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< Back On Being the Female Chair Leading a Predominately Male Board Gisele Manole Aug 25, 2022 Two female board leaders share their experiences and advice for promoting good governance—especially, but not only, as representatives of a minority demographic. Being in a leadership role—as a credit union board chair, for example—can be lonely at times. Sitting in the chair’s seat certainly puts you in a place of distinction. After all, you have been selected from among your fellow directors to lead them in their leadership role. So, consider the task of leading when you are from a traditionally underrepresented demographic—and say, for the purposes of this conversation, you are a woman leading a predominantly male board. I recently had the chance to connect with two women who shared with me some leadership advice for other women facing just this situation. What they said wasn’t at all what I expected. I anticipated hearing their perspective on having to do it better, faster and smarter than their male counterparts. But instead, their words struck a more nuanced and universal tone that stretched beyond gender differences. Don’t Wait to Be Invited A former CUES board member, Gerrianne “Winky” Burks can count herself among the trailblazers in the industry. After a 40-year career at $4.3 billion Northwest Federal Credit Union , Herndon, Virginia, the last five of which she served as CEO, she currently serves as the board chair. Burks’ advice is this: “Don’t wait to be invited to participate on a board or committee. You may be in the minority as a woman, but you bring a perspective that holds real value. “It’s so different now than when I started out,” Burks observes. “Now there is greater value placed on having a different perspective from the rest of the group. “I followed a male board chair, and frankly, I just did things a little differently than he did,” she adds. “Our communication styles, for example: My meetings may run a little longer, because I really want to hear from everyone in the room. I feel that is important. Neither style is better than the other, and the credit union has benefited from our different styles for many years.” Change Things Just Enough CUES member Janet Burgett Martin, board chair of $625 million Copper State Credit Union in Phoenix, has spent the last two years in the role of chair and recommends changing things up too. “For those new to the board chair position, I highly recommend you change the agenda so that the board understands that there’s new leadership.” Martin shares that she added a “mission moment” at the beginning of board meetings to recognize individual staff accomplishments. “This could be a member letter thanking an employee for excellent service or an award an employee received. It starts our meeting off on a positive note for both the board and staff in attendance.” When faced with assumptions or stereotyping, Martin recommends dealing with those challenges head-on when they first present themselves. Don’t wait to see if the presumption affirms itself, she advises. Find your voice and address it immediately and directly. “In my experience, when you make your expectations clear, presumptions correct themselves quickly. I am very direct but I also lead with compassion and enthusiasm,” she says. Both Burks and Martin stress the notion of being authentic. Burks says that while it may seem obvious, “[The other directors] don’t know what you know. I think that women have gotten much more comfortable in presenting their own thoughts. I pay attention to our board meetings being a place where everyone’s thoughts and ideas are invited.” While Martin encourages all board members to participate to make meetings more productive, she says “[I] always put it upon myself to be prepared by studying the full packet.” Participation requires preparation, and strong leaders model behaviors that they expect from others, she says. Add Your Takeaways to This Starter List As more and more women engage in credit union board service and rise to leadership roles within the industry, their collective learning will continue to grow. Here are some takeaways for developing leaders. Contribute your own advice in the comments section below. Don’t wait to be invited. Share your thoughts and perspectives now! Change things up and be intentional about it. Be authentic and clear in your expectations. And then hold your colleagues to them. Be prepared and model the commitment and behaviors you expect from your colleagues. Previous Next

< Back A Deep Definition of Governance Michael Daigneault Jun 3, 2015 How does your board use its formal and informal authority for the good of the credit union? While there are as many definitions as governance as there are consultants in this world, here at Quantum Governance , we believe that governance ultimately deals with the legitimate distribution of authority throughout a system--whether it’s a country, a corporation or a nonprofit like a credit union. We believe governance is ultimately how organizational leaders use both the formal and the informal authorities vested in them. How they think, make decisions, develop strategy, persuade, develop future leaders, structure their board and execute initiatives. How they communicate with key stakeholders ... with their staff … with their customers … with their marketplace … with their constituents … and even with each other. Good governance also applies to how your board oversees your CEO; tracks its own performance and the CU's results; conducts its budgeting process; allocates its resources; addresses membership or constituent needs; moves in and through its community; adheres to ethics and financial integrity standards. And, yes, good governance is even about thinking in a genuinely strategic manner. There are some who say “good governance” centers on legal issues--bylaws and conflict-of-interest policies--and how an organization’s board oversees its audit process. But at Quantum Governance, we ask our clients to look much deeper, to how well the board is doing on the many aspects of governance outlined above. Previous Next

Arlene Reuss Governance Administrator Arlene is the Governance Administrator for Quantum Governance, L3C. She married a career Marine and through considerable moves throughout the states and Japan, established a career in both the business and volunteer communities. She has earned numerous service accolades from the American Red Cross, Navy Marine Relief Society (budgeting) and Girls Scouts of America. Arlene’s resume includes numerous positions over the years in the areas of Administration and Accounting to include Controller/Assistant General Manager for a multimillion-dollar Floor Mat company. She established new Operations, Finance and Personnel practices that helped to grow the company by 40%. She worked as the Finance & A dministrative Manager for Maryland Coalition Against Sexual Assault (MCASA), where she was key in insuring proper tedious distribution of funds for grants as required by State and Federal government. Arlene worked for Anne Arundel Public Schools, she worked with the Individualized Education Programs and also with HR to insure teacher certifications and background qualifications. One of Arlene’s passions, Field Hockey, turned into a part time advocation as well. She coached for over two decades on the High School Level providing skills and mentorship to hundreds of young ladies. Arlene remains active in the community to include serving on the Board of Trustee’s at her church. Back

