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

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

Perry Haaland, Ph.D. Statistician Perry Haaland, Ph.D. Statistician is an expert in a wide range of statistical methodologies. Dr. Haaland has more than 30 years of professional experience as a statistician. He brings the practical experience of solving complex problems in an industrial research setting along with well-honed skills in explaining statistical concepts to management at all levels. He retired in 2017 as the lead statistician at Becton Dickinson, a Fortune 250 medical technology company. Dr. Haaland is a strong proponent of effective graphical analyses, having been one of the founding members of the Section on Statistical Graphics of the American Statistical Association. Dr. Haaland is currently Adjunct Professor of Statistics at UNC-Chapel Hill where he is developing a curriculum for teaching data science to graduate students in statistics. Learn More Back

< Back Taking Action On Credit Unions’ No. 1 Director Recruitment Priority: Diversity. Jennie Boden Sep 21, 2020 The credit union and women’s movements are clearly doing something right. But we still have a long way to go. The day after Kamala Harris was picked by Joe Biden as his running mate, I was talking with a colleague of mine about his choice. I have to note that the colleague in question is a woman, and she is about 10 years younger than me. She was lamenting that everyone in the media was focusing on the fact that Ms. Harris was a woman and, of course, a woman of color. From her point of view, as someone from a younger generation, why should this be the news? She sees Ms. Harris as a qualified, strong candidate for the position, regardless of her sex or ethnicity. In my colleague’s mind, of course she would have been in serious contention for the job. It started me thinking about what my sister would say as someone who is 10 years older than me. She was in college in the ’70s, and I remember her then with long, straight hair, playing sad Joni Mitchell songs on her stereo and challenging my father, the minister, on nearly everything he said. She would bring with her the perspective of history: knowledge of the years when women struggled to have a voice in their marriages, let alone a seat in the boardroom, and of the racial struggles that plagued even my small hometown in rural Pennsylvania when she was in love with an African-American boy in high school. Then my mind moved on to my niece. She is 10 years younger than my colleague . She’s a graduate of Stanford University, recently married to man whose parents immigrated from India, and studying to be a doctor at one of the best medical schools in the country—maybe the world (University of California-San Francisco). Now, at this point, it should be noted that I write from a point of great advantage, and the cast of characters in this article also enjoy great advantages. We all hail from stable families, where shelter, food and love were plenty. We are all well-educated. We are all white. So, what does this have to do with credit unions? And, specifically, with governance, since that’s my area of specialty? My biggest fear in all of the focus on DEI is that it will remain a discussion point and not become a point of action for us all. - Jennie Boden I had two thoughts immediately after the conversation with my colleague and my ensuing reflections about my sister and niece. The first was around the notion of board renewal. We talk about the topic all the time at Quantum Governance, and we’re finding that credit union boards are increasingly talking about it, too. It used to be that credit union board members would join the board and stay for years—for decades, even. I’ve had a client who had two board members who served until they died in their 80s or 90s. Others explained odd behavior by noting that a few of their board members were displaying early signs of dementia. And so, the first rule of board renewal is that you must renew, for the health of your board. It’s the board’s responsibility to ensure that you do. The guiding principle for board renewal is to find a healthy balance of historical continuity and renewal. I celebrate that my colleague just assumes that Kamala Harris is right for the job of vice president and that my niece sees a horizon as wide as possible for herself and all those around her. (And I also imagine what will be available, once they are grown, to my great-nieces.) But, it’s also critical for all of us, as women, to realize from whence we’ve come. My sister’s perspective is valuable, too. She reminded me recently that when she was growing up, girls were shut out completely from sports in high school, and today we have a woman coaching in the NFL. How far we have come, but still, how far we have to go… Ensure that your board is balancing these perspectives—all of them. Historical continuity will give you important points of view on the past, and renewal will open future possibilities the likes of which you’ve never conceived. The second thought that came to mind following the conversation with my colleague arose directly from the research that we published in The State of Credit Union Governance, 2020 report. For the first time ever, we found that demographic diversity was the No. 1 recruiting priority among credit union board members and leaders, surpassing financial literacy for the first time. Source: The State of Credit Union Governance, 2020 We also reported the news that the average credit union boards have nine members, three of which (36%) are women! On its face, this may not seem significant, but it is. In comparison, a 2018 study by Deloitte and The Alliance for Board Diversity of America of Fortune 100 companies found that women held only 25% of their board seats. And in 2018, CUNA found that 52% of credit union CEOs are female, compared to only 5% in commercial banks and 6% in Fortune 500 companies. And it’s not just among the small credit unions: At credit unions with between $1 billion and $3 billion in assets, more than 14% of the CEOs were female, compared to just more than 3% of bank CEOs. As a movement (both a credit union and a women’s movement), we’re clearly doing something right. But we still have a long way to go. It seems that today, everyone is talking about “DEI” or diversity, equity and inclusion. (Note that Quantum Governance believes the appropriate order is “ EDI ,” given that the notion of equity is a broader concept that underlies both diversity and inclusion.) It’s a most worthy discussion, and it’s been a long time coming. My biggest fear in all of the focus on DEI is that it will remain a discussion point and not become a point of action for us all. But clearly, we know how to do this. We’ve started to make true inroads in terms of integrating women into the boardrooms and C-suites of America—at least among our credit unions. Be sure not to let up on that focus. Rather, let’s add to it. While we can celebrate the gains made for women, we’ve not moved the needle one bit on increasing the number of visible minorities in the credit union boardroom or C-suite, and that’s just as important. In fact, remember, demographic diversity is now the No. 1 recruiting priority among credit union board members and leaders. How much richer would your board be if 50% of its members were women? If you had true diversity in terms of ethnic and racial background? In terms of age and tenure? In terms of skills and experience? How much more stirring would the conversations in your boardroom be if you were truly open to listening to everyone’s voices? Previous Next

