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Policy Shop Quantum Governance maintains an extensive Resource Library of contemporary governance policies, job descriptions and committee charters ― and our library continues to grow each year. Today, there are more than 65 different policies and documents available to assist you in achieving the goals within your Governance Action Plan.

< Back Parity In The Boardroom Takes Patience, Planning And Process Jennie Boden Jun 25, 2021 But putting in the effort can definitely make a difference. I have to admit I’m not a big fan of publications like Advancing Women . I mean, I’m honored to write for it, but why, after all these years, do we still have to have special publications with a special focus on advancing women? I mean, really. You’d think we’d be further along by now. Women started pursuing equality way back in 1850, when the first convention for women’s rights was held in Seneca Falls, New York. Sixty-eight women and 32 men attended the convention that demanded a woman’s right to vote in the U.S.; sadly, the convention didn’t address the racism and oppression faced by Black women and other women of color. In 1872, Susan B. Anthony and 14 other brave women were the first of their gender to cast votes in a U.S. election—and they were arrested for it. It wasn’t until 1919 that the 19th amendment was signed into law. And it passed the Senate by only two votes. Worse yet, it wasn’t until 1965 that Black and Latinx women were able to vote. That was the year before I was born. And today, so many voting rights are being threatened and even rolled back in some states. And that’s just the challenging path to voting. Women Leading Businesses A 2018 study by Deloitte and The Alliance for Board Diversity found that women held only 25% of board seats in Fortune 100 companies. And just more than 3% of bank CEOs are women. In The State of Credit Union Governance 2020 , published by Quantum Governance and partners CUES and the David and Sharon Johnston Centre for Corporate Governance Innovation, we reported that the average credit union board has nine members, three of whom (36%) are women. This is better than the Fortune 100 companies by 11%. 2021 data from CUNA shows that a majority (51%) of credit union CEOs are women – more than 15 times higher than the rate of women CEOs at banks (3%); among U.S. banks and credit unions between $1 billion to $5 billion in assets, 13% of credit union CEOs are women versus only 2% of bank CEOs; at both banks and credit unions, women CEOs are relatively more common at smaller institutions; and a board member of a credit union is about twice as likely to be a woman—33% of credit union board members are women as opposed to 16% of members of bank boards. We’re clearly doing something right in the credit union community. But we’re not there yet. A soon-to-be-released special report from The State of Credit Union Governance series, COVID-19 and DEI: Revolution & Evolution in the Credit Union Community , found that while more than a third (34%) of credit union board members in the U.S. are women, that percentage falls well short of the total percentage of women in the country (51%)—a difference of 17 percentage points. I guess I have to admit, as much as I wish parity of all types were just inherently so, that if we’re going to make more progress, we need to do so intentionally and consciously—that gender parity, like any parity, doesn’t just occur naturally. That’s why we need publications like Advancing Women and organizations like Women in Governance , headquartered in Montréal, Québec. The nonprofit was founded to “support women in their leadership development, career advancement and access to Board seats.” In partnership with McKinsey& Company , Women in Governance developed a parity certification program that is now being offered in the U.S. The program helps “organizations increase the representation of women in sectors where they have historically been underrepresented, as well as in executive leadership positions.” It’s a shame that we need a parity certification program to ensure that women are seen as being as capable as men to hold leadership positions within an organization, just as it’s a shame to think that we need laws to combat racial bias in policing. But we do. And there’s proof from other fields that, with focus and intentionality on those areas where we want to have a positive impact, we can make a difference. A Success Story From Science In 1966, only 2% of the total doctoral graduates in the physics disciplines were women, and that number increased marginally to just 5% for those graduating with a bachelor’s degree. Leaders in the field, including at the American Institute of Physics and the American Physical Society, spearheaded a program led from the board-level focused on gender parity. While that’s still a work in progress, they have experienced tremendous success over the years. Source: APS125 By 2018, both percentages had risen to 22%, still below the overall percentage of women in the U.S., but a vast improvement. While it’s disheartening to think that gender parity, and all types of parity, aren’t just inherently a given, we can be reassured that with focused intent and effective processes and programs put into place, we can make a difference—even if it takes a little longer than we might like. Previous Next

