< Back Closing the Board/Management Trust Gap Michael Daigneault and Jennie Boden Jul 1, 2018 5 ways to unite staff and volunteers for good governance We had a colleague once who used to say that trust is “the residue of promises fulfilled.” It’s a pretty good working definition, as definitions go. It’s simple, straightforward, and likely one that most people can identify with. You trust those that you can rely on; those that have come through for you in the past are most likely to come through for you in the future. You’re probably more drawn to the types of people in your life who do what they say they are going to do, and we bet that you avoid the other type—the kind that disappoint and fail to follow through. For years, we’ve been surveying credit union leaders around the country and, out of the more than 50 questions that we’ve been asking them, there’s one we’ve always identified as among the most important: How effective is your board at building a leadership culture of trust? Then, after years of surveying individual credit unions, we synthesized the data from multiple credit unions and learned a lot. (You can read the fruits of our labors in the recently published study entitled “ The State of Credit Union Governance, 2018: Five Data-Driven Recommendations for Future Success. ”) We found a significant difference in perceptions between credit unions’ senior staff and volunteers (board and supervisory committee members) on matters of trust. The numbers may surprise you; we know that they surprised us. If you consider trust to be an essential building block of a cooperative’s leadership culture, as we do, the numbers may also concern you. While we identify 10 elements of an effective board culture including engagement, inquiry, curiosity, respect, learning, teamwork, accountability, service and diligence, it’s the element of trust that undergirds them all. Without trust, you’re likely in real trouble. Conflict spikes up, relationships fray, efficiency plummets and morale ends up in the basement. Overall, just 27 percent of senior staff and 25 percent of CEOs that we surveyed reported that their boards were “very effective” at building leadership cultures of trust, and a critical mass of them (42 percent of senior staff and 48 percent of CEOs) thought that their boards were only “adequate,” “ineffective” or “very ineffective” at doing so! See Figure 1: Building a Leadership Culture of Trust by Position. There’s also a clear gap between what the senior staff and volunteers think. More than 50 percent of supervisory committee members and 40 percent of board members we surveyed reported that the board was very effective at building a leadership culture of trust—indicating a significant perception gap between the two groups. So, what’s going on here and, more importantly, what should we do about it? What’s Going On? A credit union board member recently described her board’s culture as “toxic,” and another suggested that there was a “cancer” within. While we certainly recognize that the culture described by these two volunteers is an extreme, we do know that all cultures, including your board’s culture, are living, breathing things that require constant tending and care. And if you’re not paying attention to yours, you’re putting it at risk. To understand more closely what may be driving these troubling findings on trust, let’s turn back to our recent study and explore three more elements of an effective board culture: 1. Engagement. If trust is the primary element of an effective board culture, engagement runs a close second. You can’t have an effective culture if your board members aren’t engaged. How many times have we heard from our clients (and have you thought to yourself) that there’s a group of board members who just come to board meetings and sit there, never talk, don’t seem prepared and don’t seem to care? How much trust do you think those board members are engendering? If we go back to our definition of trust—the residue of promises fulfilled—are they keeping the promises they made when they joined the board? Are they serving their CUs to the best of their abilities? Are they engaged, active members of the board? Lending their time, talents and energies? Sadly, the answer is often a resounding, “No.” Our survey data shows that 41 percent of CU volunteers and staff rate their board members’ engagement as only “adequate” or less than adequate. Board member engagement is—for some CUs—suffering, and such woes are likely having a negative impact on building trust. See Figure 2: Engaging All Board Members in the Work of the Board. 