< Back The Benefits of Board Committees Michael Daigneault Nov 1, 2016 Get the most out of them by applying these bright ideas. If there’s one thing that board members and management often share, it is a disturbing sense of uncertainty as to the real benefits of board committees. From a board member’s point of view, committee meetings can sometimes be seen as another meeting to travel to, one more report to read, or—worse yet—an additional PowerPoint presentation to sit through. To top it off, it can frequently appear to volunteer leaders that “all their hard work” on a committee is—at times—somewhat less than appreciated by both their fellow board members and management alike. Of course, the challenge of committee work is not exclusive to board members or other volunteer leaders. Management has the responsibility of assigning staff (who already have full-time jobs) to assist the work of the committees, helping to gather information, coordinating schedules, writing reports, preparing presentations as well as developing motions and updating or crafting new policies for the committee’s (and board’s) final consideration. Staff is regularly “rewarded” for their efforts by then being asked to assist in implementing the to-do list of items that emerge from an affirmative vote at the board level. You may ask, “Does this mean that board committees should be abolished?” “No,” we would respond. “But,” you might think, “to overcome the types of burdens described above, committees better have some real benefits!” Fortunately, if done well—they do provide some very real benefits. If not done well, however, they are not the “value-add” they are intended to be. Do you know whether your committees are truly effective? When is the last time you evaluated your board committees (as well as the overall committee structure) to ensure that they are providing genuine value to your credit union? When established, charged and composed effectively, board committees can be a valuable asset to both your board and your management team by helping to: identify and examine key issues, concerns and questions ahead of board meetings. give laser focus to a project delegated by the board and/or helping to get things done more quickly and efficiently than would be possible for the full board. more equitably distribute the board’s work, since committee assignments can be dispersed among board members. facilitate trust-building between board members and management through their combined efforts. (It’s always a good idea to include relevant members of your management team on your board committees, too!) increase engagement among individual board members and help them make a more meaningful contribution to the board and to the credit union. But, what does it take to establish, charge, and compose your board’s committees effectively? The State of Your Committees There’s no right or wrong number or kind of committees for each CU board. In fact, we would argue that beyond supervisory committees for federal credit unions and some state-chartered CUs and audit committees for other state-chartered credit unions, there really isn’t a must-have list of committees for credit unions. In establishing or reviewing your board committee structure, the two rules of thumb that we would have you follow are these: Board committees should be established to do the work of the board, not the work of the staff; and Establish standing, board committees only when there is sustained, permanent, ongoing work for the committee members to undertake. Otherwise, we encourage you to use ad-hoc committees and task forces to accomplish your work early and often. Ad-hoc committees are likely to exist for more than a year, but not intended to be permanent. For example, a CU board may create a “new headquarters committee” that would exist for several years. Its purpose would be to help the board understand and oversee the important process of: 1) identifying the need for a new headquarters; 2) outlining the central benefits and challenges of doing so; 3) identifying or constructing the new building; 4) managing the financial implications of the new headquarters; and 5) overseeing the transition plan to move to the new building. At the end of its work, once the credit union has successfully moved into the new building, the committee would be dissolved. Task forces are even more temporary. They almost always exist for less than a year, and they are generally subgroups made up of both board and staff, but they may also include other volunteers or even outside experts or consultants. Task forces are charged with focusing on (and learning more about) a particular issue, question, opportunity or challenge and then reporting back to the board their thoughts and findings within a defined period of time. Sometimes task forces may simply report back the information they have gathered. In other cases, they are also asked to provide one or more recommendations for the board’s consideration. Once they have provided their recommendations, unless the board asks for further work from the task force, they are dissolved. What’s a Committee to Do? Charging your committees—that is setting their course of action—is an important board responsibility. Did you notice that we said board responsibility and not management responsibility? This is key. Board members need to determine what you want your committees to accomplish. In the spirit of constructive partnership, we encourage you to ask your CEO and management team for their input. Once you know what you want your committees to accomplish, we suggest you set it down in a committee charter. Include these key sections in the charter document: Prologue: A brief overview of the committee’s key function. Meetings: A statement on how frequently the committee must meet. Members: The required number and qualifications of committee members. This may include restrictions on committee membership. For example, if you opt for an executive compensation committee, you would likely not want a member of the management team to serve on this committee. Committee leadership: Outline any position requirements and responsibilities for the committee chair and/or secretary Role of the CEO: Outline the roles and responsibilities of the CEO vis-à-vis this particular committee. Charge: Detail the roles and responsibilities of the committee, including reporting requirements to the board. The most important thing to know about all of your board committees is this: Unless it’s explicitly stated, your board’s committees do not have decision-making authority; they can only provide recommendations to the full board for their action. Let us repeat that: Unless it’s explicitly stated, your board’s committees do not have decision-making authority; they can only provide recommendations to the board for their action. Finding the Right People to Serve Unless governmentally regulated (such as for supervisory or audit committees), there is no hard-and-fast rule about the number of members a committee should have. Three to five members is often optimal. Committees generally have more credibility if there is some diversity of opinions and experiences. Too many opinions and duplicative effort can result when a committee grows too large. This is particularly the case with