< Back A Matter of Culture Michael Daigneault Apr 1, 2014 What drives yours? Here are 10 elements to shoot for in your board room. I ask credit union leaders a lot of questions… Indeed, asking questions is one of the best things effective consultants do. Some of my questions have proved fairly easy to answer; some, much more difficult. In recent years, one of the most challenging questions for many credit union CEOs and board leaders has been: “What type of organizational culture are you trying to foster at your credit union?” The difficulty in answering this question has led me to ask a second question, which has proved even more vexing: “What type of leadership or governance culture are you trying to foster at your credit union?” I have tried to discover what makes it is such a challenge for leaders to answer to these fundamental questions—particularly at the CEO and board levels. Perhaps the notion of organizational or leadership culture is something they haven’t had the chance to think a great deal about? Perhaps they have been focused on other things—like survival, economic shifts, new regulations or financial ratios? Maybe culture is something credit union leaders simply accept as-is—or take for granted? Maybe the very notion of organizational culture—as applied to a credit union or its governance—is confusing and needs to be clarified? (It is a fairly new construct, dating back perhaps just a few decades.) Or maybe it is all of the above? Uncovering why it is so difficult to answer the “governance culture question” has taken me on a recent quest to figure out what organizational culture is at a deeper level—and to try to better understand why many experts feel culture is so important to organizational success. For example, in 2010 organizational culture guru Edgar Schein warned that “cultural understanding is desirable for all of us, but it is essential to leaders if they are to lead.” Jim Dougherty wrote in a 2014 Harvard Business Review article that “company culture is part of your business model,” and “the single most important attribute to successful companies.” If these experts are right—and culture is somehow central to success—then we should try to uncover the hurdles CU leaders face in understanding, articulating and building the culture of their institutions. In particular, we should try to identify and overcome any leadership and governance culture challenges leaders may face. What is ‘Organizational Culture?’ Every credit union has a culture. Just what that culture is can be hard for its leaders to describe—even if they have been with the credit union for a long time. Although long-tenured board members often feel they understand their CU well, they are frequently too close to it to really take a step back and identify the unconscious beliefs and assumptions that have been guiding their decision-making. It is, as such, a real challenge for board leaders to really see their own organizational culture. This can be the case concerning the CU overall (where leaders do not always have the kind of institutional access to pick up key cultural cues) and at the governance level (where leaders may be too personally involved to identify the underlying assumptions with any degree of objectivity). In his book Organizational Culture and Leadership , Edgar Schein formulates a formal definition of organizational culture, the essence of which is this: “what a group learns over a period of time as it solves its problems of survival in an external environment and its problems of internal integration.’ This leads us then to a new pair of questions you should yourself ask about your credit union: How much is your organizational culture simply an unconscious by-product of your founders’ or key leaders’ leadership style? And, on the other side of the coin: How much is your organizational culture the result of a conscious attempt to shape its values and assumptions? This last question brings us to look deeper into how credit union leaders can work together to improve their organizational and leadership culture. How Do Leaders Create or Change Culture? If you have been trying to make changes in how your organization works, you need to find out how the existing culture helps or hinders you. Accordingly, you need to determine what assumptions operate within the existing culture. Schein groups assumptions into three basic levels: 1) artifacts—all of the surface things you would first observe, see, hear or feel when you encounter an organization; 2) stated beliefs and values; and 3) basic underlying assumptions—the unconscious, taken-for-granted beliefs and values of the group. In 1983, Schein wrote that when organizations first form, there are usually dominant figures or “founders” whose own beliefs, values and assumptions provide a visible and articulated model for how the group should be structured and how it should function. As these beliefs are put into practice, some work out and some do not. The group learns what parts of the founder’s belief system work and which should be left behind. This learning gradually creates shared assumptions. Founders and subsequent leaders continue to attempt to embed their own assumptions, but increasingly they find that other parts of the organization have their own experiences to draw on and, thus, cannot be changed. Increasingly the learning process is shared, and the resulting cultural assumptions reflect the total group’s experience, not only the leader’s initial assumptions. But leaders continue to try to embed their own views of how things should be and, if they are powerful enough, continue to have a dominant effect on the emerging culture. Board members need to be able to take a step back and reflect on how your organization either challenges (or doesn’t) these assumptions. Be aware that your response will be tainted by your own influence on the culture you have helped to build. This is where an unbiased third party who can remain objective and observe your board’s dynamics may be helpful. If you are trying to examine (or change) your governance culture, you may also find yourself fighting against the organization’s design and structure; organizational systems and procedures; the design of physical space, facades and buildings; stories, legends, myths and symbols; and formal statements of organizational philosophy, creeds and charters. Changing culture can be difficult, particularly because sometimes culture can act as a protective mechanism, with each existing assumption working to reinforce and support the other. If you try to change one assumption in isolation, the others will push back to reinforce the status quo. Assumptions are also driven by the individuals or groups who have influence within the organization. If you want to change the culture, you sometimes have to foster a culture change within your organization’s current leaders, or modify the organization’s core governance philosophy as well as its policies and procedures. While often the most effective, changing the behavior of key leaders can be so hard that modifying the core governance philosophy is often the best opening move. When all else fails, a change in personnel may be required. But there is hope. Change can happen. It takes a focused effort and commitment to the following types of primary mechanisms: what leaders pay attention to, measure and control; how leaders react to critical incidents and organizational crises; deliberate role modeling and coaching; operational criteria for the allocation of rewards and status; and operational criteria for recruitment, selection, promotion, retirement and expulsion. 