2. Accountability. Merriam-Webster defines accountability as “an obligation or willingness to accept responsibility or to account for one’s actions.” There’s some good news: Many supervisory committee members believe there is a fair bit of accountability on CU boards. The not-so-good news is that those actually in the boardroom on a regular basis expressed a much greater degree of concern. Less than 25 percent of board members surveyed think that they’re very effective at holding each ot her accountable—and the perspective from management is even more critical with only 16 percent of senior staff and 12 percent of CEOs finding boards very effective at holding fellow board members accountable. See Figure 3: Holding Each Other Accountable by Position. Over time, this lack of accountability is surely having a negative impact on trust. It likely means that some directors are falling short on their promises and their colleagues aren’t respectfully calling them on it. 3. Inquiry. We like to say that one of a board member’s most important jobs is asking good questions. Volunteers will never be a top expert on the CU’s operations, nor should they be. That’s why directors rely on professional CU staff for help. Volunteers must trust but verify; ask questions that staff may not have considered; and provide advice, counsel and oversight that drives success. Unfortunately, there is some evidence in our report that boards aren’t measuring up in this area. More than a third of our study’s respondents rated their boards as only “adequate” or “less than adequate” at asking the hard questions that need to be asked. See Figure 4: Asking the Hard Questions That Need to Be Asked. The key is to be sure that you’re actively creating a culture of inquiry. Understand your role and speak up. But be careful. Ensure that your culture of inquiry doesn’t become a culture of actual or apparent distrust. That is, trust but verify. Your questions should be shared for supporting and furthering the CU, not a “got ya” mentality. And don’t jump into the weeds. Keep your questions strategically focused or at the appropriately high end of fiduciary oversight. What Can Be Done? If you’ve read carefully, at least some of the answers will have begun to emerge. We’ve listed them here in five suggestions for you to consider: 1. Assess your credit union’s governance effectiveness and culture. If your board hasn’t conducted a governance assessment recently, it’s time to do so. Just like you go to a doctor regularly to evaluate your health, your CU’s governance health and culture should receive its own check-up on a regular basis—usually every two years. This should include a formal assessment process to identify your strengths and challenges and the development of an action plan for improvement. 2. Keep your promises. Say what you are going to do and then do it. Don’t disappoint. Follow through, and if you can’t, be clear why not. 3. Show up. Be prepared. Participate. If you’re not clear about what is needed, ask. Ensure you have job descriptions for directors and officers; make sure you have committee charters, too. These all help to clarify (and quantify) roles and responsibilities. 4. Be accountable and hold others accountable, too. Accountability is a two-way street. Just as we talked about keeping your promises, you need to be sure that your colleagues are keeping their promises, too. Once the roles and responsibilities are clear, and everyone knows them and agrees to them, commit to a culture of accountability. Ensure you have a chair in place who is bold enough and strong enough to lead the charge. 5. Ask the hard questions that need to be asked (and have the hard conversations that need to be had). This last suggestion is perhaps the most challenging of all. It will require you to be open and vulnerable at the same time ... to put your trust in your colleagues and to ask them to put their trust in you. But it’s a must, and as we said, probably your most important role as a board member. Previous Next

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

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 Women In Football, Politics And Credit Union Boardrooms Jennie Boden Feb 11, 2021 It’s important to prioritize and value diversity. It’s Super Bowl Sunday as I write this, and it’s snowing at my home in New Hampshire. My husband has made a big batch of his famous mac and cheese, and we have a fire roaring in our wood stove in the ell. (Unless you’re from New England, you won’t know what an ell is, but it’s a great term that means the room that connects the house to your barn. For us, that room has been refinished to a cozy family room.) We’re getting ready to watch Tom Brady (yes, I’m still rooting for him) take on Patrick Mahomes. But the news that I’ve been focused on this week is about the three women who “will be making history” tonight—National Football League referee Sarah Thomas and Tampa Bay Buccaneer assistant coaches Maral Javadifar and Lori Locus. While Tom Brady will be playing in a record 10th Super Bowl, for the first time in NFL history, three women will also be on the field tonight. While the female football ref and coaches made news all week, I also saw an interview with Jocelyne Lamoureux-Davidson and Monique Lamoureux-Morando, two sisters who happen to be Olympic gold medalists in hockey. Aside from continuing to play the sport that they love, they’ve also dedicated their lives to inspiring the next generation of young girls to fight for equality in sports. Asked about