credit unions that have fairly small boards. If the committee grows too large, efficiency may be lost. The ideal composition of a committee depends on a variety of factors, such as the committee’s purpose, charter, size, chair and even the experience of its members. It’s best to have at least one board member on a committee. But including non-board members or community members on board committees can be an effective way of reaching out and potentially beginning to build your bench for future board members. Each committee should also have an official non-voting staff liaison appointed to help carry out its efforts. Your board chair and the CEO should also be treated as ex-officio, non-voting members of all board committees unless the substance of the committee’s deliberations would be in conflict with their attendance. (Consider our previous example where a CEO would not attend a meeting of a committee doing an analysis of his or her performance and compensation package.) Other than these basic parameters, be bold. Cast your net widely, and don’t assume that your strategic planning task force should be filled with only strategic thinkers. Remember, there are other aspects to strategic planning that are important, such as developing a realistic budget for those strategic goals. Thus, a financial mind would be a good addition to your strategic task force, too. Our guess is that if you are like most credit union boards, you are probably secretly worrying about your board committees. Shed some needed light on them. Don’t just carry on with the same committee structure that you’ve always had, just because you’ve always had it. Board committees are a significant component of your credit union’s governance structure. And they draw a significant number of staff resources. Be sure that you are using them wisely. Do you have the right committees? Tasked with the right responsibilities? Composed with the right folks and aided by the right staff? Be brave. Ask yourselves these questions—and more questions like them. You’ll be very glad you did. 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 How Using a Recruiter Can Boost Board Succession Planning Efforts Gisele Manole Jun 28, 2022 Approaching director searches like executive searches can produce great results. Recently the National Credit Union Administration proposed a new rule that would require all federally insured credit unions to have board succession plans. Here at Quantum Governance , that proposal prompted a robust conversation among us consultants on the merits and challenges of regulation. And that conversation prompted us to look for ways to lessen the potential burden of increased regulation in this area. Our instincts to usher in solutions meant getting our arms around an emerging board renewal practice enlisting a recruiter to help with executing on the board succession plan. Two Credit Union Case Studies To learn more about using a recruiter at the board level, we didn’t have to look farther than two credit unions we have had the privilege of working with recently. Both have taken up the challenge of ensuring the future of their board with innovative new thinking that includes hiring a search firm to help recruit board candidates. For $1.3 billion Utilities Employees Credit Union President/CEO Bret Krevolin, a CUES member, the notion of enlisting the expertise of a corporate recruiter came about because the credit union was looking to diversify its board. "We were looking to really broaden the experiences, as well as the gender and ethnic diversity of our board," he says. "We didn’t want to recruit the positions in the same way we had before.” Krevolin and his board hired executive search firm Smith & Wilkinson , Scarborough, Maine, to identify highly desirable board candidates and conduct the initial interviews before recommending them to Krevolin and his board. Smith & Wilkinson Partner Nick Hayes says that recruiting a board member is different from typical corporate recruiting. “The main challenge behind recruiting for credit union boards is the time commitment required to ensure that each candidate understands the industry, understands the credit union, and understands the makeup and duties of the board,” he says. “We’ve found that many people are open to hearing about these board roles, and to successfully ‘recruit’ them into running for a board seat, we must take the time to make they understand these three areas.” $6.4 billion Hudson Valley Credit Union CEO Mary Madden, CCE, and her board also looked to Hayes to help find qualified board volunteers in an increasingly competitive market for talent. “Many companies use recruiting firms for executive searches, and we had heard of other industries doing the same for board candidates,” says Madden, a CUES member. “Knowing we were entering markets where we lacked a familiarity with local community leaders, the credit union felt engaging an experienced recruiter could facilitate the search for high-caliber board candidates.” For the last several years, Madden, her board and her management team have been prioritizing improvements to their governance. “One aspect of that work was defining volunteer roles and responsibilities, writing job descriptions, and identifying key skills and competencies needed to help the credit union succeed,” she notes. “With our industry’s guiding principle of people helping people in mind, we prepared specific information the recruiting firm could use to help us identify the candidates who would add value to our volunteer/management collaboration as we grow closer to a $10 billion cooperative.” What’s Your Objective? Hayes says having a clear goal in mind when reaching out to a search firm about recruiting board-level directors is one of the most important steps a credit union needs to take in this process. “We [the recruiters] need to understand the history of your board and your credit union, and why you are looking to take an active step into putting together an external campaign for a board position,” he explains. “We need to understand if a certain skill set, personality or background will complement the rest of your board, and we need to understand the value it will bring to both sides. We’ll need to spend time with your board to develop a clear value proposition that we can take to market on behalf of your credit union. Madden champions the work that Hayes is doing and stresses that finding talented volunteers must be an ongoing effort. “Incumbent board members should consider seeking ways to connect with talent year-round and not simply at election time,” she says. “Involving diverse voices—such as BIPOC (Black, Indigenous, people of color) and LGBTQ+ community groups/leaders—can help you spread the call for candidates, especially in new markets where the credit union may have less brand recognition. “Nomination committees can be assisted by having senior leaders, volunteers and community leaders identify potential candidates throughout the year so relationships can be built with those who may have interest in serving,” she adds. In this brave new world of interconnectedness and regulation, the challenges to board recruitment and succession planning remain. However, with a clear vision of your board’s future state and the expertise of an experienced recruiter, your credit union can draw on new talent to further the credit union’s vision and mission. Previous Next

