member’s trusted peer (or peers) for a private conversation to address the behavior. Schedule a formal meeting between the board member, the chair and another board officer to address the behavior. Outline the offending behavior in a written reprimand letter, asking the board member to correct their behavior immediately. Call for a written apology from the board member to those offended. Require formal sensitivity/or related content training. Prevent the board member from participating in any trainings, conferences or seminars paid for by the credit union until select steps (such as those outlined above) are complete and the behaviors are corrected. Provide a copy of the written reprimand letter to the governance and nominations committee to inform the nominations process. Institute peer-to-peer evaluations and provide a copy of the board member’s results to the governance and nominations committee to inform the nominations process. And for especially serious cases: Stipulate that the board member will be formally censured or that their resignation would be called for unless select steps (such as those outlined above) are complete and the behaviors are corrected. Note to the board member that formal censures and/or a vote for their resignation will appear in the credit union’s public minutes. It’s Worth the Effort to Manage Divisive Directors I can tell you that all our clients who have adopted any number of the steps above did feel a sense of relief ultimately, as hard as it might have been. In most instances, the board members simply resigned, knowing that it was best for them as individuals and ultimately for their credit unions. While no process is ideal, and we at Quantum Governance certainly want you to honor and adhere to the principle of Democratic Member Control more than anything, sometimes a bully or undemocratic individual acting in bad faith needs to be stopped. Sometimes, that board member who refuses to adhere to the credit union’s policies must simply be shown that their behavior is unacceptable. And sometimes, their behavior becomes so antithetical to the very essence of a cooperative that you don’t have much of a choice. 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Dr. Alexander Stein Founder & Managing Director, Dolus Advisors (a Principal in the Boswell Group) A licensed psychoanalyst, expert in human decision-making and behavior, and Adjunct Consultant with Quantum Governance, Dr. Stein serves as an advisor to CEOs, Senior Management teams and Boards across a broad array of industries on issues involving leadership, culture, governance, ethics, risk and other organizational matters with complex psychological underpinnings. Dr. Stein is also a passionate advocate for ethical and socially responsible technologies. Dr. Stein is widely published and cited in the business press and varied industry publications including Fast Company, INC, Financier Worldwide, Risk & Compliance, the Wall Street Journal, The FraudNet Report, among many others. A former monthly columnist for FORTUNE Small Business Magazine, CNN/Money, and CBS Business News covering the psychology of leadership and entrepreneurship, he currently contributes his expertise to Forbes focusing on the psychology of decision-making and unintended consequences in organizations and society. Learn More Back

< Back What to Do When Communication Styles Clash: Embrace It Jennie Boden Feb 18, 2019 Building a culture of inclusivity helps ensure each voice on your board is heard. Once when my firm, Quantum Governance L3C, was looking at some assessment tools that might help our clients, we spent the fall taking them for a test drive. We spent time looking at the DiSC profile , the CliftonStrengths assessment and more. In essence, we were putting our staff through some of the paces through which we often put our clients—boards of directors of credit unions, associations, foundations and other nonprofits. We use assessment tools with our clients with the intent to improve their ability to function as a team and increase their governance effectiveness. With these test drives, I learned a lot about myself and my colleagues. I learned that I like “contributing to a calm, stable atmosphere” and “working with people who genuinely care about one another.” And I definitely don’t like “dealing with angry, pushy or argumentative people,” or “having to argue for [my] point of view”—although I think my husband would likely disagree with that last observation. One of the personality tests called me “amiable.” The results of the tests helped me to understand some of the factors that motivate my behavior and the way that I communicate and interact with my colleagues, how they interact with me, and our own team’s dynamics. To this day, when one of my colleagues says I’m being “too soft,” I’ll simply reply, “Remember, I’m the amiable one.” It’s a common language and experience from which we can both draw. But it can be tough sometimes, can’t it, when personalities and communications styles clash? We all believe in the value of diversity. In fact, when we interview board members (and we interview a lot of them), diversity is one of the things that they feel their board is lacking the most! They