tonight’s history-making Super Bowl, one of them said, and I’m paraphrasing here, “We’ll know we’ve made progress when this is no longer a story.” I couldn’t agree more. I mean, don’t get me wrong. I think it’s great that history will be made tonight. Just as I thought it was great that Joe Biden picked Kamala Harris to be his running mate, and she is now our vice president, regardless of the politics. But why does it still have to be history-making? Because it is. I had the same reaction when I was speaking recently with CUES member Deborah Acosta Conder, board chair at $2.5 billion JSC Federal Credit Union , Houston, Texas. Conder was bringing me up-to-speed on some recent appointments that the credit union had made to its board of directors. She shared that under her fresh leadership, and the constructive partnership that she was building with relatively new CEO Brandon Michaels, also a CUES member, she had communicated to the board that the credit union needed a “more diverse board—an expanded board, because the credit union was expanding its own strategic vision.” With an acute focus on diversity, Conder noted that being “a person of color herself,” she had always wanted “the membership to see themselves reflected on the board.” And now, she was in a position to make a difference. Acting with purpose, Conder and her colleagues first identified the core competencies, skills and qualities they wanted in their new board members. Although the legacy of the credit union was proudly and firmly tied to the National Aeronautics and Space Administration, the team decided to recruit some board members outside of the famous space agency. The group prioritized diversity, individuals with broader experience who had been through mergers and acquisitions, and people with legal and digital strategy experience. And they hit the jackpot. They also changed where and how they recruited board members. Conder called on each of her board colleagues (and we would encourage the inclusion of the CEO in this process too) to explore their own, personal networks. If great, potential candidates for your board are not already members of your credit unions, assuming you have a fairly open charter, they can join! The recruiting team also worked with the local United Way’s Project Blueprint that “trains tomorrow’s nonprofit board leadership, ensuring that Greater Houston’s nonprofit sector reflects the rich diversity of [its] community.” The results? Three new additions to the board who all bring with them not only great diversity but also great competence. One is even a coveted millennial! Michaels agrees with Conder that the credit union will be better for it. A third-generation CEO, following in the footsteps of both his grandmother and his mother, he says that throughout his life, he relied on the perspectives of these two pioneering women: “When I look at boards, I value diversity of thought and experience. We all have various perspectives based on our lives and our journeys, and it is that very diversity of thought that is incredibly important to us in our boardroom because our members are diverse.” New board member Lavonne Burke Hopkins, senior legal director, cybersecurity, product & application security, and Dell Digital for Dell Technologies Inc., joined the JSC FCU board because she believes that there is alignment between her “day job” and the current strategic initiatives being undertaken by the credit union. She was happy to find that board service at the credit union is a perfect way to “marry her experience with her own personal goals of service.” Her new board colleague Dwayne D. Busby serves as the executive director overseeing the mission, goals and overall purpose of strategic partnerships at the University of Houston-Clear Lake. Conder tapped Busby, of course, for his strategic thinking skills, and he is more than happy to provide them. He was honored to be approached by the chair, who is a leader in the community, and he, too, sees board service as a way of giving back to his community, which has done so much for him. His goal? To help determine how the credit union’s strategic plan actually works in Houston’s very diverse community. Lastly, Portia S. Keyes was tapped during this last round of elections too, and the board is lucky to have her. Keyes is a contracting officer at NASA Johnson Space Center. A strong “believer in the power of teamwork,” Keyes joined the board because she, too, believes that “serving the credit union is an extended way of serving her community.” She also volunteers for Fifth Ward GO Neighborhood, a Houston-based initiative dedicated to revitalizing the city’s communities. In The State of Credit Union Governance 2020 , published by Quantum Governance in partnership with CUES and the David and Sharon Center Johnston Centre for Corporate Governance Innovation, we found that demographic diversity was ranked No. 1 among the highest priorities when recruiting new board members among our respondents, but only sixth among those skills that add value in the boardroom. Could it be that everyone is talking about the need for greater diversity in the boardroom, but no one understands why they need it? At JSC FCU, clearly, leaders are both valuing and prioritizing diversity. They, along with all of us at Quantum Governance, would encourage your credit union to do both, too. Previous Next