10 Elements of an Effective Culture Once you and your colleagues—both the board and the senior staff leaders–have effectively recognized and thoughtfully discussed the underlying assumptions driving your current credit union leadership culture, you can turn your attention to identifying any weaknesses or gaps and shape a more effective leadership culture for the future. I challenge you to address each of the following 10 key elements to build an effective board culture for your credit union. 1. Commit to a culture of engagement. Nothing really improves unless the board and senior staff are actively engaged in the process. This means leaders have to do more than just attend monthly meetings and listen. It means they have to do their homework, and be genuinely prepared. It means they have to show up and actively engage in discussions. That way, they can co-create with senior management the future of their credit union. It’s the responsibility of senior staff leaders and all board members to be familiar with the credit union’s key programs and strategic initiatives. It’s also the responsibility of leadership to work together to improve them. To do so, you must be engaged. 2. Join with management to foster a culture of teamwork. There is a lot of literature in the business world on the importance of teamwork, but seldom is it applied directly to boards. Taking a page from Management 101, you and your colleagues must join together to foster a culture of teamwork. And not just among yourselves—be sure to include members of your credit union’s senior leadership. Who else will work with you, shoulder to shoulder, during times of challenge? Evaluate opportunities with you? Celebrate the successes with you? Share the burdens? 3. Build a culture of curiosity. Socrates was recognized by Oracle at Delphi as one of the wisest men on earth because he was a genuinely curious man who was open about what he knew and—perhaps more importantly—what he did not know. Bring your own humility to the board room. Come with an open mind and learn from both your board and senior staff colleagues. Curiosity is one of the most important attributes a director—and a board as a whole—can have. 4. If you are able to develop a culture of curiosity , you’ll likely also foster a culture of learning. You and your colleagues will bring to the table your own personal curiosities and, combined together, you will move in the direction of what Peter Senge, a leading 21st century management theorist, has called a “learning organization.” Indeed, you can then begin to look at board room (and many committee meeting) experiences not through the lens of “necessary data exchange,” but the lens of “collective learning.” Culture is a learned experience and learning models should help us to better understand culture creation and change. 5. To support your learning, you and your colleagues will need to foster a culture of inquiry. You will need to revise the very nature of your board meetings so they encourage a genuine dialogue and exchange of ideas, a culture in which great questions are recognized and appreciated. Gone should be the days of stale committee reports or—worse yet—committee reports that simply mirror the written briefing materials. 6. All this communication requires that CU leaders maintain a sincere culture of respect. Respect does not mean agreeing to everything anyone else suggests. It does not simply mean being “nice.” It does mean deeply listening to—and honoring—other leaders’ voices in the process of decision-making. It also means valuing others’ contributions and knowing the boundaries of the role you each are carrying out. 7. Be mindful that you have all committed your time, talents and expertise to the CU board for the same reason—to be of service. Focus on that commitment. Build a culture of service, remembering that the roots of the CU movement are deep. For more than 100 years, credit unions have been providing quality financial services to their members. Above all else, we are driven as a movement by our commitment to cooperative principles. Voluntary and open membership, member economic participation and rewards are at least as—or more important than—the bottom line. 8. Because you are stewards of other people’s funds and have committed to a culture of service, you and your colleagues should—and will—be held to a very high standard. You will need to, therefore, build a strong culture of diligence. Some components of this part of your culture will be informal. Together you and your colleagues will determine mutually agreed-upon standards and expectations for how you will act and govern the CU. Other, more formal standards will be imposed upon your CU by regulators. In either case, you and your colleagues must pledge that together you will be eternally vigilant on both the formal and the informal standards guiding your decisions and actions. 9. As stewards of other people’s funds, and because as a CU you are committed not only to a culture of service but also to cooperative principles, you must commit to a culture of accountability. Of course, you must hold each other accountable and, clearly, accountability extends to your credit union’s CEO and, ultimately, the staff. You must model a culture of respect from the top-down, the same way you must model accountability. 10. Ultimately what every organization wants to build is a culture of trust. You want a trusting relationship with your members, your staff, your regulators and with the public. It’s the right thing to do and can only benefit your business bottom line as well. In all, building a culture that breeds success for your CU will not be an easy journey, but is certainly one that’s worthy of the effort. Challenge your organization’s long-held assumptions. Commit yourself. Be engaged. Ask your questions. Leave your ego at the door. Respect one another. Hold each other accountable. And do the right thing. Having done so, you will earn the trust that your members place in your leadership! Previous Next