believe that their boards (and their credit unions) would be better off if they reflected the diverse make-up of their credit union’s membership. And they are probably right. At Quantum Governance, we define diversity as the quality of being different or unique at the individual or group level. And yet, while we’re all going around valuing and actively seeking diversity, it’s the very nature of diversity that can cause communications challenges. My perspectives and the way I communicate are, by definition, different from the perspectives and communication style that my firm’s CEO brings to the table. First, the obvious: I am female; he is male. Second, I was raised in a small, rural town in Pennsylvania; he was raised, well, everywhere. He moved 25-plus times by the time he was 30. I was educated by liberals at UC-Berkeley; he, by the Jesuits of Georgetown. I studied literature; he studied law. I am a quiet, amiable communicator; he is larger than life. I like big, lumbering dogs (think Lab/Great Dane mixes!); he likes multitudes of small, cuddly pups. And yet, for more than 25 years, we have been working and collaborating happily and effectively together. And you, too, can work effectively with those who are vastly different from you. Instead of avoiding the challenges that will, by definition, arise from the diversity that surrounds you, embrace them. The true value of diversity is in what it brings us—the variety of thought, perspectives, context and experience. It helps us all—whether an entire credit union, its board or even an individual—grow and strengthen in ways that we never imagined. There is a twin pillar to diversity that will show you the way. It is the notion of inclusivity. When a diverse board, team or even diversity in a one-on-one relationship challenges your ability to communicate, work to build inclusivity—an environment where everyone genuinely feels included, supported, heard and able to contribute to the success of the whole. My father was a minister in that small rural Pennsylvania town where I grew up, and my amiable self was most likely born from his drilling into my head, “Try to understand the other person, Jennie,” which was his own definition of building inclusivity. When my communication style clashes with another, this is my go-to tactic. And I employ it all of the time. Communication styles clash because people are diverse. Ultimately, however, making a diligent effort to work effectively and even thrive in a diverse world will not only enrich you as an individual but strengthen your board and your credit union’s leadership. Previous Next

< Back Supervisory Committees Function Well, But... Michael Daigneault Apr 29, 2015 Just like CUs and their boards, supervisory committees must change with the times. We survey a lot of credit union board members. And generally most will say they are pretty satisfied with the job their supervisory committee is doing. In fact, of the five areas on which we survey (vision, mission and strategy; board structure and composition; fiduciary oversight; governance and leadership; and supervisory committee), fiduciary oversight and supervisory committee usually are the two highest-scoring areas. But I’ve been troubled lately. Why? Because a good percentage of board members we interview admit that: (1) they don't really know what their supervisory committee does; (2) if they do know what their committee does, the practices of their supervisory committee do not appear to have changed much in the last decade; and (3) almost 45 percent of board members think their supervisory committee’s analysis of the top operational and strategic risks facing their credit union are less than effective. Notably, half of the board members at one CU client even described their supervisory committee’s oversight of the external auditor--traditionally one of the key functions of that committee--as either adequate or even ineffective. So, what’s going on? Today’s credit unions are not like the credit unions of yesterday. The CU world is increasingly multifaceted, with regulatory complexity, a growing number of mergers and acquisitions, disruptors from all sides, evolving board governance and leadership practices, exploding technology, and different types and degrees of risk. Just as your credit union evolved from its early days when the governing board served multiple roles and the supervisory committee’s charter was likely focused only on the external audit, so, too is it time for that committee’s purpose to evolve with the changing landscape. Many supervisory committees today are being stretched beyond their traditional focus of helping to oversee the internal and external audit functions of a credit union. They also are being asked to carry out verification of accounts, receiving member complaints, ensuring regulatory compliance, and other critical oversight processes, including – for some credit unions – the possible suspension of credit union board members. The most progressive credit unions are going even further--asking supervisory (and audit) committees to expand the scope of their efforts to include the idea of risk beyond just financial risks. As such, some supervisory committees are taking a more active role in helping to encourage the credit union’s enterprise risk management efforts--working in cooperative partnership with management, including the CEO and CFO--to identify and mitigate key risks facing the credit union. How far does your supervisory committee go? And how would you and your colleagues on the board answer the question, How effective is your supervisory committee’s analysis of the top operational and strategic risks facing your credit union? Previous Next