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

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

Governance Services We offer a variety of ways to assess your governance employing a combination of the following methodologies: proprietary online survey, document review, interviews with members of your board, supervisory/audit committee, and executive leadership. Additionally, focus groups, meeting observations, member surveys and environmental scans may be added. Governance assessments are scaled to meet your organization’s needs. We can deliver the results of your assessment via an expertly facilitated retreat or a series of in-person or virtual workshops. Deliverables may include a report, best practices tailored to your organization, and a governance action plan. Additional governance services include: credit union industry benchmarking, year-to-year analysis for returning clients, developing a roadmap for growth and pre-merger assessment. Additional Governance Assessment Tools Leadership Culture Assessment & Policy Development CEO Evaluation Peer-to-Peer Evaluations Director Skills Inventory & Director Development Planning CEO Succession Plan Assessment & Development Supervisory/Audit Committee & Other Committee Assessments Board Succession: Assessment, Board Member of the Future Profile Development, Recruitment, Nominations & Succession Plan Development Communications & Information Architecture Study: Reimagining Your Board Packs & Meeting Agendas Contact us to learn more about how we can strengthen the leadership and governance of your organization. Jennie Boden, CEO "One of the most vital governance issues that organizations are faced with today is the evolution of their governance policies, practices and systems as they grow. We've found that -- as one CEO put it -- many have been 'working with their Boards, but not on their Boards.' While the organizations (including the Management) are growing and evolving, so, too, must an organization's governance."

Additional Services Our team of governance and strategy experts can assist you and your leadership in a variety of ways including but not limited to: Director Onboarding & Orientation Education Bylaws & Board Policies Development and Revision Keynote Presentations Research Let's discuss how we can customize our services to meet your organization's needs. Contact Us

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

< Back No Higher Calling Michael Daigneault Nov 25, 2014 The challenge of effective CEO evaluation It never fails—when I’m with a group of board members (which is very, very often) and I ask “What are your core responsibilities?” someone will always say, “to hire and fire the CEO.” And yes, I suppose at a very basic level this is true. Perhaps there is no more important decision a typical credit union board makes than in the hiring of a CEO. There is, of course, so much more to developing a successful relationship with a credit union CEO than in his or her hiring and firing. If you were to think back over your career and consider the best mentors you had—the ones who were able to elicit from you your finest moments as an employee—certainly you would consider their contributions to your career far beyond the moment they hired (or even fired) you. Indeed “CEO support and oversight” (not solely hiring and firing the CEO) is a key board responsibility that Quantum Governance focuses on. (The others are governance and leadership; performance and results; strategic thinking, learning and planning; budget and resources; membership and community outreach; and stewardship, ethics and financial integrity. On the whole, my colleagues and I sometimes worry that credit union directors spend too much time focusing on fiduciary and operational- related matters. Ideally, we would like to see you talk a bit more at the strategic level in the board room. However, one area where we do see a great deal of variability--and perhaps a greater need to focus at the fiduciary level—is in the assessment process of the CEO. What does an effective or “constructive partnership” between the board and your credit union’s CEO look like? That is, what kind of relationship do you have—and will you forge in the future—with your CEO? What are the appropriate operational and strategic boundaries? How, in the big picture, can you help your CEO be even more effective? What goals should you set for your CEO? Should your CEO’s goals be the same as the goals of the credit union as a whole—or should there be goals unique to him or her? Ultimately, what type of process is appropriate to provide an effective CEO assessment? There are real challenges in the answers to these vital questions. In Quantum Governance’s work, we assess credit union boards nationally, and less than 30 percent of board members we’ve surveyed think they effectively establish performance goals for their CEO. And only slightly more (35 percent) think they are effective in holding their CEOs accountable for such goals when they have been established. If my math is correct, that means only about 10 percent of credit union boards perceive they are effectively holding their CEOs accountable to an agreed-upon set of performance goals! To maintain a truly effective constructive partnership with your CEO, a board must thoughtfully and collectively work to build, foster, maintain and improve the relationship. A regular and genuinely valuable assessment process of the CEO is vital. It can provide: a more objective and comprehensive analysis of your CEO performance, a higher degree of focus on key credit union goals, efforts, and initiatives, an in-depth look at important leadership strengths – as well as challenges, a means for your credit union’s leadership to get “un-stuck,” a way to reframe key governance, leadership and strategy issues, baseline data to measure future efforts and progress, and new ideas, insights and ways to move the credit union forward. And yet, sadly our surveys show that a third or more of credit union board members feel they are doing an “ineffective” or only “adequate job” of using a quality process that allows all board members to provide input on the CEO’s evaluation. Such a process is a vital element in maintaining a good relationship with your CEO over time. In addition to ensuring that all board members have an opportunity to provide input into the CEO assessment process, here are other options to seriously consider: For example: 1) you could also ask your CEO to complete a CEO self-assessment tool aligned with the question set board members use to provide feedback; (2) you could ask for 360-degree assessments by direct reports to the CEO; and, in appropriate instances, (3) you could ask for mentor or coach assessments of the CEO. The immediate goal is to provide valuable feedback to the CEO that accurately assesses his or her efforts and gives genuinely helpful guidance to improve overall performance. The ultimate aim is to build an effective partnership that will help your CEO and, through his or her efforts, actively assist the credit union and its members to succeed. In many respects, there really is no higher calling before you as a board. Previous Next