< Back A Quality CEO-Board Relationship Michael Daigneault Jul 26, 2016 Fostering A Healthy Balance The CEO of an organization we’ve been working with recently resigned. Unfortunately, a good deal of finger pointing followed. Some suggested a lack of strategic focus. Others questioned her leadership qualities. And there was the inevitable discussion of “fit” or “chemistry.” This outcome ultimately came down to the relationship between the CEO and the board. And it’s not the first time we’ve seen this set of circumstances. In fact, a member of our team has resisted taking on a chief staff position for this very reason—because the relationship between a CEO and the board can either make or break effective organizational leadership. As such, we spend a great deal of our time at Quantum Governance talking about the importance of building a constructive partnership between the CEO and the board. But what does that really mean? We can start with the basic definition of these words. Constructive, as defined by the Oxford Dictionaries, is “serving a useful purpose; tending to build up.” Partnership refers to “taking part in an undertaking with another or others, especially in a business or company with shared risks and profits.” There’s a lot of meaning embedded in those definitions, but let’s just call out a few of the most important words: “useful purpose,” “tending to build up,” “undertaking with another” and “shared.” When we ask board members what their most important role is vis-à-vis their CEO, a common response is “to hire and fire.” That’s a very limited view of the relationship. Yes, recruiting and dismissing the CEO are formal powers vested in a board. And, yes, these decisions are among the most important a board typically makes. But these formal powers do not speak to the quality of the relationship, whether it is constructive and how it functions as a partnership between the board and the CEO. Yet, therein lies the real key to leadership success in the vast majority of credit unions. The constructive partnership model is not a luxury but a necessity. Both the board and the CEO are needed at the table. There are times when the board must firmly lead, as when setting overarching credit union policy, for example. And there are times when it makes sense for the board to get out of the way and let the CEO and his or her management team do what they do best—run the day-to-day operations of the credit union. But there are very real instances where you both need to work—and here’s that term again—in constructive partnership. For example, who sets the strategic vision for the credit union—the board or the CEO? Or do you do it together, through dialogue and in discussion? Would your board hold a strategic planning session without your CEO? Would your CEO put a new five-year strategic plan in place without the board? Certainly not. We have seen instances in which credit unions have been largely driven by the board. In these situations, the CEO is often frustrated and describes feeling like “my hands are tied.” There is a fair amount of turnover at the senior levels of these organizations. On the other side of the coin, in organizations where the CEO is firmly in charge and forges forward without board input, directors are disengaged and describe feeling like a rubber stamp, following the whim and will of the CEO and his or her management team. Neither extreme benefits the credit union. All this talk of constructive partnership does not imply that the board should not address CEO performance issues. That is a key board responsibility—and a process that may require more attention at many credit unions: Nearly two-thirds of all board members we’ve surveyed wouldn’t describe their method of assessing their CEO’s performance as very effective. Ultimately, one of the most important roles you play as a director is to find a way to support and hold your CEO accountable, joining him or her in the undertaking the leadership of your credit union in genuine constructive partnership, sharing the responsibility to deliver on the expectations of your members in helping them fulfill their financial life dreams. Previous Next

< Back A New Credit Union Model with Classic Principles Focuses on Social Purpose Michael Daigneault and Caitlin Hatch Oct 1, 2018 Reclaim the ‘why’ of credit unions by deeply embedding social purpose in all your activities. Most modern credit unions significantly under-leverage their cooperative model. A key reason for this is the way the leaders of most credit unions conceive of “success.” Our thinking a few years ago was that the perspective of all CU leaders about success fell somewhere along a spectrum we could define (see graphic). On one end of this spectrum, CU leaders were very “member-centric” in their approach. “After all,” they would say, “credit unions exist for their members. Success is providing member services and benefits that improve people’s lives—sometimes at the expense of better financial results or ratios.” These CUs’ cause was to—first and foremost—benefit the member. They did so while prudently ensuring the ongoing viability of CU operations. On the other end of the spectrum, CU leaders were strongly focused on their CUs’ “financial performance”—fundamentally oriented toward financial success, growth and sustainability. “You can’t help members if you don’t exist” was a perspective such credit unions often shared. They did not ignore their members by any means, but ultimately, success for credit unions on this end of the spectrum was primarily based on classic financial measures, sometimes at the expense of rewarding members first. Their “cause” was to ensure the ongoing financial health of the credit union so that it might, in turn, offer products and services to members and their families. Still other CUs were in the middle of our success spectrum and took a “balanced approach.” These CUs did all they could to thoughtfully harmonize the member-centric and CU-centric approaches. They saw the essence of their success as an ongoing balance of excellent service and strong financial results. Sometimes service was paramount in their thinking. Sometimes financial strength had to be the priority. Overall, however, the careful balancing between the two would lead to true success. These CUs’ “cause” was twofold: to benefit members and craft a strong financial cooperative. More recently, as we have talked to other CUs about ways they could take greater advantage of their cooperative model (and what it truly means to be a CU today), we learned that a few were thinking in a new way about success. These CUs reported that the essence of their approach was to include their relationship to their communities in their thinking about every one of their programs. These CUs have a new cause orientation and new success metrics. After talking with these CUs, did we need to revise the entire spectrum? The answer was a resounding yes and no. We’ll explain. ‘Revising’ the Spectrum The much more robust and comprehensive “community focus” that these CUs were taking didn’t seem to fit well on our initial spectrum. On the other hand, this new approach remained closely related to the fundamental CU ideas of member service and financial strength. What we ultimately learned is that by adding a third focal point—community —to the member-centric and financial performance focal points, a new way of framing success for credit unions emerged, one that is a direct descendant from the movement’s foundational principle of people helping people. At this point, some of you may be thinking, “Hey, maybe we are already a social purpose credit union. We already do lots of good things in the community.” You are not alone in suggesting this, but the social purpose approach goes much farther than nearly all of the community engagement efforts we have seen to date. As Coro Strandberg , former chair of $21.7 billion Vancity , Vancouver, British Columbia, and a corporate social responsibility pioneer, explains, “It is not uncommon for credit unions to find that they are not as far along toward becoming a social purpose organization as they think they are. It is because they already have the