Cris Wineinger President, Wineinger & Associates Cristina Wineinger, President of Wineinger & Associates is an adjunct Senior Consultant at Quantum Governance. Cristina has over 27 years of experience in all aspects of nonprofit management and consulting both in the United States and Bermuda (where she was born and raised). Her diverse client base includes churches, private schools, environmental agencies, cultural organizations, social service providers and hospitals. Her consulting services encompass capital campaign management, business assessments, governance, strategic planning and nonprofit mergers. In the last 27 years, Cristina has provided guidance to fundraising campaigns totaling over $175 million. One of her more recent clients is the Bermuda Hospitals Charitable Trust where she helped raise $35 million in a country of only 65,000 people. This fundraising campaign is the largest in Bermuda’s history. Additionally, Cristina has helped many nonprofits to chart their path forward through comprehensive strategic assessments and planning. In 2005, Cristina moved to the US with her family and launched Wineinger & Associates, Ltd., a full-service consulting firm for nonprofits. Wineinger & Associates serves a variety of nonprofit organizations both in Bermuda and across the US. In addition to her business, Cristina is a popular speaker both in Bermuda and the US and an Executive Partner at the College of William & Mary’s Mason School of Business. Learn More Back

< Back Resolutions for a New Year Michael Daigneault Jan 24, 2017 Taking the Opportunity to Make Changes It’s that time of the year again. The holidays are behind us, and the decorations are back in the attic. If you have kids, they are (thankfully) back in school. Most people began the new year with great hopes for what they will accomplish in 2017. How about you? Have you set (and already broken!) your own New Year’s resolutions? Are you eating better? Spending less and saving more? Working out more often? Achieving a better balance in your life? Here’s a New Year’s resolution that we would like to challenge you and your credit union’s leadership to make and keep: Spend 2017 focusing on improving your credit union’s governance and leadership. This resolution has the potential for such amazing impact that you’ll want to extend it permanently. Many credit union leadership teams spend the lion’s share of their time focusing on financial, fiduciary, and high-level operational concerns: asset growth, ROI, capital ratios, membership, services and, at least once a year, strategic planning. But how often do these leaders pay attention—meaningful attention—to governance? And what is governance, anyway? We define governance as “steering, directing, influencing or persuading from a position of authority. It deals with the legitimate distribution of authority throughout a system—whether that system is a country, a corporation or a credit union.” That means that for your credit union, you are governing not only when you are using your formal authority (passing policies or voting on procedures), but also when you are using your informal powers of persuasion (encouraging fellow directors to support a new venture or working in constructive partnership with the CEO to fine-tune your strategic priorities). Because governance involves the “distribution of authority throughout a system,” we encourage you to look beyond the board when you think of who is involved in governing the credit union. Working in constructive partnership to support the holistic governance of the credit union should be the board, supervisory or audit committee, board committees, and the CEO and management team. In your efforts to improve governance, consider at least these basic components: Governance assessment. If you haven’t completed an assessment of your credit union’s governance for two or more years, you should. It’s important to check in on your “governance health,” just as you would on your own physical health. An assessment can help you and your board colleagues: (1) develop common ground with each other; (2) push the board and management team to ask better questions and think more strategically; (3) develop a clear road map of how to move forward together; (4) form even more productive relationships among your board, CEO and management team; and (5) ultimately improve your governance and leadership efforts to better serve members. CUES offers a self-assessment tool to help boards evaluate their governance health. Board member and board officer job descriptions. It’s important to have clear, up-to-date job descriptions for both directors and board officers. Ensure that you review these on a regular basis (at least every two years) for