< Back Charting a New Direction Michael Daigneault Apr 1, 2016 The roles of leadership in today’s credit unions are changing; specifically, there’s an important new way to think about key board leaders. The ideal role of board treasurer was a recent topic of conversation on CUES Net™ , the CUES-members-only listserve. Without identifying which CUES members were having the conversation, the CUES Net moderator asked for my input, and posted my thoughts back to the list. My thoughts stirred a bit of controversy, and I thought to myself, “Well, good. Let’s have this discussion. Let’s talk about the changing roles of leadership in today’s credit union.” In this article—as I did in my comments to CUES Net—I’m going to challenge assumptions about the role of board treasurer—and the other officers. Get ready. I’ve never been one to shy away from a good old-fashioned give and take, and I think it’s time that we all push ourselves to go beyond the status quo when we think of the board officer positions that are leading our movement into the future. I’ve written and spoken in recent years about the nine key challenges facing the credit union of the future. ( Read about them in my article ). To be certain, you and your colleagues are facing a lot more challenges today than you were a decade or more ago when many of you signed up as board members. So, if the world around you has changed, and continues to do so at a rapid pace, shouldn’t some of our assumptions and approaches to leadership be open to change, too? I think so, and I’m encouraging you to revisit some long-standing assumptions you have about board leadership. Assumption #1 : Boards should never “manage” anything. I love asking board retreat participants if boards should manage. The vast majority of board members (and nearly all CEOs) gasp and respond with a resounding and unequivocal, “no.” So, I continue prodding, asking: “Are there no circumstances under which a board should manage?” I get silence—and blank stares. “None?” I ask. Ultimately, I’ll have one brave individual who will posit that: “Boards should manage their one employee—the CEO.” Another brave soul may offer, “Boards should manage themselves.” And this becomes my opportunity—they are correct! If a credit union board should be responsible for managing its own operations, then it would be logical to consider your chair as your board manager-in-chief. He or she is responsible for the overall, effective functioning of your credit union’s board. Beyond crafting and facilitating your meetings in partnership with the CEO, your chair should ensure that your board is building a healthy governance structure and practices. (Of course, we recommend an active governance committee as an important partner in this endeavor, too.) But, these are just the nuts and the bolts part of the job. The real key to what the board chair does is in fostering and then managing the right culture for your credit union board. Be sure that you and your colleagues appoint a chair who can inspire and engage your board members—one who sets and models high ethical standards, from both personal and professional points of view. It’s also important that he or she work well with the credit union’s CEO—fostering a constructive partnership between the board and senior management. Assumption #2 : The vice chair’s job is boring. Much like the vice president of the United States, the position of vice chair used to be pretty boring. But it doesn’t need to be. What if you reframed the vice chair role as your board learner-in-chief? Yes, of course, this means your vice chair should be learning everything he or she can about the role of the chair should the vice chair be needed in that role some day. It is, after all, the vice chair’s role to be “at the ready” at all times. This means your vice chair should be ready to fill in for short-term absences and the potential long-term replacement of your chair. But being the board learner-in-chief can mean so much more. And it should. To meet the challenges before you, you and your colleagues need to be constantly learning and growing. There is no one better suited to lead this charge toward adopting the culture of a “learning board” than your vice chair. He or she should already be in full learning mode and can be a catalyst to encourage you and your colleagues to actively pursue learning on an ongoing basis. Lastly, you can consider charging your vice chair with special projects or initiatives like being a public spokesperson at key events, coordinating board retreats, designing better board meetings, strengthening the strategic planning process, or even a successor CEO search. The vice chair position lends a level of credibility to these initiatives, which is important, while allowing your chair to keep his or her eye on the overall management of your board. Assumption #3 : The board secretary’s job is to take minutes. (That is, the secretary’s role is even more boring and inconsequential than the vice chair’s!) This is perhaps my favorite board officer position to discuss. I always ask this very simple question: “What is the role of the board secretary?” And there are usually one of two answers given. The first is this: “To take the minutes.” And the second: “To edit and approve the minutes taken by the staff.” Really? That’s it? Boring… But no–that’s not it! For a little inspiration, we needn’t look far. In the corporate sector, the board secretary has a very, very important role. He or she is, as enumerated by the Canadian Society of Corporate Secretaries , responsible for ensuring the integrity of the governance framework, the efficient administration of the company, compliance with statutory and regulatory requirements, and implementing decisions made by the board of directors. There. How does that sound? Boring? I don’t think so. Now, that’s a job I’d like to have as a volunteer board member. It goes pretty far beyond taking minutes, doesn’t it? Make no mistake. You are helping to lead an organization every bit as complicated or sophisticated as a corporation. While a credit union’s structure may be different from its for-profit competitors, the stakes are just as high. And some could argue that the complexities you face as a credit union—with members’ interests and a mission to balance—place even greater demands on your governance structure, policies and practices. Consider your board secretary your board builder-in-chief (or, better yet—your chief governance officer), working hand in hand with your chair to build a stronger board. Your board secretary should be tasked with seeing that your board adheres to organizational policies, as well as national regulations. He or she should also oversee board nominations and a robust onboarding process by chairing the credit union’s governance and nominations committee. And this committee, too, can be charged with working with the chair to build engaging board and committee meetings to effectively carry out the board’s work. Assumption #4 : You have to be a numbers person to be the treasurer. At last we come to the source of the controversy that sparked this article. In my response to CUES