philosophy built into their DNA. [But, because of that,] they think they are doing more than they actually are!” The Social Purpose Model The social purpose approach—fully executed—means integrating social purpose into everything a CU does. It has a direct connection to the values and underlying principles that propelled the CU movement many years ago. In this model, the CU commits “a substantial portion of its assets to social finance projects rather than having social investment as an ancillary corporate social responsibility plan,” wrote Sean Geoby and Olaf Weber in a 2013 article in the Journal of Sustainable Finance and Investment . In other words, the focus on community impact becomes the driving vision of the CU, which then embeds social purpose values into all aspects of its governance, strategy and operational efforts. This does not mean that a CU should abandon its members nor the credit union’s financial health. Rather, to really serve members and substantially grow the credit union’s financial strengths, shifting to a broader focus on community can help rally many more people and organizations to the “cause” of the credit union. To do this, Strandberg advises, “As a board and management team, you need to determine what your purpose is. Why are you here?” The answer, she suggests, should not be to just meet member financial needs, but to go beyond such needs and—in a targeted manner—address some of the broader societal issues negatively impacting members and their families. And yes, this may mean helping others in the community who are not yet connected with the CU. As Simon Sinek challenges us all in his book, Start With Why: How Great Leaders Inspire Everyone To Take Action , organizations need to both examine and reclaim their “Why?” CUs should certainly serve their members and their families with excellent products and services—what Sinek terms the “what.” They should also effectively execute their cooperative business model and maintain strong and sustainable financial fundamentals—which Sinek calls the “how.” But they should also think deeply about their core societal purpose—the “why”—a societal purpose that embraces members’ needs, but also extends far beyond just members in its ultimate reach and impact. This helps to transform the entity from one that simply provides a service or a commodity—like so many others in the marketplace—into a social movement. A cause! When helping the community becomes part of your core product line, and you think about it that way and it's part of what you are doing, focused on it on a daily basis, you are starting to arrive. -- Brett Martinez, Redwood Credit Union Social Purpose CUs Vancity : Chief Governance Officer and Corporate Secretary Karen Hoffman says the CU defines success as “building healthy communities and increasing and preserving the well-being of our members.” Under this vision, the CU has achieved 25 percent market share in one of Canada’s most sophisticated and international financial cities. Vancity does not focus on community simply because it has the “luxury to do so” due to its large asset base. It is so large today—and has gained such a passionate and loyal membership—due to its courageous decision to improve the Vancouver community. The CU has succeeded in transforming itself into a cause to improve Vancouver—a cause that many people in the city and its surrounding areas can truly believe in and actively seek to be a part of. For example, one of the CU’s most important efforts is its high-impact community investment loan that supports affordable housing; social purpose real estate; local, natural and organic food; the environment and energy efficiency; as well as social enterprises and social ventures. The CU’s social finance portfolio dwarves traditional corporate social responsibility efforts at many institutions. Vancity’s journey toward the social purpose model was sometimes two steps forward and one step back. The CU’s leaders had to experiment to see what would work. Other CUs can learn from its experience and take inspiration from its success. University Federal Credit Union , Austin, Texas : Under the banner of “When Our Community Is Strong, We Are Strong,” $2.3 billion University FCU has elevated its already strong community efforts to a new level. “This demonstrates where the heart of UFCU is—with our members and our community,” says Heather McKissick, VP/community impact and a CUES member. “In only its first year, our DO GOOD program has rallied our employees’ efforts around our community partners and made a real impact on the people they serve.” The credit union’s CEO, Tony Budet, understands that the model has its challenges. “We needed to attract new leaders to our board who were from within the community and had an interest in it, and it was a culture clash at first,” the CUES member says. “It’s difficult to go through that. A lot of credit unions will have this challenge if you don’t have an anchor or a group of people on the board who are part of the community you serve. It needs to be board-driven.” Lake Trust Credit Union , Brighton, Michigan : David Snodgrass, CCE, CEO and a CUES member, says: “We were talking about our strategy, culture and our business plan and we were wrestling with answering the question, ‘Why?’ We started reflecting on, ‘Why we are here?’ and ‘What is our purpose beyond just the traditional banking services we offer?’ It is still a journey we are on today.” $1.8 billion Lake Trust CU pursued a number of avenues, including forming a 501(c)(3) foundation to encourage charitable participation in some of its community endeavors, pursuing a grant from the U.S. Treasury’s Community Development Financial Institutions Fund. “Our CDFI grant request is to help seed a micro loan fund for small businesses in rural communities across the state of Michigan and to help us to take more risk than we would otherwise in our standard business practice—take a chance on a single mom who wants to open a hair salon, a young man who wants to open a pizza shop, in an effort to breathe economic opportunities into our smaller communities across the state,” Snodgrass says. Like Budet, Snodgrass also emphasizes that a social purpose model needs to be driven at the board level. Lake Trust CU has recently added four new board members and two associate directors from the non-profit sector with very deep roots in the community. “The contributions of our new board members have been multiple,” he explains. “It has invigorated the leadership team … to think even bigger about where we can go. They have opened up their networks to us and connected us to other thought leaders or other social purpose enterprises. That has been priceless. Having partners is part of this—we can’t do it all ourselves.” Redwood Credit Union , Santa Rosa, California : Sometimes pressing circumstances demand new approaches. Last year $4.3 billion Redwood CU found itself at ground zero in one of the most destructive wildfires in California history. CUES member Brett Martinez, CEO, says that the CU’s historic response was a result of having reacted to earlier fires in 2015 and 2016 and the recognition that the CU was able to react in an emergency to meet its communities’ needs. Because of its already deep relationships, Redwood CU was able to raise $32 million from 41,000 donors and help ensure the