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

< Back 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 Embracing our New (Virtual) Reality Caitlin Hatch May 22, 2020 The new virtual reality is changing the way we do business. I saw an interview recently in which author, American diplomat and former State Department official Richard Haas observed that the COVID-19 pandemic is not so much a turning point for our society, but an accelerant. His comments alluded to the idea that trends only just beginning to emerge before the pandemic, have been “fast-tracked” and their significance amplified as we unlock the ways and means of our new normal. Perhaps the best and most accessible example of this phenomenon is our new fluency in virtual or video conference meetings and even social gatherings. At Quantum, we’ve operated as a virtual organization from the beginning, conducting much of our work via telephone, video conference and the miracle of the Internet. However, an important and transformative element to our work often culminated in traveling to meet clients, sometimes one-on-one but frequently in groups of 20 or more. And the public speaking engagements at conferences to even larger groups…how does that work continue, or does it? As so many of you have, we decided to take a case-by-case approach postponing our in-person retreats and workshops at first but quickly pivoting to 100% virtual via Zoom, Meet, WebEx and the myriad of other apps that have become as familiar to us as centuries-old brands like Kleenex and Clorox. As it happens, we have been in the regular practice of video conferencing with an international nonprofit organization who asked us to conduct individual board orientations with their multi-national Board. We had previously aided them in updating their core governance structures and establishing a better understanding of their core identity and purpose —orientation of their newest directors was the next meaningful step forward. This afforded us a unique opportunity to put into practice a new way of conducting board orientation…100% virtually! In the recently published The State of Credit Union Governance 2020 Report we identified that “a significant number of board members believe their boards must improve their current onboarding process.” Less than half of the directors surveyed for the study felt that they were “using an effective process to orient new board members to the work and dynamics of the board,” with 30% categorizing it as “adequate”— hardly a ringing endorsement. Thus, we developed a virtual board orientation, a solution for boards who struggle with finding enough hours in the day, volunteers to manage the effort, or simply engaging ways to orient new board members effectively and meaningfully. So we “upped our game” so to speak. Doing more video conferencing in particular around board orientation, and we’re creating more recorded video segments and interviews. Check out our Facebook and LinkedIn for the latest and greatest! We upgraded our typical teleconference to a video conference where face-to-face from our own homes has increased the intimacy of our client relationships in a way that would make Getting Naked author Patrick Lencioni proud of both our clients and of us. 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

Gisèle Manole VP of Marketing & Senior Consultant Gisele’s work with credit union and nonprofit clients, and as a liaison to Quantum Governance’s strategic partners, leverages her 25 years of creative marketing, public relations and communications experience. Gisele is second chair on many client engagements and develops connections between clients, our team and the services we provide to further the firm’s mission. Gisèle has written articles on governance and leadership, communications and cultural dynamics for CU management and Advancing Women. Prior to her work with Quantum, Gisèle was the Senior Manager of Integrated Marketing for InStyle Magazine, developing large-scale, multi-media advertising and public relations campaigns for high-profile international brands. Gisèle’s early career included management positions with Condé Nast Publications, Hearst Corporation and Reader’s Digest Association, developing multi-platform programs that capitalized on the invention of social media and digital innovations partnering advertisers with beloved publications including SELF, Cosmopolitan, CosmoGIRL!, Gourmet and Every Day with Rachael Ray. Gisèle graduated from Villanova University in 1999 with a B.A. in English Literature and Political Science, and lives in North Carolina with her family. Back

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