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

< Back Key Outcomes And Lessons Learned From A Board Renewal Effort Jennie Boden and Dr. Alexander Stein of Dolus Advisors Jan 31, 2022 An analysis of Hudson Valley CU’s work to revise key governance processes. Quantum Governance and Dolus Advsiors are pleased to offer the following key outcomes and lessons learned from our work with $6.1 billion Hudson Valley Credit Union in revisioning and revising their nominations process. (For more background, read the feature story detailing the work we did with Hudson Valley CU.) Key Outcomes The nominations sub-committee learned it could be nimble, coalesce around change and have a significantly increased impact on the future of the Hudson Valley CU board and supervisory committee. In the end, the members were proud of the changes they implemented and the outcome of their work. And, importantly, they served as a model on how to welcome and adapt to change for other elements of the governance system at Hudson Valley CU. There was an increased level of trust attained between members of the nominations sub-committee and the CEO—primarily through the CEO’s participation in the nominations process, but also as an extension of the still-developing constructive partnership between the board, supervisory committee and CEO/management. All the volunteers—board and committee members—gained a new and enhanced understanding of their capabilities and, despite initial trepidations, developed a significantly greater appreciation for the upsides of transformational change. The previous governance committee and the old nominations committee combined in an integrated model to become the new governance and nominations committee. This provides the credit union with the structure, know-how and horsepower to better meet its members’ needs given its size and complexity. Lesso ns Learned Include everyone in the discussions, right from the start—board members, supervisory committee members, nominations committee members, the CEO—when you’re a) discussing why and how you want to change the nomination process; and b) what the ideal board or supervisory/audit committee of the future looks like for your credit union. Cast your net wide for new candidates and volunteers. Ensure that every candidate attaches a resume or curriculum vitae to their submitted application. And be sure that you update your application to obtain the information that you need—in alignment with your call for candidates. Don’t assume that your current board and supervisory committee members are the right members for the future. Vet them as thoroughly and fully as you vet your new candidates—and against the same requirements. Prepare both the volunteers on your nominations committee and your incumbents for navigating emotionally hard decisions. Meeting the requirements of creating the board and supervisory/audit committee of the future may necessitate the departure of a long-term volunteer colleague. Ensure that the roles and responsibilities for your volunteer positions are clear, including the time commitment. Even with all the communications shared with the Hudson Valley CU candidates, several candidates expressed surprise at the level of commitment required after joining. It doesn’t have to be perfect right out of the gate. Not every tool you develop or innovation you incorporate will immediately work flawlessly. And that’s okay. Keep experimenting. One example: We developed a scoring sheet for the nominations sub-committee that ended up being more of a hindrance than a help. It was quickly set aside, and the members of the sub-committee moved on. Balance urgency and patience. A member of the governance and nominations committee admitted wishing they had developed an associate board member program years ago. But there had been resistance, and it was shelved. When the proposal was introduced last year as a part of these innovations, the practice was enthusiastically adopted. Change takes time. Prioritize equity, diversity and inclusion. Ensure that your credit union is aware of how systemic inequalities adversely affect society—and your credit union. This conscious commitment to equity will enhance organizational decision-making, lead to greater diversity around the leadership table, and help directors and executives alike develop a more inclusive, shared understanding of what everyone has to say and contribute. Alexander Stein, Ph.D . , is founder of Dolus Advisors , a consultancy that helps leaders address psychologically complex organizational challenges. Previous Next