Net, I suggested that it is the role of the contemporary credit union treasurer to help fellow board members effectively translate complex financial reports and data into comprehensible and insightful information that can effectively support strategic decision-making at the board level. There was some concern raised that perhaps what I was suggesting was that board members (i.e., the treasurer) might have more experience in the financial realm than the credit union’s CFO. I wasn’t. I was actually trying to make the opposite point. If your credit union board is like most, it’s not made up of financial whizzes and MBAs. It’s made up of everyday people like you and me, representing the membership and, for whom their financial literacy and acumen may have been developed through their service on the credit union board. And if they’re like me, perhaps their eyes glaze over when they see 26 Excel spreadsheets coming their way. I see an effective treasurer working with the CFO and his or her staff—poring over those Excel spreadsheets—to ensure the board receives clearly discernible reports, dashboards, bar charts and graphs, all in an attempt to clarify and deliver the complex financial reports in a manner that everyone on your board can genuinely understand. My colleague shared a story recently that made perfect sense to me. She said that the best treasurer she ever saw was a marketing guy. Yes, you read that correctly. A marketing guy. He didn’t want the job, but no one else would take it. He was the last guy standing. And what made him good at the job (indeed, great at the job) was that he didn’t fully understand the numbers at first, and he kept asking for clarification until he did. And, he was good at communications and visuals, so that was a plus. The joke around the boardroom was that if Jeff could understand the financial reports, anyone could. And they were right. He had them “translated” into a form he could genuinely understand. This helped Jeff—and everyone else on his board! How crystal clear are your financial reports? Can your new board members truly understand them? Or are you still presenting 26 Excel spreadsheets (in the form in which the staff tends to understand them) to your board members and expecting them to read them like a CPA? Assumption #5 : Everyone deserves a chance to be chair. Don’t simply adopt an automatic ascension plan for the board member who “hasn’t had a chance to be the chair yet.” Many credit unions have a practically automatic process whereby directors begin as a regular board member, then become the secretary, then move to treasurer through to vice chair and right on up to chair. Not everyone is cut out to be chair. Automatic ascension provides little to no wiggle room concerning needing a particular person to be chair because he or she has a particular skill set or capability; due to big changes being on the horizon for the CU; or because the board needs to focus in a new direction. Choose the right candidate for the right time, not simply because it’s his or her “turn.” Assumption #6 : You’ll know what to do when the time comes. One of the most important leadership assumptions I can help you challenge is that you will know what to do when the time comes. This relates directly to the notion that you should always have in place a leadership succession plan—and I’m not talking about a CEO succession plan (although I think you should always have one of those in place, too!). Your board and its officers are some of your most important strategic assets. Treat them accordingly. Plan ahead for changes in board leadership—both the kind that can be anticipated and those that cannot. I’m not talking about drawing up a 10-page, detailed plan. I’m talking about outlining the basics, including: who will serve as board officers on an interim basis; what roles certain committee(s) will play; and how the credit union’s CEO may be impacted. Be sure any succession plans are in line with your credit union’s bylaws, which may provide some direction on these issues. Above all, be open to even the idea of change. Here’s an example to explain what I mean: I spent the better part of a recent training arguing the merits of having a board secretary play an increased role within the organization. Really? I could hardly believe it—here was someone before me, arguing against a more engaged, more robust role for a board officer. Arguing against a board volunteer filling a key need within the credit union. Why? Because the secretary was so busy reading and approving all of those meeting minutes? I hardly think so. What’s the downside? I wondered. Imagine the upside… Previous Next

< Back Hope for Gen Z Comes in the Shape of Credit Unions Lauren Paradise May 6, 2024 Generation Z has the potential to be the greatest credit union generation, so why are so many credit unions struggling to get their attention? Generation Z has the potential to be the greatest credit union generation, but we are struggling financially and we need credit unions to step up to help. After I signed the lease for my first apartment last year, instead of the excitement you might expect I would feel, all I felt was hopelessness. I kept hearing the words of the leasing agent in my mind: “Rent is going to be X but that doesn’t include the security deposit or electric/gas utilities or pet fee or parking or Wi-Fi or furniture or laundry. Oh and it will go up next year.” All I could hear was fee after fee after fee, topped off with the guarantee of rising rent. It felt like there was going to be an extra fee just to breathe. This is the harsh reality for Gen Z after college. We feel like we are financially falling behind even before our journey begins. A few months ago, I attended a webinar that was supposed to be a facilitated discussion on what my generation (Gen Z) wants from their financial institutions, and how credit unions can connect with them. I had anticipated that someone of my generation would be speaking. How else would you be able to accurately represent the Gen Z perspective? To my disappointment, it was given by two people well beyond Gen Z, and while some of their statements were true, others were entirely inaccurate. Not including a Gen Z person in the conversation was a total miss. It’s a theme I have noticed in webinars and articles about Gen Z: they are all from the outsider’s perspective, observing us from a distance and not accurately reflecting our voice. After attending that webinar I asked myself, “As a member of Gen Z, what DO we really want from our financial institutions?” Of course, we want the obvious elements like a strong mobile app and financial education, but the first thing that came to my mind was HOPE . More than anything, my generation needs hope for their financial future. With the cost of living through the roof (for example, the cost of groceries is up 25% since 2020 ), many young people right now are asking themselves, “What is the point?” We feel a sense of futility in making smart financial choices like where to bank or apply for a loan, wondering if our choices will amount to anything in the face of the rising cost of everything. Despite that—and perhaps because my dad works for a credit union and I now work for a firm that works intimately with credit unions—the