funds got to the right hands. “The state senator knew the areas, what the needs are, and the newspaper helped to communicate, get the word out and manage the communication, and that helped us being able to take in and distribute the money,” Martinez says. “Affordable housing is a huge issue,” he adds. “We didn’t do construction loans. We didn’t do agriculture lending either. There were other people doing that, and there wasn’t a need. Now, we are doing them, and we intend to keep doing them, even after recovery is completed. When helping the community becomes part of your core product line, and you think about it that way and it is part of what you are doing, focused on it on a daily basis, you are starting to arrive.” Redwood CU’s response to the disastrous fires has helped to propel it to a whole new level. Its leaders acknowledge they will never be the same after this experience. Future plans include more fully integrating the lessons learned—a hallmark of a maturing social purpose model. Pursuing the Model Snodgrass acknowledges that really understanding community needs and developing authentic relationships with community partners can be challenging. “Deciding to do this requires a degree of humility,” he says. “It’s not about you—all of your energy is directed to others. We were meeting with a social purpose organization in downtown Detroit. They are doing some amazing things: employing homeless women, designing jewelry, creating products. We wanted to understand how we would could add value and support them. We were met with a degree of skepticism. When you start engaging in community organizations, they don’t expect that somebody really cares. They expect that this is some sort of propaganda play.” Much work remains to be done to fulfill the promise of CUs’ social purpose model, which offers a blend of classic CU principles, an innovative community-centered approach and the promise of re-energizing the “why” of CUs in a way that appeals to young people. The approach also appears quite flexible and allows for both incremental development and a broad reach. It also stimulates innovation and a renewed passion from credit union leadership in how they design the credit union to be a meaningful cause—a cause that genuinely invites others to collectively reclaim the “why” of a credit union and create positive impact for members, their families and communities. Caitlin Hatch previously served as a senior consultant with Quantum Governance and has worked with credit unions for the past eight years, focusing on governance and strategic planning. Prior to that, she served for 25 years as general counsel and corporate secretary for the largest anthracite coal company in the United States. Previous Next

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

< Back An Antidote For Shifting Sands Michael Daigneault and Jennie Boden Sep 24, 2019 Your strategic planning process is as important as the plan and should be ongoing. Recently, Henry Meier, SVP/general Counsel at the New York Credit Union Association penned a blog addressing “ Why D.C.’s Policy Pronouncements are the Key to Economic Growth .” In it, Meier discusses the shifting sands of today’s political environment, as well as the state of our economy and how “We are now more dependent on Washington than ever before.” The business environment in which your credit union operates is, to say the least, complicated. Beyond the challenges that emerge from Washington, you are likely faced with growing competition, shifting demographics, technological disruption, as well as the potential for an economic slowdown or recession. What else would you add to your list? Challenges with board succession? A CEO transition? A core conversion? How prepared is your credit union to meet these challenges? Do you have a solid strategic plan in place? What about your process? We think the process, in these turbulent times, is nearly as important as the plan. There are four common strategic planning processes that you and your colleagues can adopt: A traditional planning process would have you identify where your credit union is today and where you want to be in the future (for example, three to five years from now). Then, you create a disciplined timeline, set of strategic goals, milestones, and financial and other resources needed to get there. The only problem with this process is that stuff happens. Presidents implement tariffs. Timelines for core conversions drag on. You get the point. Scenario planning allows you to plan for a number of different potential futures or scenarios on a contingency basis. The challenge here is that it’s much more time-consuming because of all of the time required to create and consider alternative scenarios (and accompanying plans)—many of which are sometimes necessary, particularly in an unpredictable world in which very different futures may unfold. In phased planning , it’s understood that the world may change quickly and, therefore, it’s difficult to plan too far into the future. Accordingly, the phased approach tries to break up the strategic planning process into manageable periods (or phases) of time. The downsides to phased planning are that you can lose sight of longer-term goals and default to a form of operational planning. Cyclical planning combines best practices from all three of the above methods—It’s “real-time,” “continuous” or “ongoing” strategic planning. To quickly put you at ease, cyclical planning does not mean that you are re-creating your strategic plan at every board meeting or even every year. What it does mean is an important change in the mindset of both your board and your management team. It means that strategic planning is regarded not as something separate from the board’s governing duties, nor is it separate from management’s responsibilities. It means that strategic thinking and planning are core elements of your board’s and management’s responsibilities. It means, therefore, that your board and management are holding meaningful strategic discussions on an ongoing basis—throughout the entire yearly cycle of board and committee meetings. (And that these discussions go beyond merely an update on how you are doing on the metrics.) It means there is no designated start and end to “the plan.” It is thoughtfully considered—and modified if need be—over time. It means that as the sands shift in Washington, China or in your backyard, your credit union’s board and management team are prepared to react—quickly and in “real time” to meet the credit union’s changing strategic needs. Previous Next