relevancy. The danger of having out-of-date job descriptions (or worse yet, no job descriptions at all) is that board leaders will be falling short of their critical governance responsibilities . Committee charters. We find that many credit unions do not have charters in place for their committees, and most fail to review their committee structures on a regular basis. Be sure that you are doing both! Board committees , when they are well chartered, staffed and effectively operating, can be one of the most efficient ways to carry out the work of the board. At their worst, they can be a drain on your management team and leave directors feeling underappreciated and overwhelmed. Board meetings. Review your board meeting agendas, structure and functioning to ensure that you are addressing strategic and governance issues at every meeting. Be sure you are developing agendas that are engaging and generating lively discussions for directors, the CEO and management team. Board meetings are critical. They can make or break the health of your board, so give their structure and functioning the attention they deserve. If this work seems daunting, don’t be overwhelmed. Take it one step at a time. Perhaps start with a simple online assessment to establish a baseline. Regular evaluation of governance is both vital and doable for credit unions of all sizes. We have seen boards that are in trouble—real trouble—realize the benefits of focusing on governance in as little as six months. When board and management leadership roles are clarified, micro-management decreases, the quality of board meetings improves, committees add more genuine value, an approach to renewing the board’s composition is agreed upon, and the boundary of operational vs. strategic thought is better defined. For 2017 and beyond, resolve that you will make a commitment with your colleagues to improve your credit union’s governance and leadership—for the health of your board and management team and the good of your members! Previous Next

The Four Elements of Good Governance Resources Finding Balance in Board Meetings Efficiency vs. Engagement Read More What Key Factor May Be Working Against Your Interest in Raising Board Engagement and Accountability Discover the hidden factor sabotaging your board's engagement and accountability, and learn how to address it effectively. Read More The Sophisticated Art of Ensuring Your Board Grows Alongside Your Credit Union Four areas to focus on. Read More Is Your Organizational Success An Accident? New study suggests where to look for the answer. Read More Why Directors Are Chess Pieces, Not Checkers Every director should be ‘chair material’—even if they wouldn’t make a good chair. Read More Building Your Associate Board Member Program, From The Philosophy Up The groundwork for success includes commitment from the start. Read More Advice from My Hero Six key responsibilities of every board, gleaned from my conversation with world-renowned expert Ram Charan. Read More The Learning Board Three key building blocks Read More Creating a 'Wow' Credit Union Board Meeting How to Take Your Meetings to the Next Level Read More 'Quantum' Board Engagement Six questions to help you more fully get your board engaged Read More Board Engagement Needs A Boost Strategies to use in your monthly meetings Read More

< Back Some New Remote 'Norms' Are Here To Stay Michael Daigneault and Gisele Manole Aug 25, 2020 Five tips for a successful pivot to virtual board meetings At a recent credit union board retreat, we asked the group (a mix of board members and executive leadership); “How do you think the post-COVID-19 world will be different from the pre-COVID-19 world?” The answers were varied and included: More of the workforce will work remotely Better overall hygiene practices Less brick-and-mortar retail and other traditional storefront businesses Increased consolidation of the credit union field Fewer major airlines and fewer travelers We ask this question because, as they say, “the genie is out of the bottle” on so many of our new norms and behaviors. Our businesses and our culture have made a sharp turn to adapt to new laws about social distancing—a foreign concept just a few months ago. This pandemic has accelerated our transition into the digital realm. Which of the changes that we have made are likely to stick? Which ones should we adapt to craft the “new normal”? Perhaps the most immediate change our boards have had to make is switching to virtual meetings. So many boards are asking us and themselves if and how can they effectively and meaningfully conduct their work virtually? Quantum has had to make some changes along these same lines. While the majority of our work is conducted remotely, our facilitated retreats, often considered the pivotal “aha!” moment for many of our clients, had to be reinvented as virtual experiences. It was a daunting challenge but one that we attacked as a team composed of different strengths, talents and experiences. Some of us are more confident with new technologies than others. And then there was a sense of mourning for the loss of our in-person retreats. We had invested so much of ourselves over eight long years and hundreds of thousands of miles