< Back Who Needs A Shadow Board? Jennie Boden Jun 25, 2024 Add younger employees and members directly to your C-suite and board to benefit from their skills and knowledge today. I read with interest a Fortune article entitled “ Companies are turning to ‘Shadow Boards’ to keep in touch with the real world .” The author, Lila MacLellan, defines a shadow board as “a committee of typically younger employees who come together within a firm to advise the management team on key topics, such as company culture, product marketing, trends in technology, and sustainability efforts.” She continues, noting “They are not an official board, of course, but their views often supplement those of experienced, much older corporate directors and C-suite leaders. “These advisory groups give some businesses insight into their customers’ tastes and passions.” MacLellan reported that companies like The Body Shop have embraced the trend, and her colleague, Fortune ’s Orianna Rosa Royle, recently found that The Body Shop developed its shadow board, with its members aged 30 and under, “when it became aware of the gap between the company’s youngest workers and its leadership team and directors.” After reading the article, a colleague of mine posed a logical question: “Would shadow boards be a good strategy for credit union?” The question made sense. After all, our own 2023 State of Credit Union Governance recently found that 89% of credit union board members are aged 51 or older, and the average age of most credit union members in North America is 53. But here’s the thing. Creating another board isn’t a ready-made solution to the problems of an aging board and membership. In my mind, it’s simply a workaround. In our work, we’ve found that most credit unions struggle managing the governing boards that they already have. Many credit union boards have failed to evolve their governing roles and responsibilities even as their credit unions have grown around them—from financial institutions with assets of $250 million to those with well over $1 billion; some face challenges with that ever-elusive balance of authority between the board and the CEO and still others are still lingering “in the weeds” too much, not finding their stride in being strategic thinkers. Marie Kondo has ushered in the era of “tidying up,” not “cluttering up.” You must attend to that which you have, and like I said, too many governing boards are already flying under the radar, receiving too little attention. Why add another? Instead, add those younger employees and members directly into your C-suite and onto your governing boards— of course, given that they meet the requisite qualifications . Don’t keep them waiting in the wings until they reach some magical age where you deem them acceptable for full service. Benefit from their skills and knowledge now. A Gen Z member of our team recently sat in on a webinar proclaiming to share insights into the mind of the Gen Z credit union member. It was taught by two individuals in their 50s. In. Their. 50s. To be fair, our team member said they got some things right, but they also got a lot of things wrong. After, we asked her to present to our team what she thought that members of her generation were looking for from their financial institutions. You know what she said? Hope. To learn more about what Gen Zers really think, read this May blog from Quantum Governance’s governance administrator, Lauren Paradise. Previous Next

< Back A Cautionary Tale of Risk Management in This Time of Bank Failures Gisele Manole Mar 30, 2023 Defining roles and responsibilities and continuing education help ensure appropriate coverage. While the news surrounding the failings and futures of Silicon Valley Bank and Signature Bank remains in the headlines, we are learning a great deal about the role that rising interest rates, cryptocurrency and governance played in each organization’s demise. The federal government reacted quickly to minimize panic that might have destabilized the entire banking industry, and National Credit Union Association Chairman Todd Harper was quick to assuage the fears of our nation’s credit union members, saying “No one has ever lost a single penny of insured share deposits within the credit union system.” And while there is much debate about who or what is ultimately at fault, there are important lessons to be learned from these examples about the risk management responsibilities inherent within your own credit union’s system of governance. The International Organization for Standardization defines risk as “the effect of uncertainty on an objective”—a direct correlation to a credit union’s strategic plan. A secondary definition of risk is simply, “managing uncertainty.” This perspective brings front and center the human dynamics at play in measuring and managing risk. And while enterprise risk management can be clearly defined by the Committee of Sponsoring Organizations of the Treadway Commission, each individual credit union must have its own understanding of risk, or more specifically, its appetite for organizational risk. Ensure that your board, in constructive partnership with your CEO and senior management, has defined an explicit risk tolerance statement that indicates the level of risk your credit union is willing to take. Who’s Responsible for Risk Management? Remember that risk management is not the responsibility of just one entity within your credit union; it should not solely fall upon the shoulders of your internal auditor or your supervisory or audit committee. It is a function of your board, CEO, internal auditor, senior management, and the supervisory or audit committee working in constructive partnership. The board approves the credit union’s risk profile and oversees its ERM program. However, the risk profile itself is developed by the credit union’s board, CEO and senior management during the strategic planning process. Address risks in your strategic planning process by scanning your credit union’s internal and external risks. Does your credit union have a charter for its board-level risk management committee and a job description for its members? Like all best practices, this one is essential. Clearly defining roles and responsibilities around risk management ensures appropriate coverage and a system of checks and balances that won’t leave the credit union unnecessarily exposed. Additionally, a job description will ensure you have the right talent with a collective finger on the pulse of what is happening in our world that will impact the credit union and present opportunities for growth and failure alike. Uncertainty about whether your credit union has the right people in the right seats may indicate a need for a director’s skills assessment that can recommend further education and training. Look to Committees and Director Development Allen DeLeon, CPA, founding partner of DeLeon & Stang , and adjunct consultant with Quantum Governance, advises boards to ask whether their management-level asset/liability committees and board-level finance committees are meeting regularly and having robust conversations about liquidity and asset/liability management. “Make sure that both members of the board (through your finance committee) and senior management (through ALCO or ALM committees) are knowledgeable and experienced and that you are monitoring your rates during this time while the banking sector is under some level of instability,” he says. Lastly, once you have the best and brightest serving your credit union, ensure that you have continuing education requirements and resources at the ready to help your ERM committee stay on top of the shifting sands of cybersecurity, cryptocurrency, regulatory changes and interest rate hikes. To help you in your risk management efforts, you can purchase Quantum Governance’s ERM Policy , which is part of our library of policies, charters, procedures and job descriptions. Previous Next