< Back Weaving a Single Garment of Destiny Michael Daigneault Jun 23, 2020 The key threads include equity, diversity and inclusion. All three are needed for the best leadership and governance for your credit union. ! Widget Didn’t Load Check your internet and refresh this page. If that doesn’t work, contact us. Previous Next

< Back A Case for Reaching Higher Michael Daigneault and Caitlin Hatch Sep 26, 2017 Musings on the Federal Reserve’s proposed guidance on supervisory expectation for boards In August, the Federal Reserve published its Proposed Guidance on Supervisory Expectation for Boards of Directors and invited comment and discussion on the subject of better performance though better governance—a topic near and dear to us at Quantum Governance . These proposed guidelines, which apply directly to the boards of directors of banks and savings and loans (not credit unions), seek to “establish principles regarding effective boards of directors focused on the performance of a board’s core responsibilities.” These proposed guidelines are inspired largely by the 2007-2009 financial crisis and are designed around supporting “safety and soundness.” While we applaud any effort to improve governance, we are concerned that these guidelines are too focused on the oversight or a “supervisory” role for the board. That is, they are concerned largely with mitigating exposure to risk and, as such, promote a narrow view of the board’s role in governance. Even though the proposed guidelines do not directly apply to credit unions, we think it is vital to comment, as there are natural parallels to credit union governance. The Fed’s proposal seeks to better distinguish the role of the board from that of management by encouraging the board to focus on its core responsibilities: (1) setting clear, aligned and consistent direction; (2) actively managing information flow and board discussions; (3) holding senior management accountable; (4) supporting the independence and stature of independent risk management and internal audits; and (5) maintaining a capable board composition and governance structure. While all of these are admirable goals, they tend to cast the board’s work in the more traditional role of fiduciary oversight, focused on monitoring performance and mitigating risk. While these things are certainly important and necessary for preserving the safety and soundness of a financial institution, they only address one aspect of what makes a board truly effective today. Governance today is not, as the proposed guidelines imply, simply a matter of carving out areas of responsibility and levels of oversight. To foster a highly effective governance culture, a board must create a genuine, constructive partnership with the CEO—and in credit unions, with the supervisory or audit committee as well. This constructive partnership, we believe, is the true foundation of good and effective governance. A well-conceived constructive partnership is one in which the duties and responsibilities of all parties are clearly communicated, understood, respected and mutually supportive of each other. The board knows not to get involved in day-to-day management (indeed, this is one of the desired outcomes stated in the Federal Reserve’s Proposed Guidelines), but its role goes far beyond this basic standard. The proposed guidelines do acknowledge a situation that bedevils credit union boards as well as bank boards—the overly burdensome amount of information a board is expected to review. These requirements consume so much time that a director is, ironically, actually distracted from properly fulfilling what we believe are the higher principles of governance: setting the long-term strategic vison and direction of the credit union; defining “success criteria” which do not necessarily have to be financial in nature; encouraging genuinely diverse ideas and discourse; and, as mentioned above, constructively partnering with the CEO and staff to further the credit union’s mission. In short, we are concerned that the Fed’s proposed guidelines are grounded in an outdated governance model that may foster boards to move back in time, not forward. They appear to be based on a set of legal requirements that focus on a minimum standard. We advocate for all boards to “reach higher” and to put into practice governance principles and skills that are holistic and proven to lead to truly exceptional leadership and ultimately mission success for their credit unions. 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 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