to fine-tuning our practices. Who are we without our flip charts, big stickies and colorful illustrations? How did we pivot? We practiced … a lot! We spent countless hours choreographing and rehearsing for our first virtual retreat. It is safe to say that we have successfully pivoted now that a number of our clients have commented, “I think this was actually a much better format for our retreat. We were so focused and got so much accomplished in a shorter period of time!” And, “This (virtual retreat) raised the board’s governance IQ but also our video conferencing and communication skills which will make us stronger, too.” Here are a few best practices that this short and intense period of adjustment has taught us about teamwork and conducting successful virtual meetings: While we are limited to only a virtual meeting format, make it the best possible experience. Be present just as you would be if you were seated in the same room with your colleagues. Make sure your video is on, that your face is well lit, that your sound is strong with no background noise or distractions, and that you are knowledgeable about how to use whichever conferencing platform you are using, such as Zoom or Google Meet. Come prepared in every other way and review in advance the board materials you were provided in advance. It may seem like common sense, but many board members still treat virtual meetings like “board meeting light,” as if they are in a holding pattern until they can meet in person again. This experience of continuing to operate and indeed grow your organization in a pandemic has likely already provided you with opportunities to conduct vital business and make board-level decisions remotely. If it hasn’t already, it will. Your loyalty to the mission of your credit union and your responsibilities as board members are the same today as they were in the pre-COVID-19 world. Have a focused agenda and aim to keep your virtual meetings to about 90 minutes. (We think two hours is the max.) Participation can fall off a cliff if a video conference goes on too long ... we have all been there! Consider meeting for more than one session if you need more than 90 minutes. Keep your agenda tight while leaving room for strategic discussion. It is a delicate balance and requires excellent meeting facilitation by the chair and active participation by the rest of the board. Use all of the tools available to you on whichever video conferencing platform you use , including “breakout rooms” for small groups and strategic discussions, “polling” (which is a great way to efficiently get a Five-Finger Consensus ) and the “chat” feature (which, used appropriately, is a great way to take the pulse of your entire group in record time.) Remember that teamwork is essential. Everyone has to be “all in” on the virtual experience and 100% committed to your meeting’s purpose. The pandemic crisis has been a gut check for leaders in the credit union community. Having a deep bench of various talents, experiences and cultures has never been more important. Perhaps nothing is a complete substitute for “breaking bread” and the ways that in-person meetings, practices and rituals build community and culture. However, think about how a hybrid model of virtual meetings (when done well) and in-person meetings (with social distancing, masks and hand sanitizer) can help you to expand the reach of your board recruitment and diversify your membership. As we continue to adjust to the post-COVID-19 “new normal,” the most important lesson is to remain nimble; don’t be afraid to try new things and accept that experimentation will lead to some failures, but ultimately to success as well. Previous Next

< Back Un-Cage Your Thinking Michael Daigneault and Caitlin Hatch May 24, 2016 Good Credit Union Performance Doesn't Equal Good Governance Board members and CEOs frequently ask us: “Do we really need to focus on governance?” Before answering, we ask: “What’s behind your question?” The most common response we receive is, “If it ain’t broke, why fix it?” That is, many assume their governance is effective largely because the credit union’s “numbers are good.” When we suggest “just because a credit union is performing well financially, it doesn’t necessarily mean the credit union is being governed effectively,” we get a lot of blank stares. Our perspective comes as a surprise to some. If the credit union is “doing well” and the board is responsible for the credit union, then doesn’t that mean the board is doing its job effectively? In a word…no. Without a much deeper analysis, simply equating “good credit union performance” with “good board performance” or general “good governance” is leaping to an unwarranted conclusion. Of course, to many board members, it feels perfectly natural to make the leap. That’s because it is a result of how we, as humans, are designed to work. In some situations, making a quick analysis is perfectly appropriate. In others, it can lead to flawed decisions. So, why is the “natural conclusion” unwarranted here? Well…it could be the credit union is blessed with a great CEO and management team who are doing a terrific job – dare we say it? – despite the board! Or, it may be the credit union