< Back Un-Cage Your Thinking Michael Daigneault and Caitlin Hatch May 24, 2016 Good Credit Union Performance Doesn't Equal Good Governance Board members and CEOs frequently ask us: “Do we really need to focus on governance?” Before answering, we ask: “What’s behind your question?” The most common response we receive is, “If it ain’t broke, why fix it?” That is, many assume their governance is effective largely because the credit union’s “numbers are good.” When we suggest “just because a credit union is performing well financially, it doesn’t necessarily mean the credit union is being governed effectively,” we get a lot of blank stares. Our perspective comes as a surprise to some. If the credit union is “doing well” and the board is responsible for the credit union, then doesn’t that mean the board is doing its job effectively? In a word…no. Without a much deeper analysis, simply equating “good credit union performance” with “good board performance” or general “good governance” is leaping to an unwarranted conclusion. Of course, to many board members, it feels perfectly natural to make the leap. That’s because it is a result of how we, as humans, are designed to work. In some situations, making a quick analysis is perfectly appropriate. In others, it can lead to flawed decisions. So, why is the “natural conclusion” unwarranted here? Well…it could be the credit union is blessed with a great CEO and management team who are doing a terrific job – dare we say it? – despite the board! Or, it may be the credit union is fortunate enough to be benefiting from a strong economy. Or, it could be there is a long lag effect and decisions made five years ago are what improved performance. And, yes – it could be the board’s leadership is actually contributing to the credit union’s performance. It’s just that “good governance” is too complex a conclusion to simply reach from “good financial results.” So why do we do it anyway? We instinctively try to create some type of order out of our environment and our experiences by finding meaningful patterns and connections in acts, decisions, and the results that flow from them. We do this because we are designed to do so. Only by being more conscious of (1) how our own minds work, (2) being more aware of what connections we are consciously or unconsciously making, and (3) determining what facts are truly related and relevant to the issue at hand, can we avoid some of the thinking traps. Below are just a few of the tricks our brains regularly play on us while we are trying to “make sense” of our world. They are so subtle and so ingrained we are frequently not even aware of them. By calling them out, by asking each other the hard questions that must be asked at the fiduciary, strategic and generative levels, credit union leaders can together minimize the impact of the tricks our brains can play on us and, thereby, make better decisions. Seeing connections that may not be there . We can all take a little bit of information and build a story linking the bits of information into a simple explanation for what may be a very complex reality. But we don’t always have enough facts, and sometimes we aren’t even asking ourselves the right questions. Is good financial performance the same as good governance? How is the board directly contributing to the credit union’s success? Even if we can’t answer the questions, maybe by being aware the answers shouldn’t be based on an assumption can lead to better discussions, better decisions and a better understanding of what the board is actually contributing to the success of the credit union. Personal bias. We all filter facts through our own experiences so we better understand them. When others perceive our thoughts as open and relevant, we may be viewed by others as wise, aware or even empathetic. When our minds are already made up, when we don’t listen, many view our thinking in terms of a “personal bias.” We need to do all we reasonably can to be aware of our own biases and assumptions and try to be genuinely open about seeing the world differently. The halo effect. Our overall impression of something influences our feeling and thoughts about it, and it can work for you or against you. Take the city of Las Vegas, for example. People tend to either love it or hate it. The halo effect goes beyond a personal bias because you can have an opinion about Las Vegas without ever having been there. This effect can be so strong it can outweigh the facts, especially if they don’t agree with strong feelings or assumptions. Anchoring. We tie thoughts and feelings to a piece of information and then apply it to another piece of information, even if the two things do not have anything in common. We tend to apply specific facts to general circumstances. That first piece of information becomes the “anchor” around which we perform our analysis. Consider a credit union board that bases its discussions on “how we used to do it,” and uses that filter to make decisions for the present day. The analysis is “anchored” to a prior experience that may have little or no relation to the needs of present-day members. The endowment effect. It’s likely you’ve done this one, too. Have you ever assigned more value to your own abilities than others’ abilities? We all tend to think we are better than average. Study after study notes anywhere from 65 percent to 85 percent of people think they are “better than average.” Confidence can be a good thing, but that many people can’t be better than average, it is mathematically impossible. Boards—yes, even your board—may unconsciously assign more value to its efforts than the impact warranted. Your board may be one of the majority of credit union boards that would rate itself as “better than average.” Loss aversion. Credit union boards are notoriously risk adverse. Many strongly prefer avoiding loss to the risk of acquiring gains – or even serving members in better ways! Our focus on avoiding future loss can cause us to overestimate how truly risky some actions are. Being prudent is a good thing, but being extremely conservative can be the riskiest approach of all! These are six examples of how we typically think. This instinctive thinking is one of the things that makes us human, and it is embedded deep within us. But when thoughtful analysis is required, we may get led astray by our instincts. We suggest being aware of the reasons underlying your judgments and actions can help you and your colleagues make better decisions about what you do and how you do it for your credit union, your members and the communities you serve. Caitlin Hatch previously served as a senior consultant with Quantum Governance and has worked with credit unions for the past eight years, focusing on governance and strategic planning. Prior to that, she served for 25 years as general counsel and corporate secretary for the largest anthracite coal company in the United States. Previous Next

< Back Fiduciary AND Strategic Thought Needed Michael Daigneault Mar 5, 2014 Finding the right balance between operational oversight and visionary dialogue in your boardroom is worth the struggle. I’ve long said that being a CEO of an organization is one of the hardest jobs in the world. I’ve had the opportunity to help lead a number of organizations myself and have found myself being challenged to find the right balance between fiduciary and strategic agenda items at board meetings. Having formally observed a number of credit union board meetings in recent years, I have realized that this struggle is shared by many credit union CEOs and board chairs. And the proof of this difficulty goes well beyond the anecdotal. In recent assessments of credit unions throughout the United States, a surprising number of credit union board members reported a lack of genuine strategic dialogue at their monthly board meetings. Finding the right balance between operational oversight and strategic dialogue is a real struggle. But one that is very much worth fighting. There are a number of reasons why such a balance is difficult to achieve, but I’d like to focus on one reason in particular: Many credit