< Back 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

< Back Make Your Voice Heard Jennie Boden Nov 17, 2023 Speaking up can be scary, especially if you’re the only woman in the room, but it’s important to call attention to problematic behavior in the workplace. I recently observed credit union CEO introduce a new, young, female staff member to a predominantly male board of directors. The male board members lined up to welcome her—a new staff member they hardly knew—with a hug. In my follow-up conversation with the board chair and CEO, I was amazed to find that the male board members, as well as those in leadership, didn’t seem to realize there was anything wrong with this interaction and how they were collectively objectifying the new staff member. Though we have undoubtedly made significant improvements in moving towards gender equity, power differentials between men and women—particularly in governance and leadership spaces—are still painfully real. I see this regularly in my interactions with credit union boards and leadership. This spring, I facilitated a session with another board where there was only one female director. This female board member, who also served as the chair of the governance committee, absorbed all the tasks being delegated to her by her fellow board members, all of whom were men. No one else was taking ownership of any of the to-dos coming out of our working session. Again, I talked with the board chair and CEO about my concerns in a follow-up session. These two situations are teaching moments for women in traditionally male-dominated spaces. While the credit union sector has taken steps to diversify its leadership, most board members in our field are still white men. Many of them are older as well and unaccustomed to reflecting on how their actions and habits resonate in spaces with women in leadership roles. Gender bias, or gender-informed behavior, can happen under even the most kind, thoughtful, open, progressive leadership. It can happen with male and female leaders. It can happen even if you have eliminated traditional, gendered power dynamics in your personal relationships. I’ve also worked with male leaders who are willing to reflect on how women are—or are not—set up for success as directors on their board or as members of their staff. In meetings, they’ve reflected on their role as leaders and how they could do better to eliminate power differentials in these spaces. Unfortunately, these conversations often stay just that: conversations. When we face these types of scenarios, it can be difficult to speak up. Sometimes the best way to address the problem is with a follow-up conversation. It’s wonderful when we can speak up in the moment, but we women often lose our voices even when we know something isn’t right and when we know we should say something. We’re afraid of being seen unfavorably by male-dominated leadership, of being passed up for opportunities, of being considered “difficult.” I know these challenges very well, and such fears are not unfounded. As Francesca Gino writes in Harvard Business Review , “Speaking up can also result in negative performance evaluation, undesirable job assignments, or even termination. Most people are aware of these potential costs; as a result, most stay quiet about bias, injustice, and mistreatment.” However, psychologist Catherine Sanderson, writing for Greater Good Magazine , deftly explains why inaction is both contagious and dangerous. She says: “When facing an ambiguous situation, our natural tendency is to look to others to figure out what’s going on. But here’s the problem: If each person is looking to the people around them to act, and no one wants to risk feeling foolish and embarrassed, the problematic comment or behavior may be left unchallenged.” While I know it can be challenging to make your voice heard in these situations, take a moment to find your power. This power can be in yourself—in speaking up—or even in just interrupting the moment by saying “Hmmm,” while you consider what to say next. It can be in allies you have in the room, who can help you hold others accountable. That power can manifest in so many different ways. You can gracefully redirect tasks that are being piled on a female colleague to others in the room who can take them on. You can stand by a junior colleague who has become the target for inappropriate behavior to serve as a buffer and demonstrate solidarity. You can gracefully share that specific behaviors are inappropriate. And, as was mentioned earlier, if action isn’t possible in the moment, small gestures—even after the fact—can go a long way. Changing workplace culture is hard work. But you can be the change you want to see. Find your voice and speak up! Previous Next