< Back What to Do When Communication Styles Clash: Embrace It Jennie Boden Feb 18, 2019 Building a culture of inclusivity helps ensure each voice on your board is heard. Once when my firm, Quantum Governance L3C, was looking at some assessment tools that might help our clients, we spent the fall taking them for a test drive. We spent time looking at the DiSC profile , the CliftonStrengths assessment and more. In essence, we were putting our staff through some of the paces through which we often put our clients—boards of directors of credit unions, associations, foundations and other nonprofits. We use assessment tools with our clients with the intent to improve their ability to function as a team and increase their governance effectiveness. With these test drives, I learned a lot about myself and my colleagues. I learned that I like “contributing to a calm, stable atmosphere” and “working with people who genuinely care about one another.” And I definitely don’t like “dealing with angry, pushy or argumentative people,” or “having to argue for [my] point of view”—although I think my husband would likely disagree with that last observation. One of the personality tests called me “amiable.” The results of the tests helped me to understand some of the factors that motivate my behavior and the way that I communicate and interact with my colleagues, how they interact with me, and our own team’s dynamics. To this day, when one of my colleagues says I’m being “too soft,” I’ll simply reply, “Remember, I’m the amiable one.” It’s a common language and experience from which we can both draw. But it can be tough sometimes, can’t it, when personalities and communications styles clash? We all believe in the value of diversity. In fact, when we interview board members (and we interview a lot of them), diversity is one of the things that they feel their board is lacking the most! They believe that their boards (and their credit unions) would be better off if they reflected the diverse make-up of their credit union’s membership. And they are probably right. At Quantum Governance, we define diversity as the quality of being different or unique at the individual or group level. And yet, while we’re all going around valuing and actively seeking diversity, it’s the very nature of diversity that can cause communications challenges. My perspectives and the way I communicate are, by definition, different from the perspectives and communication style that my firm’s CEO brings to the table. First, the obvious: I am female; he is male. Second, I was raised in a small, rural town in Pennsylvania; he was raised, well, everywhere. He moved 25-plus times by the time he was 30. I was educated by liberals at UC-Berkeley; he, by the Jesuits of Georgetown. I studied literature; he studied law. I am a quiet, amiable communicator; he is larger than life. I like big, lumbering dogs (think Lab/Great Dane mixes!); he likes multitudes of small, cuddly pups. And yet, for more than 25 years, we have been working and collaborating happily and effectively together. And you, too, can work effectively with those who are vastly different from you. Instead of avoiding the challenges that will, by definition, arise from the diversity that surrounds you, embrace them. The true value of diversity is in what it brings us—the variety of thought, perspectives, context and experience. It helps us all—whether an entire credit union, its board or even an individual—grow and strengthen in ways that we never imagined. There is a twin pillar to diversity that will show you the way. It is the notion of inclusivity. When a diverse board, team or even diversity in a one-on-one relationship challenges your ability to communicate, work to build inclusivity—an environment where everyone genuinely feels included, supported, heard and able to contribute to the success of the whole. My father was a minister in that small rural Pennsylvania town where I grew up, and my amiable self was most likely born from his drilling into my head, “Try to understand the other person, Jennie,” which was his own definition of building inclusivity. When my communication style clashes with another, this is my go-to tactic. And I employ it all of the time. Communication styles clash because people are diverse. Ultimately, however, making a diligent effort to work effectively and even thrive in a diverse world will not only enrich you as an individual but strengthen your board and your credit union’s leadership. Previous Next

Leadership Resources Finding Balance in Board Meetings Efficiency vs. Engagement Read More A Matter of Leadership CUs need to pave a new road to ensure a strong, high-performing board over time. Read More Nine Leadership Challenges The board of the future will need the strength to overcome these. Read More No Higher Calling The challenge of effective CEO evaluation 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 A Matter of Culture What drives yours? Here are 10 elements to shoot for in your board room. Read More Surfacing Assumptions Knowing what you're assuming can boost board strategic thinking. 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