is fortunate enough to be benefiting from a strong economy. Or, it could be there is a long lag effect and decisions made five years ago are what improved performance. And, yes – it could be the board’s leadership is actually contributing to the credit union’s performance. It’s just that “good governance” is too complex a conclusion to simply reach from “good financial results.” So why do we do it anyway? We instinctively try to create some type of order out of our environment and our experiences by finding meaningful patterns and connections in acts, decisions, and the results that flow from them. We do this because we are designed to do so. Only by being more conscious of (1) how our own minds work, (2) being more aware of what connections we are consciously or unconsciously making, and (3) determining what facts are truly related and relevant to the issue at hand, can we avoid some of the thinking traps. Below are just a few of the tricks our brains regularly play on us while we are trying to “make sense” of our world. They are so subtle and so ingrained we are frequently not even aware of them. By calling them out, by asking each other the hard questions that must be asked at the fiduciary, strategic and generative levels, credit union leaders can together minimize the impact of the tricks our brains can play on us and, thereby, make better decisions. Seeing connections that may not be there . We can all take a little bit of information and build a story linking the bits of information into a simple explanation for what may be a very complex reality. But we don’t always have enough facts, and sometimes we aren’t even asking ourselves the right questions. Is good financial performance the same as good governance? How is the board directly contributing to the credit union’s success? Even if we can’t answer the questions, maybe by being aware the answers shouldn’t be based on an assumption can lead to better discussions, better decisions and a better understanding of what the board is actually contributing to the success of the credit union. Personal bias. We all filter facts through our own experiences so we better understand them. When others perceive our thoughts as open and relevant, we may be viewed by others as wise, aware or even empathetic. When our minds are already made up, when we don’t listen, many view our thinking in terms of a “personal bias.” We need to do all we reasonably can to be aware of our own biases and assumptions and try to be genuinely open about seeing the world differently. The halo effect. Our overall impression of something influences our feeling and thoughts about it, and it can work for you or against you. Take the city of Las Vegas, for example. People tend to either love it or hate it. The halo effect goes beyond a personal bias because you can have an opinion about Las Vegas without ever having been there. This effect can be so strong it can outweigh the facts, especially if they don’t agree with strong feelings or assumptions. Anchoring. We tie thoughts and feelings to a piece of information and then apply it to another piece of information, even if the two things do not have anything in common. We tend to apply specific facts to general circumstances. That first piece of information becomes the “anchor” around which we perform our analysis. Consider a credit union board that bases its discussions on “how we used to do it,” and uses that filter to make decisions for the present day. The analysis is “anchored” to a prior experience that may have little or no relation to the needs of present-day members. The endowment effect. It’s likely you’ve done this one, too. Have you ever assigned more value to your own abilities than others’ abilities? We all tend to think we are better than average. Study after study notes anywhere from 65 percent to 85 percent of people think they are “better than average.” Confidence can be a good thing, but that many people can’t be better than average, it is mathematically impossible. Boards—yes, even your board—may unconsciously assign more value to its efforts than the impact warranted. Your board may be one of the majority of credit union boards that would rate itself as “better than average.” Loss aversion. Credit union boards are notoriously risk adverse. Many strongly prefer avoiding loss to the risk of acquiring gains – or even serving members in better ways! Our focus on avoiding future loss can cause us to overestimate how truly risky some actions are. Being prudent is a good thing, but being extremely conservative can be the riskiest approach of all! These are six examples of how we typically think. This instinctive thinking is one of the things that makes us human, and it is embedded deep within us. But when thoughtful analysis is required, we may get led astray by our instincts. We suggest being aware of the reasons underlying your judgments and actions can help you and your colleagues make better decisions about what you do and how you do it for your credit union, your members and the communities you serve. 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 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

< 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