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

< Back Nine Leadership Challenges Michael Daigneault Mar 25, 2015 The board of the future will need the strength to overcome these. At Quantum Governance, we’ve been taking a look at what the credit union board of the future will look like and, almost more importantly, the challenges it will face. Ultimately, we have identified nine key challenges that are already (or will be) confronting your leadership. The Composition Challenge. Gone are the days when your credit union can simply rely on a nice cross section of its membership to fill open slots on its board. The most progressive boards today are actively recruiting the talent they need; identifying the skill sets that deliver the talent, connections and expertise they need on the board; and then inviting those individuals to become members of the credit union. The Technology Challenge . The rate of technology is changing at lightening speed. I don’t have to tell you that. But here’s the thing. It’s changing at a faster rate than anything else we’ve ever seen. Faster than political change, business change and even social change in our world. Is your board ready? Is the credit union? The Community Challenge. The very notion of community is being altered by technology. Community is ceasing to be largely defined by geography and more often it’s defined as a sense of belonging. How does that impact your “community” credit union? Indeed, as a credit union member myself, I haven’t set foot in a local branch for more than a decade. What does that mean for your business? Is your board discussing the impact of this from a strategic point of view? The Disruptors . How many of you have heard of Uber? Five years ago, could you have ever conceived of an online reservation ride service? I’m sure the taxi companies in nearly 130 American cities never dreamed their business could tumble by more than 65 percent in just one year, like it did in San Francisco. Uber wasn’t even on the radar then. What’s not on your radar now? It’s difficult to know. And that’s the point. You won’t know. More than 99 percent of the disruptors will fail, but it will only take one to succeed and have a dramatic impact on your credit union’s business. The Demographics Challenge. We love Baby Boomers. First, there are lots of them. Eighty million of them, and they are doers. Board service has been a part of their DNA. But what about the next generation: Generation X? Much has been said about them and most of it hasn’t been good. I happen to think they are doers, too. And very civic-minded, but in a different way. Their way of giving back is more individualistic. When they want to get involved, it’s more on a one-on-one basis. When they want to make a difference, they start their own organizations … forge their own path. And critically, there are 40 million fewer people in Generation X than there are Baby Boomers. If you think you’re having a tough time finding good, qualified and engaged board members now, it’s about to get harder. The Information Challenge. With your iPad and your smartphone, you probably have more information at your fingertips than the entire federal government did 25 years ago. But what matters? What’s important? What information will move your credit union forward? What do you need to know and what is just white noise? One of the key challenges for credit unions is not a lack of information, but rather the volume and variety of data available. The current flood of information can be like trying to satisfy your thirst with a hose attached to a fire hydrant! The Complexity Challenge. This challenge is related to The Information Challenge and every credit union will face it. It’s a distinct moment in time – that moment when the abilities of a credit union board are overcome by the increasing quantity and complexity of credit union regulations, responsibilities and requirements. There is more and more expected of you and your colleagues as directors. The demand for your knowledge base is only continuing to grow. The Risk Challenge. There’s a great book titled Competing for the Future , in which the authors say organizations that “create the future are rebels. They’re subversives. They break the rules…Foresight often comes not from being a better forecaster, but from being less hide-bound.” It comes from breaking free from your mold, from taking more risks. Is your credit union board “hide-bound?” Are you stuck? My guess is that you and your board colleagues spend more time on the lower end of the risk spectrum – most credit union boards do. But, if you’re going to grow … if you’re going to forge the future, maybe even be a credit union disruptor yourself, you’ll need to learn how to effectively balance two abilities: 1) understanding, identifying and mitigating risks to the credit union; and 2) tolerating the risk that will enable you to grow. The Impact Challenge. It’s not enough to keep your head down and do good work. You have to not only keep your head up, but you have to get out. The Impact Challenge requires that you foster relationships, as leaders and always in constructive partnership with your CEO, with external stakeholders to have the greatest impact. And that goes far beyond your membership to include governmental representatives, local businesses and, yes, even other credit unions. To face these nine challenges successfully, your board will need to regularly strengthen its leadership and governance abilities. You can do it! Previous Next