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< Back Board Size Michael Daigneault Jul 28, 2015 There's no one-size-fits-all answer to how many directors you need. One of the questions I’m asked most often by credit union directors and CEOs is this: “What’s the best size for our credit union board?” There’s no fast and easy answer but, essentially, you want your board to be large enough so you can appropriately govern and help lead the credit union, and yet small enough so you function effectively as a cohesive leadership team. For your credit union, what size might that be? Our experience is that credit union boards of seven, nine or 11 appear to be most effective. Here is the essence of our reasoning: Boards of five or fewer are efficient but committee work, diversity and inclusiveness may suffer. With five or fewer members, the work of the board tends to be accomplished as a “committee of the whole.” This framework may be sufficient for certain small or relatively uncomplicated credit unions, but it quickly becomes a very real and limiting factor when considering how much work a small board can realistically accomplish. While we do not believe credit union boards should have an excessive number of committees, it does increase the board’s capacity to accomplish vital work when directors can divide themselves into a few committees and task forces. Having committees and task forces also helps develop a somewhat larger group of volunteers who can be potentially called upon to become board members in the future. Additionally, credit unions are cooperatives of many different types of people. What very small boards of five or less offer in terms of ease and efficiency, they typically lose in terms of diversity and inclusiveness. This lack of diversity is evident not only in terms of gender, nationality and race, but also will likely result in a lack of individuals who are of a different age or who can bring additional, valuable skills, perspectives, experiences, and the like to the board’s efforts. Boards of 12 or more can be complicated to manage, can pose challenge to trust-building, can be more expensive to run, and can make it harder to gain true consensus. Boards of this size do exist in the credit union community, but they are rare. They often arise for such reasons as : (1) mergers and acquisitions that combine two boards; (2) a desire to offer more members the opportunity to serve; (3) a lack of will or desire to “kick” long-term colleagues off the board as new members are added; and (4) a “representative mindset” that supports having a board with folks from a variety of stakeholder groups or geographic areas. If your board is on the larger size, do not let the executive committee become a “board within the board.” It will upset the balance of power, and often results in an “insider” vs. an “outsider” dynamic that can cause some directors to be too passive or disengage altogether. In all, size is a nuanced question, with a nuanced answer. The exact size that’s best can shift from credit union to credit union depending on many factors, such as the role the board is playing, the number of board committees, the complexity of the credit union, the history of the credit union, and the quality of its leadership. In the end, keep in mind that the role of your credit union’s board is to govern in constructive partnership with your CEO. In most circumstances (as long as you remain in the sweet spot of between seven and 11 members), the exact number of board members ends up being less important than your directors’ collective ability to work effectively, add real value and help move the mission of your credit union forward. Previous Next