union leaders get “stuck” in one mode of thought. What do I mean by that? CEOs and board members frequently lack a framework or vocabulary to ask the full range of questions necessary to effectively carry out their governance responsibilities. As such, and often by default, many credit union boards spend the majority of their time in the fiduciary realm of thought. Frequently, this notion of fiduciary is paired with the word “oversight.” As credit unions, we’re very good—and often most comfortable—with providing oversight. We are stewards of our members’ hard-earned money, and so we are traditionally strong at reviewing the financials, ensuring legal and regulatory compliance, instituting appropriate financial controls, conserving the organization’s resources and even mitigating key risks. As we should be. I would imagine your credit union spends a great deal of time talking about (or reporting on) fiduciary items at your board meetings. In fact, I’ve had clients who issue monthly board packets -- some 100, 200 or even 300 pages long -- and then spend the vast majority of their board meetings simply reviewing those written reports. Don’t get me wrong. Fiduciary thought is absolutely necessary, and it has a vital place - especially in the credit union community. The problem is that while fiduciary thought is necessary, it is certainly not sufficient if you desire a governance culture operating with excellence. Yes, more is needed. But the extra effort yields significantly greater rewards. The “more” that is needed is to begin incorporating strategic discussions into your board meetings regularly . Please note that I am not talking about “strategic planning.” It is highly likely you already incorporate some form of strategic planning into your meetings annually - or every few years - when your board undertakes the review or revision of your strategic plan. I am, however, suggesting that the board and senior management exercise their “strategic thinking muscles” very regularly. If you don’t, you won’t be able to adapt to changing market conditions. Nor will you improve at identifying, planning and executing high-impact strategic initiatives. (It’s a lot like my golf game. I know how to hit the ball reasonably well, but playing only once or twice a year, my game has seen no real improvement in 20 years.) By modifying their regular meeting agendas, boards and senior management teams can work in constructive partnership throughout the year to create the credit union of the future, craft thoughtful dashboards of strategic success, find ways to innovate, experiment and learn on an ongoing basis. They can also work diligently together to scan the internal and external environments surrounding their credit union, identify evolving member needs, analyze competitive benchmarks and see key marketplace trends long before others. Begin to think of “strategic planning” as an ongoing process of strategic discussions and learning opportunities throughout the year -- not a discreet occurrence with a start and a finish. And so the question is: What’s on your next board meeting agenda? Previous Next

< Back The Origin Of Civility Michael Daigneault Mar 22, 2016 Be sure to disagree in an agreeable way. I’ve been thinking a lot lately about the word civility. And unless you live under a rock, you can likely understand why . Frankly there’s a significant lack of it in the public sector. It concerns me, and my guess is that it concerns you, no matter what your party affiliation. What does this lack of civility mean for us as a country? For how we will govern ourselves in the future? What lessons are we teaching our children? What lessons are we learning ourselves? Surprisingly enough, this same word – civility – has been surfacing more and more as we think about our work with credit unions and others in the nonprofit sector. Because I’m a life-long learner, I decided to take myself back to school on the notion of civility itself. The word’s origins stretch back to the late 14th century, when the French used the word “civilite” to denote the “status of a citizen,” and the English translated the word as “courtesy.” But it is the Latin derivative of the word that surprised and delighted me the most – “civitatem” was defined as both “the art of governing” and “courteousness.” Isn’t that perfect? Isn’t that what we all need on our boards – a little more focus on the “art of governing” and more “courteousness?” I won’t bore you with a long list of boards behaving badly, but I would like to share with you a few examples that we’ve experienced recently. We’ve: seen board members texting each other, under the table, in the middle of board meetings; interviewed board members who said they felt like they “had a target on their back”; witnessed others interrupting their colleagues and shouting to get their points across during the middle of meetings; and heard staff describe conversations where board members are approaching them to get the “dirt” on their CEO’s performance. I’m not suggesting behavior like this is rampant or that it exists on all boards, nor am I suggesting that a normal amount of give and take, or even conflict on a board isn’t healthy. It is. In fact, boards that experience absolutely no conflict, or those that are in complete harmony, are just as dysfunctional as boards that are always in conflict (see the graphic at the beginning of this article). There is a balance. Just like in a good marriage, an appropriate degree of conflict is necessary. You just need to be sure that you’re disagreeing in an agreeable way. But even if your board is the healthiest board in the world, our research indicates that there is still room for improvement…for greater civility…to sharpen your focus on the “art of governance.” One in five board members that we surveyed for the 2016 Quantum Governance Compendium reported that their board is doing a less-than-effective job at building a leadership culture of trust, and that same survey reports that less than 25 percent said that they are very effective at asking the hard questions that need to be asked. So, then, what does that mean? Look around you. One in five of your colleagues isn’t feeling the love; a high level of trust is not resonating at the board level. And only one in four of your colleagues thinks that you’re asking the right questions in the boardroom. I know. This post sounds like it’s full of doom and gloom. That certainly wasn’t my intent. But it is a wake-up call. Increase the civility in your boardroom – in the Latin sense of the word. Be more courteous. Sharpen your focus on the “art of governance,” while you push yourselves to have the hard conversations that leading a credit union in today’s competitive environment demands. I am not suggesting that you practice the “art of governance” at the risk of foregoing your responsibilities as a board member or that you should stifle your dissenting opinions to keep the peace. The “art of governance” is not about being nice and passive in your boardrooms. But, don’t confuse strong leadership with being discourteous, unprofessional or disrespectful. The true art of governance is about being in the middle of the bell curve, with a good and healthy balance of open and challenging discourse in an environment where everyone plays respectfully in the proverbial sandbox. Previous Next