conclusion I have drawn is that credit unions are the ideal financial institutions for Gen Z. Yet only 4% of Gen Z are currently members of a credit union . Why is that? Perhaps the answer lies in that many members of Gen Z don’t even know what a credit union is, or if they do, they have misconceptions that deter them from being members. For example, the fact that credit unions are nonprofits in our communities should be a huge advantage in capturing younger members, as many of us loathe big corporations and find value in supporting local businesses . But Gen Z is almost assuredly not aware of things like shared branching and therefore sees the localized aspect of a credit union to be a weakness rather than a strength. Credit unions need to bridge this information and awareness gap, better leveraging social media to communicate frequently and hiring younger employees and ambassadors who can advocate from the inside, among many other strategies. Gen Z Is Aligned With Credit Union Philosophy There is a lot of alignment between the vision, mission and values of credit unions and what Gen Z is looking for—the messaging just needs to click. Ultimately, we want to feel like we are investing in something that will make a difference in our lives and in the lives of others. Credit unions are the prime foil to corporate banking greed. When I hear credit union board members share, “We need to keep members front and center in our minds at all times when making decisions for the credit union” or “We strive to have the lowest interest rates of any credit union in our area,” this is a refreshing change from the money-driven messaging of most corporations who seek to push the limits of what they can charge without losing customers, instituting absurd money grabs like surge pricing. Recently, I spoke with a credit union that is offering a mortgage loan with a down payment as low as 3%. This lower rate was established in direct response to their younger members being unable to buy a home in the current housing market. This type of offering can make a tangible difference in young people’s lives and is one example of how credit unions help us achieve our financial goals, hit life milestones, and offer up hope. Credit unions can’t solve all of our problems, and they can’t control the external political and economic factors that contribute to the financial angst of Gen Z, but they have a unique opportunity to ease the emotional burden and equip Gen Z with the tools, products and support that we need to better position ourselves to reach our financial goals. Most importantly, credit unions can offer their young members HOPE for their financial future. Previous Next

< Back ERM Is Everyone's Responsibility Michael Daigneault May 23, 2017 10 steps to take to ensure your leadership is doing all it can to identify and manage risk A study released last year— Risk Management for Nonprofits —raised quite a storm in some circles. While the particular risks faced by the charitable sector are often different than those in the credit union community, the study has, nonetheless, been an effective catalyst for raising awareness about the need to have a board-level conversation about risk and risk management. I’ve mentioned before that we have the good fortune of conducting governance assessments for credit unions throughout the United States. Only about a third of the CU boards we’ve assessed describe their ability to identify risk as “very effective,” and an even smaller group of them say they’re “very effective” at mitigating those risks once they’re identified. From a governance point of view, this is a pretty significant finding. And one that demands attention. For many CUs, discussions of risk begin and end with financial matters—interest rate risk, loan loss risk, fraud risk, etc. But is that enough? Aren’t there other risks that organizations face? And, what is risk, anyway? The authors of the Wyman/SeaChange study define risk as “unexpected events and factors that can have a material impact on an organization’s finances, operations, reputation, viability and ability to pursue its mission.” While the definition comes from a study on the charitable nonprofit sector, we think it’s a pretty good place to start in terms of framing the concept of risk for credit union board and committee members. But, let’s look a bit deeper, as some credit unions have begun to do. We are thinking about enterprise risk management, which is not just the responsibility of your board, management, board committees, a risk specialist, your external auditor or even an internal auditor. Yes, each has a role in understanding and managing risk. We’d also suggest that your supervisory or audit committee should play even greater role than typically given them. (Read more about the expanded role of the supervisory committee in “ Supervisory Committees Function Well ’ and “ Internal Watchdog, Plus … ” The Committee of Sponsoring Organizations of the Treadway Commission is a voluntary, private-sector organization dedicated to guiding executive management and governance participants towards more effective, efficient and ethical business operations. It defines ERM as “a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives." Are you doing all that you can, as credit union leaders, “to provide reasonable assurance regarding the achievement of entity objectives?” To get you started, consider these 10 steps: Ensure that your board assumes its full governance role, including not only its legal duties, but formal and informal governance responsibilities. With the rapid pace of change and the many threats facing CUs today, it’s imperative that your board understands that it must play a vital role. Formally task your supervisory or audit committee with ERM. Ensure that your committee is on the leading edge of today’s best practice of going beyond simply conducting an audit. Consistent with board policies, management will still conduct the operational work. It's the committee’s role to ensure it is being done regularly and effectively. Be sure you have the right people, in the right seats, to support effective ERM. Identify the best people from among your volunteers and staff. Develop an explicit risk tolerance statement that indicates the level of risk your credit union is willing to take. Once your board has assumed its duties in this area, this should be one of its first tasks. Be sure to constructively partner with your CEO and his or her management team, as well as members of your supervisory or audit committee. Develop a list of key risks and include brief scenario planning to address them. We had one credit union client that was housed in the World Trade Center on Sept. 11. It lost nearly everyone and everything on that day, but within a day, it was up and operating at a remote location in New Jersey. Scan your credit union’s internal and external risks in your annual strategic planning. Make sure key risks are identified and considered. Include financial benchmarking in your annual scan. Review your financial reports and projections and compare your position to similarly-situated organizations. Set appropriate financial targets to support your risk tolerance statements, as well as your scenario planning. Once you have reviewed your financial benchmarking data, develop a plan to address any risks therein. Put your plan and reports in writing. Be sure that your perceived risks, opportunities and scenario planning is shared broadly with the board, supervisory or audit committee, and appropriate members of the management team. Update your plan on a regular basis. Be sure to revisit your risk tolerance statement, financial benchmarking, scenario planning and your ERM plan annually. We don’t need to tell you that the environment is changing rapidly, and that means your risks are likely evolving, too. Be sure that you’re on top of them and ready to pivot. It’s fundamental to your responsibilities as leaders of your credit union. Your members are counting on you. Previous Next