< Back To Pay or Not To Pay Michael Daigneault Sep 22, 2015 Deciding whether to compensate credit union and CUSO directors is a hard question. There’s been a lot of buzz recently about whether credit union board members should be compensated. For a long time, this notion was taboo. For many, it literally seemed to go against the very essence of a cooperative credit union. Then the idea of compensation seemed to shift from being taboo to being merely uncommon. Though federal credit unions can provide compensation only to one member of their board, usually the treasurer, some state-chartered credit unions may compensate more broadly. A recent study published by Filene Research Institute (and underwritten by Quantum Governance and CUES, among others) notes that there has been a new and significant shift, with many beginning to support the notion of paying their boards, “with some even believing that doing so would soon be crucial to their ability to attract and retain effective board members.” The study, aptly titled Should Credit Unions Pay Their Directors? , goes on to report that “At 145 credit unions in 12 states, directors earn somewhere between $60 and $37,597 annually.” The report’s author, Matt Fullbrook, manager of the Clarkson Centre for Business Ethics and Board Effectiveness at the University of Toronto’s Rotman School of Management shares that while “In most states, credit union director compensation is dwarfed by fees paid to directors of commercial banks …the pay trend is slowly catching on, especially among large credit unions.” On the one hand, such a trend makes some sense. Credit unions deserve engaged board members who feel appreciated and perhaps, at times, fairly compensated for their significant efforts. They bear significant burdens. They are, for example, legally responsible in ways that even the CEO isn’t. And I don’t have to tell you that there is a lot at stake: millions of dollars in assets for most credit unions and even billions for an increasing number in this age of consolidation. Credit unions need the best and the brightest board members to meet the tremendous challenges of the day, but it has become increasingly hard for many credit unions to recruit high-quality, dedicated directors. If compensation can help in that regard, perhaps it is one tool that should be utilized. Yet on the other hand …there is a rich tradition of board members serving their fellow members in a voluntary capacity. Indeed, you and your colleagues are in the business of running a cooperative credit union on behalf of your members. What About CUSO Boards? Like a credit union board member, directors of credit union service organizations are tasked with providing good governance, effective oversight, strategic vision and the like. But unlike credit union board members, they are guiding for-profit entities. And therein lies a very significant difference. CUSOs were created as “outside-of-the-box” business solutions – creative ways for credit unions to effectively address effective business needs. One argument for compensating a CUSO board certainly is that in order to attract and retain the most creative, “out-of-the-box” thinkers, compensation is a must. But as in the credit union community, there are also cons to the practice of compensating CUSO board members, many of whom are credit union CEOs themselves. That con list includes: the argument that the CEOs are already handsomely compensated by “the community”; that while the CUSO is a for-profit entity, it exists to serve a cooperative community and should, therefore, follow cooperative principles; and that it may send the wrong message to credit union members or the community, among others. The long and the short of it is this: There is no simple answer to the question for either credit unions or CUSOs. The notion of compensating a CUSO board (despite its for-profit status) can be just as perplexing. What I can tell you is that for both credit union boards and CUSO boards, answering the compensation question does require a board that doesn’t shy away from asking the hard questions. All of us should consider the long-term implications, as well as pros and cons of compensation at the board level, and dig deeper to find common ground on this challenging issue. Previous Next

Strategy Resources Double Your Fun: Tracking Strategic Planning For a Brighter Future Read More In Search Of The Strategic Board Discover how credit union boards can become agile strategic partners and lead their institutions to future success. Read More The Need for Evolution: One of Today’s Central Governance Challenges If your credit union has grown have you re-considered the balance of authority between your board and CEO? Read More Why Directors Are Chess Pieces, Not Checkers Every director should be ‘chair material’—even if they wouldn’t make a good chair. Read More The Concept of ‘Constructive Partnership’ Collaboration, more than control, fuels today’s high-performing boards. Read More Coming Together for the Common Good Consider multiple perspectives and build consensus— not unanimity—to ensure your CU is making good decisions. Read More An Antidote For Shifting Sands Your strategic planning process is as important as the plan and should be ongoing. Read More Advice from My Hero Six key responsibilities of every board, gleaned from my conversation with world-renowned expert Ram Charan. Read More 5 Data-Driven Recommendations for Governance Success Core Recommendations from a New Report Read More Help Your New Chair Move Up Here's what a top board leader needs to know to be successful—and what you need to know to help. Read More ERM Is Everyone's Responsibility 10 steps to take to ensure your leadership is doing all it can to identify and manage risk Read More Moving Beyond The Strategic 'Moment' Incorporate strategic planning and thinking into your routine discourse. Read More Fiduciary AND Strategic Thought Needed Finding the right balance between operational oversight and visionary dialogue in your boardroom is worth the struggle. Read More

The Michael G. Daigneault Excellence in Governance Grant The Michael G. Daigneault Excellence in Governance Grant honors our Co-Founder Michael G. Daigneault and his continued commitment to developing exceptional leadership in mission-driven organizations through governance excellence. This grant initiative aims to strengthen the governance effectiveness of nonprofits and credit unions, providing them with the tools and advice they need to drive positive, lasting change throughout their organizations and enhance their impact on the communities they serve. The grant provides one credit union ($250M in assets or less) and one charitable nonprofit (operating budget of less than $5 million annually) with a pro bono Governance Assessment inclusive of the following: a proprietary online governance survey a report comprised of survey data and expert recommendations based on survey results a facilitated workshop for the board and executive leadership resources such as policies, job descriptions, charters and more How to Apply Guidelines Before you apply, take a look at the eligibility requirements and timeline. Funding Guidelines & Timeline Application The application window for the Michael G. Daigneault Excellence in Governance Grant is May 4, 2026 through June 30, 2026. You can start your application, save it and return to complete it at your own pace. Click Here to Apply Today Questions? If you have any questions, please use the form below or email gisele@quantumgovernance.net Contact Us About Michael G. Daigneault Michael brings more than 45 years of governance, strategy and ethics expertise to boards and C-suite executive leadership of nonprofits, credit unions, governmental entities and other organizations of all shapes and sizes. He is credited for developing a proven methodology for assessing governance and strategy, including a proprietary survey tool for a variety of organizational types. Prior to founding Quantum Governance, Michael was a Senior Governance Consultant for BoardSource studying and advising nonprofit board leadership and Director of Advisory Services at DeLeon & Stang, a preeminent business management and accounting firm. Michael was the Founder and President of Ethics, Inc. – a private consulting and training firm specializing in business ethics for the private, nonprofit and public sectors. He also served as President of the Ethics Resource Center (ERC) in Washington D.C. Michael is a three-time graduate of Georgetown University, holding a B.A. in Philosophy from the College and a J.D. and a Master of Law from the Law Center. He was the first person to graduate from the Law Center with a Master of Law with a concentration in Legal Ethics and Professional Responsibility. A lifelong learner, Michael went on to complete the Corporate Governance Training Program at the Columbia Business School in 2021. Statement of Confidentiality: We will keep all information learned in this application process confidential. No information will be disclosed to any third party unless compelled to do so by law or regulation. Notwithstanding the foregoing, we may disclose information to our authorized contractors with an obligation to maintain confidentiality (e.g., Alchemer and data entry personnel) and personnel with a “need to access'' such information in order to review the grant applications.

Jennie Boden Managing Principal & Lead Consultant Jennie brings more than 30 years of experience in governance, strategy, leadership, and development to the field. Jennie leads a team of consultants, topical specialists and other experts to meet the governance and strategic needs of the firm’s clients. For nearly a decade, Jennie has been the catalyst for developing countless tools, products and services, as well as alliances with the firm’s strategic partners. Jennie has led complex governance and strategic planning engagements with boards and executives at organizations as varied as CUES, CUNA, Hudson Valley Credit Union, Redwood Credit Union, Rivermark Community Credit Union, Washington State Employees Credit Union, Camphill Village, the Center for Arms Control and Non-Proliferation, Con Edison, the Friends of the National Arboretum, the Gerontological Society of America, Morgan Stanley, Queens County Farm, the Tipping Point Community and so many more. She is widely published in CU Management, and she authors regular columns for Governance Matters and Advancing Women. Jennie served as Executive Director of the Maryland Coalition Against Sexual Assault (MCASA) and as Vice President of First Candle’s National Campaign for Cribs funded with a $3 million grant by the Bill & Melinda Gates Foundation. The organization generated more than $23 million in revenue during her tenure. Jennie has held a director-level position at the National Mental Health Association, overseeing $3.5 million in corporate contributions and started her career as the Director of External Relations for the Ethics Resource Center in Washington D.C. Jennie earned a B.A. from the University of California at Berkeley and lives in New Hampshire with her family. Back