< Back Finding Balance in Board Meetings Gisele Manole Sep 13, 2024 Efficiency vs. Engagement In a recent conversation with a credit union board member, she expressed frustration over the increasingly automated and predictable nature of their monthly board meetings. This shift towards efficiency and expediency has left her questioning the necessity of her presence at all. This sentiment is a stark contrast to the past, where the primary complaint was the lack of focus and excessively long meetings. The Shift in Board Meeting Dynamics For many years, credit union board meetings were often critiqued for being too operational and detailed, often described as “chasing too many rabbits and catching none.” These meetings were lengthy and lacked substantive discussion. However, it seems that in the quest for efficiency, for some boards, the pendulum may have swung too far in the opposite direction, sacrificing curiosity and meaningful dialogue for expediency. Striking the Right Balance As with many things, the ideal approach lies somewhere in the middle. While asking questions is a sign of engagement, asking the wrong questions can indicate a lack of understanding of a director’s role. My colleague, Paul Dionne, recently wrote about achieving balanced, strategic-level dialogue while efficiently meeting fiduciary, legal, and regulatory obligations. The Traditional Role of Credit Union Board Meetings Historically, credit union board meetings have emphasized the formal role of the board. A routine agenda was often used to move from one report or policy issue to another. Board members were present to receive information, provide fiduciary oversight and make quick decisions when necessary. Many decisions were made immediately or at the beginning of the meeting, with strategic questions and generative dialogue often seen as obstacles to their progress. The Need for Generative Dialogue To foster a more engaging and productive board meeting, it’s essential to incorporate generative dialogue. This means creating space for strategic questions and discussions that go beyond routine reports and decisions. Encouraging curiosity and deeper engagement through thoughtful questions can lead to more meaningful outcomes and a stronger connection to the credit union’s mission. Perhaps not all questions need to be answered right away. Perhaps the best questions linger and fuel conversations for many meetings to come. If the question has a finite answer like yes or no, it’s likely operational in nature. What are some other helpful cues to guide strategic, board-level questions? Operational Indicators: Is it about the past or present? Is it about day-to-day operations? Is it about how you should get there? Strategic Indicators: Is it future-oriented? Is it central to your vision, mission or strategic goals? Is it about where you should go? Finding the right balance between efficiency and engagement in board meetings is crucial. While it’s important to maintain focus and avoid operational detail, it’s equally important to encourage strategic thinking and meaningful dialogue. Previous Next

< Back Mentoring … Because If We Don’t, Who Will? Jennie Boden Dec 17, 2021 Supporting other women as they advance is important. A year ago September, after Ruth Bader Ginsburg died, I wrote an article for Advancing Women called The Thin, Strong String that Ties Women Together about how successful women have long helped the next generation find their footing and be better able to succeed. I thought of the thin, strong string piece when I heard that—quietly, with no fuss or fanfare—one of my newest colleagues had set about checking in weekly with one of our more junior female staff members. I’m proud to say that Lynette Smith , the recently retired CEO of $131 million TruEnergy Federal Credit Union in Springfield, Virginia, has joined the ranks here at Quantum Governance as a lead consultant, and we are the better for it. Even though the junior staff member in question reports directly to me, I heard about Lynette’s calls to her through the Quantum grapevine. There are times when the grapevine at small organizations can be … well, you know. But this time, I was happy to have heard about Lynette’s kindness in this way. My father used to say that the truest kindnesses are those that you extend when no one is looking. And certainly, Lynette’s regular check-in calls were never intended to be known by anyone else—let alone did she expect that they would surface in this article. But they have. Like most organizations, we’re not perfect. We have our foibles. (Yes, even consultants have foibles too.) But I felt lifted when the grapevine brought me news of Lynette’s calls to our staff member. The thin, strong string that ties women together went from Lynette to our staff member and then to me too. There is so much more work to be done. More mentoring to offer and to receive. More quiet, under-the-radar phone calls to make. And we must all do our part. For the ones that come after us and alongside of us, and even for those who are above us. Because after all, if we don’t, who will? And then I started to think more about that thin, strong string and all the women that I’ve known throughout my career—the women that lifted me up and the women that didn’t. I wondered, what does being a mentor really mean, anyway? The word comes from ancient Greek mythology—a class I skipped more than I attended when I was studying literature at the University of California at Berkeley. When Odysseus left his wife and son to fight in the Trojan War, he placed his son under the care of a man named Mentor, with directions to protect and guide his son. The war was a long one, and Odysseus was gone for 10 years. During his absence, Mentor failed miserably at his one and only job. It was a woman, of course, the Greek goddess Athena, who finally came to the rescue. Impersonating Mentor, she helped to save Odysseus’ son. Athena, the goddess of wisdom and practical reason. The city protectress. The goddess of handicraft and warfare, too. In the Middle Ages, I found in a resource by Roche for this course , the notion of mentoring “’became common practice in the time of the guilds and trade apprenticeships when young people, having acquired technical skills, often benefited from the patronage of more experienced and established professionals.’ In the 1970s, business people and researchers started to recognise ‘the vital role mentors play in the development of corporation executives’ (Roche, 1979).” How many mentors have you had? I mean really, truly good mentors? People who had your best interests at heart, even when you might not have known what your best interests were? And how many of them were women? How many authentic, open relationships with women at work have you had? Was there a woman who was your “protectress?” Or, like another colleague recently shared with me, did the goddess of warfare show up when it was time to present your good idea to the boss? Earlier this year, CUNA published a study that found that 51% of all credit union CEOs and 33% of all board members are women. This is good news, given that only 3% of CEOs and 16% of board members at our nation’s banks are women. But is it good enough? Women make up 51% of our nation’s population , and the 2021 State of Credit Union Governance report, COVID-19 and DEI: Revolution & Evolution in the Credit Union Community , finds that 47% of credit union board members report that gender is a low priority when recruiting new directors. There is so much more work to be done. More mentoring to offer and to receive. More quiet, under-the-radar phone calls to make. And we must all do our part. For the ones that come after us and alongside of us, and even for those who are above us. Because after all, if we don’t, who will? Previous Next

< Back Know When It’s Time To Go Jennie Boden Feb 28, 2023 Holding onto your board position may be best for you, but what’s best for your credit union? In September 2021, I wrote an article entitled “Are Women Better Leaders?” Then, I referenced several studies and articles from sources including the Pew Research Center, Forbes and The Washington Post that seemed to suggest that maybe, just maybe, women might have an edge over their male counterparts when it comes to leadership. The Pew study found “few differences between women and men in terms of leadership, [but noted that] women are perceived as more compassionate, empathetic leaders.” The Forbes article cited “studies … [that state] ‘women tend to outperform men.’” And The Washington Post article reported that countries led by women “suffered far lower death rates” than those led by men during the first wave of COVID-19. That very article cited the leadership of New Zealand’s Prime Minister Jacinda Ardern during the pandemic. A study conducted by Alex Beatie at Victoria University of Wellington, New Zealand, found that Ardern’s leadership during the pandemic “is considered … [among] the best in the world.” Beatie noted three key themes of Ardern’s daily press briefings and the government’s communications: “1) open, honest and straightforward communications; 2) distinctive and motivational language; and 3) expressions of care.” And Prime Minister Ardern has done it again. She is leading in an open, honest and straightforward way—this time with an expression of care for both her country and her responsibilities to and for it and for herself. On Jan. 19, 2023, I joined most of the world in surprise when Ardern announced that she would resign as her country’s prime minister just a month later. During her announcement, she said, “I’m leaving because with such a privileged role comes responsibility.” She continued, stating, “The responsibility to know when you are the right person to lead and also when you are not. I know what this job takes. And I know that I no longer have enough in the tank to do it justice. It’s that simple.” Her words struck me. How many times have I heard credit union board members say, “They’ll drag me off this board feet first, if I have anything to do with it?” Or even been given a heads-up by a CEO that a couple of their board’s directors could have the beginning stages of dementia? We’ve even had clients who have experienced the wholesale turnover of their board and their CEO within two short years. Tell me, how is that considered responsible leadership? A Characteristic of Responsible Leadership With 83% of credit union board and supervisory/audit committee members, CEOs and other C-suite staff reporting in the 2023 edition of The State of Credit Union Governance that their credit unions do not have term limits, it’s no wonder that the average age of board members today is 76.3 years, and they have been serving on their boards for an average of 19 years. Holding on to your board position may be what’s best for you, but is it in your credit union’s best interest? What if more of our credit union directors took Prime Minister Ardern’s tack and asked themselves this important question: Are you still the right person to lead your credit union into the future? And if you’re not, consider the three themes identified above: 1) Be open, honest and straightforward; 2) use distinctive language to motivate your colleagues for the future; and 3) above all, consider every action that you take as a director an expression of care and concern for the credit union and your members. Previous Next

< Back Double Your Fun: Tracking Strategic Planning For a Brighter Future Paul Dionne Feb 21, 2025 When it comes to strategic planning, I often start with guidance from Harvard Business School professor Michael Porter. Porter was the first to develop a research-based understanding of competitive strategy, and his approach begins with the dramatic premise that operational effectiveness is not a strategy ! Of course, to have a shot at sustainability and success, any enterprise would do well to focus efforts on running an effective shop. But simply improving how you do business is not sufficient to succeed over the long term. Porter’s claim was meant to be provocative because he wanted strategists to avoid falling into the operations trap. The trap is solely focusing on running an effective shop, which can be imitated by competitors all of whom are also working to improve their operations. When you consider immensely larger competitors such as big banks or fintechs, competing on operations alone probably won’t work. I can assure you that your budget and staffing for your new banking app is tiny compared to what Bank of America is spending on theirs. And yes, credit unions certainly want to offer competitive rates to members and potential members, but good rates alone won’t cut it either. Porter notes that firms who rely on operational effectiveness alone will inevitably be outflanked by competitors who can be similarly effective and are also building strategic advantages such as product differentiation and/or a deep focus on meeting the needs of specific consumer segments. Credit unions need to walk and chew gum – they should run an effective shop and also identify, choose and develop a competitive strategy that rests on being different. How can your credit union create unique value for members and potential members that is difficult for others to copy? The Future Demands Strategic Differentiation In strategic planning, credit unions often throw everything into a single process. The outcome can be muddled and end up over-indexed on the side of objectives that seek to improve operational effectiveness. Far less common is a holistic strategic plan that explicitly seeks to achieve competitive advantage. Operational effectiveness is important, but it is not sufficient to ensure future sustainability. What is also really important is figuring out how you are going to connect with new, especially