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

< Back The Importance Of A Truly Independent Supervisory Committee Michael Daigneault and Jennie Boden Feb 25, 2020 If you’re shifting to an ‘audit’ committee instead, be careful not to sacrifice independent oversight at the altar of efficiency. We’ve seen an important trend relevant to a good number of state credit unions nationwide. It’s one of those quiet trends that we believe could—in the long run—have significant governance consequences, perhaps for the entire credit union community. It is the transition of a good number of supervisory committees to the form of an audit committee. And with more state regulations allowing such a transition, more and more credit unions are taking the opportunity to make it. While federally chartered credit unions are still required to maintain a supervisory committee, many state regulators have allowed the credit unions they regulate to operate with an audit committee made up entirely of board members, and the number of states (and credit unions) moving in this direction is growing. Further, some federally chartered credit unions, for various strategic reasons, are converting to state charters, thereby opening up the door to even more credit unions making the shift to an audit committee. The difference between supervisory committees and audit committees can at times be significant, and those differences often come down to two key factors: the scope of authority granted to such committees who is appointed or elected to them—that is, their composition Committee Authority Supervisory committees at federally chartered credit unions can exercise certain types of authority over credit union’s leadership, and the National Credit Union Administration’s Supervisory Committee Guide for Federal Credit Unions outlines two key actions a supervisory committee can take, namely: Suspending by unanimous vote any board member, executive officer or credit committee member Calling “a special meeting (by a majority vote) to consider any violation of the: a) FCU Act; b) Rules and Regulations; c) Charter; d) Bylaws; e) Any practice considered unsafe or unauthorized.” This can result in a board member officer or credit committee member being removed. The reality is, of course, that very few supervisory committees take either of these actions—even when perhaps they should. (Sadly, we have witnessed instances when we believe a credit union’s supervisory committee should probably have suspended or meaningfully investigated a board or committee member but didn’t.) The important thing to remember here is that they could take such actions in the interest of the credit union and its members if supervisory committees were properly charted, effectively trained as to their responsibilities and courageously led. The power to suspend or initiate a process to remove “any board member, executive officer or credit committee member” is a rarely used but still meaningful check on credit union leaders from engaging in acts that are unauthorized, unsafe or contrary to established laws and regulations. It is a far from a perfect means of deterring such misconduct, but when carried out thoughtfully and courageously by a determined supervisory committee, it can help save a credit union and its members from disaster. To be fair, some states give audit committees the same authority to oversee board activities as a federal supervisory committee, but some don’t. What happens when an audit committee does not retain the authority to oversee the board? Then one leg of the credit union’s three-legged governance stool has essentially been removed. Only two “legs” now remain: (1) the board (of which the audit committee is now a part); and, (2) management. In such instances, the three-part system of governance-related checks and balances has simply disappeared. This unique authority in the credit union realm to oversee the board may not, however, be the essential differentiator between the two types of committees. The real difference may lie in their composition. Committee Composition Traditional supervisory committees (both federally and state-chartered) that follow the federal credit union model are almost exclusively composed of members of the credit union who are not board members. The exception to this is that federal credit unions may have one board member appointed as a member of a supervisory committee. We find that this does happen sometimes but is not particularly common. In contrast, audit committee rosters are almost always composed of board members. This is often seen as efficient, more harmonious and certainly much simpler. What it gains in efficiency, however, it may lose in objectivity and independence. One must ask, for example, how likely it is that a committee composed of fellow board members will find fault with their own board’s governance efforts or even that of their individual board colleagues. Yes, in extreme cases it may still take action, but remember that’s if—and only if—they are in a state that still grants them the authority to do so. If one of the primary goals of both supervisory and audit committees is to serve as part of a system of checks and balances on board and management, it is little wonder that outright eliminating or even psychologically constraining such a role would result in significantly greater efficiency, harmony and simplicity. Therein, of course, lies the very danger traditional supervisory committees were designed to protect against! Effective supervisory committees play a vital role in the overall governance of the credit union and an adequate degree of independence must be a cornerstone of their design. Be careful not to sacrifice one of the foundation stones of the credit union governance system at the altar of efficiency. Previous Next

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

< Back 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

The Michael G. Daigneault Excellence in Governance Grant We offer specific opportunities for nonprofits and credit unions which require different applications. Prior to completing an application we recommend reviewing the eligibility guidelines below. I am applying for a credit union. I am applying for a nonprofit. Excellence in Governance Grant Guidelines & Timeline (PDF) Statement of Confidentiality: We will keep all information learned in this application process confidential. No information will be disclosed to any third party unless compelled to do so by law or regulation. Notwithstanding the foregoing, we may disclose information to our authorized contractors with an obligation to maintain confidentiality (e.g., Alchemer and data entry personnel) and personnel with a “need to access'' such information in order to review the grant applications.

< 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 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