younger members and provide next-generation financial services that fulfill their needs. That is where “running a tight ship” will fall short over the long haul. The credit union of the 20th century (bless our brilliant and creative forebears!) will not survive the 21st century without major upgrades to a competitive strategy and value proposition that speaks meaningfully to members hailing from the 21st century. It is their century, after all. Old fuddie-duddies like me are just living in it until our kids take over. What is to be done? To ensure you are covering both bases and building a clear and coherent strategy, divide your planning into two tracks. Tracking for Success An alternative approach to strategic planning calls for clearly dividing the process into two tracks, one focused on improving operational effectiveness and one devoted to developing long-term strategic advantage. The first takes into account all those analyses and enhancements to identify and leverage efficiencies, strengthen processes, and find ways to match or beat peers on operational metrics. The second track is more focused on changes that will position the credit union for a bright future. Senior Management and the Board should understand both efforts and learn how to support each of them from their unique perspectives. Track One: Operational Effectiveness The first track is always in play and strategy sessions should result in an annual plan for improving operational effectiveness. The key question is: How can we run a tighter ship? The types of questions and initiatives might include: How can we lower our efficiency ratio or NIM? How can we grow inexpensive, longer-term deposits? Is it time for a core conversion? These efforts can be measured, benchmarks set, and KPIs measured by Senior Management with oversight from the Board. Track Two: Competitive Strategy The second track toward building competitive advantage over the long term is where credit unions often fall short. Devote time to this work! Start from your mission and map out where you want to be in 5, 10, 25 years. The key question is: How can we be viable in the future? The types of questions and initiatives are broader and might include: What financial problems will our future members have and how can we help solve them? What makes us truly different from our competitors and how can we strengthen that difference? What should we stop doing to better advance our priorities? This effort is more difficult to measure, but it is critical to long-term success. One example might include an integrated community development approach that combines household financial well-being, targeted “healthy community” philanthropy and small business investment to create a value proposition that promotes robust communities and economic prosperity for all. Don’t fall into the trap of avoiding long term investments into changes that cannot be easily quantified or that will not deliver in a single annual cycle. Advancing strategy requires vision, discipline, and a willingness to sometimes sacrifice short-term gains. Continuity of purpose and effort are critical here. Combine, Measure, Socialize Does a two-track planning process lead to two business plans and scorecards? Ideally not. After the heavy rocks have been identified and set into place, build a combined business plan for the coming year that clearly defines and includes next steps from each track. This is where the work of integrating the two tracks is finalized and where you should build in mutually-reinforcing activities. Metrics and KPIs are essential for first track goals. A combination of metrics and milestones are often more relevant for second track goals. Socializing both the long-term vision and the short-term business plan across the credit union is another important step. Each staff needs to have an understanding of the work to be done and how they can move the needle. By delineating two tracks in your planning process, you will not lose sight of needed reflection and problem-solving for both business and strategic improvements. You get to double your fun. Don’t avoid the challenging work of designing and implementing changes that will create strategic advantage for your credit union over the long term. Adopting the two tracks in your strategic planning process means you will be more directly and clearly addressing the credit union’s short-term needs and opportunities for the coming year and, at the same time, identifying and building a pathway to longer term success. Previous Next

Michael Daigneault Founder & Lead Consultant Michael is a renowned expert on governance, strategy and ethics and has channeled this more than 35 years of expertise into a uniquely personable, engaging and authentic consulting and presentation style. Michael along with his wife founded Quantum Governance over a decade ago with the mission to improve the effectiveness of board and executive leadership through governance and strategy. Michael is a nationally recognized keynote speaker and published author on governance, strategy and ethics in both the credit union and nonprofit fields. Prior to founding Quantum Governance, Michael was President of the Ethics Resource Center (ERC) – the nation’s oldest, independent ethics center. During his tenure, the ERC launched the ERC Fellows Program; developed ethics centers in the United Arab Emirates, South Africa and Colombia; and spearheaded the rebirth of the National Business Ethics Survey. Michael also served as the Executive Director of the American Inns of Court Foundation, a nonprofit dedicated to enhancing the skills, ethics, civility and professionalism of judges and lawyers. Michael is a three-time graduate of Georgetown University, holding a B.A. from the College in Philosophy, and both a J.D. and a Master’s Degree from the Law Center. He lives in Virginia with his family. Back

Research & Reports Research The State of Credit Union Governance, 2023 This report identifies four governing elements central to measuring good governance and what correlations exist between them. The State of Credit Union Governance, 2023 Download Report Research The State of Credit Union Governance, 2020 This report offers findings from 115 credit unions on Board structure, governance, leadership, strategy and decision-making. The State of Credit Union Governance, 2020 Download Report Research Should Credit Unions Pay Their Directors? This Report explores the state of director compensation and offers considerations when exploring paying board directors. Should Credit Unions Pay Their Directors? Download Report Research The State of Credit Union Governance, 2021 This report examines the impact of COVID-19 and increasing calls for DEI on the credit union community. COVID-19 and DEI: Revolution & Evolution in the Credit Union Community Download Report Research The State of Credit Union Governance, 2018 This report analyzes governance practices at 70 credit unions focusing on Board structure, leadership, fiduciary oversight and strategy. The State of Credit Union Governance, 2018 Download Report White Paper A New Model Based on Classic Principles This white paper presents discussion on a new approach to the credit union cooperative model. A New Model Based on Classic Principles Download Report