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< Back Moving Beyond The Strategic 'Moment' Michael Daigneault and Jennie Boden Sep 27, 2016 Incorporate strategic planning and thinking into your routine discourse. When more than 30 percent of our clients describe themselves as “less than effective” at something, we sit up and take notice. And that’s exactly how (and how many) of the board members and CEOs we work with describe the challenge of articulating a compelling future vision for their credit unions. Not having a future vision for your credit union is a genuine problem, but one that can be overcome (though not easily, or a third of our clients wouldn’t be struggling with it!). Is your credit union challenged with crafting or updating the foundational components of your overall strategic plan—vision, mission and strategic goals—as well as the more specific strategic objectives and metrics undergirding them? It's worth the struggle to get your future vision right. This is much more than just a convenient tagline or agreeable-sounding statement in your annual report. The conscious or unconscious future vision that a board and senior team hold in their heads has real consequences. Crafting a clear and effective path forward that will truly benefit members is among the most critical and nuanced challenges you will collectively undertake. Yet many boards and executive teams spend less time thinking about the consequential strategic issues facing their credit union than they do on small changes to the loan-loss ratio, car loan volume or even on a single member complaint suggesting that the carpet needs to be replaced in a branch. We recently facilitated the CUES Director Development Seminar in Santa Fe, New Mexico. When we asked the 100-plus attendees who included strategic discussions regularly on their board meeting agendas, one brave soul posited, “Well, we have an agenda item called the ‘strategic moment.’” Though the room spontaneously filled with laughter, the speaker was quite serious, and everyone knew it. Many other attendees may have recognized that by including such a “moment” on the agenda, their colleague was likely well ahead of their own routine meetings typically filled with data-intensive, financial and fiduciary oversight reports. Veteran directors may recall the days when their credit union was just forming and their role was to pour over financial statements, do cash counts and fill the void that a lack of professional staff created. Today the director’s role is quite different. Unless your credit union is very small or in start-up mode, you rely on professional staff to brief you on financial and fiduciary reports. You need to provide effective oversight, hold staff appropriately accountable—and then move effectively to your strategic responsibilities that will help propel your credit union to flourish into the future. In that spirit, we recently developed a list of sample strategic topics for directors to discuss in board meetings, even just for 20-30 minutes. Not all of them are applicable to your situation, but they are the types of questions that can help you regularly exercise your strategic thinking muscles: What criteria would you use in considering—or rejecting—an offer to merge your credit union into a larger one? What types of risks does the evolution of payment systems foreshadow for your credit union? How is your credit union growing? How might you need to grow differently in the future? Even if your credit union is growing, is it genuinely improving members’ financial lives? What would the “ideal” board for the credit union you envision in the future be like? Do you have the right blend of directors for that future? What would the future focus be? What committees would the board have? What type of relationship would it have with your CEO and executive team? What type of relationship would it have with your members and the community? How does your credit union define its risk tolerance or philosophy? Are you too risk-averse? How does your credit union’s risk profile compare to peers? How should you balance ROA, risk and stewardship to members? How do you leverage your cooperative culture into a competitive advantage? Are there other success measures you should be looking at, beyond financial performance? We strongly encourage the board to work hard to fine-tune a strategic plan that includes clear vision and mission statements, strategic goals, objectives and metrics in constructive partnership with your committee leadership, CEO and executive team. After reaching a consensus on the features on the accompanying chart shown in blue, challenge your CEO and executive team to develop their organizational work plans to meet or exceed your agreed-upon strategic goals. But don’t stop there. Include regular and ongoing strategic thinking, discourse and potential changes to your strategic plan, if necessary, in board meetings throughout the year. Insist that your CEO and management team report regularly on the strategic metrics of success as you march toward achieving your strategic goals and objectives. Consider changes in the marketplace or your business environment regularly to assess whether anything needs to be fine-tuned, adjusted or even eliminated. Strategic planning and thinking are continual processes. Off-site sessions annually or every few years may be helpful to recalibrate your leadership’s thinking, but they’re not the end-all. The real work of strategic planning should be a regular feature of the discourse and thinking of the board and executive team—day in and day out, moving beyond the “moment” (though that’s a good start) to become the central focus of your most important deliberations. Previous Next

< Back The State of Credit Union Governance, 2018: Six Key Findings Michael Daigneault and Jennie Boden Jan 23, 2018 Use them to increase your board’s focus and effectiveness. We’ve been regularly surveying credit union board members, supervisory (“audit”) committee members, CEOs and senior staff on the executive team for the past five years. And for as many years as we’ve been surveying them, we’ve dreamed about the notion of pulling together a “state of the state” of credit union governance report—both to forward our own understanding of broad trends we’re seeing in the field, and also so that we can share the combined results with you, our friends, colleagues and clients in the credit union community. The culmination of that dream is The State of Credit Union Governance, 2018: Five Data-Driven Recommendations for Future Success . Today, we are pleased to share the report’s key findings with you. We hope that they will challenge you to increase the focus on effectiveness of governance and leadership at your organization—all toward the betterment of your credit union and its members. Key Findings We identified six key findings in total: Board members and CEOs have differing perceptions of governance . Their answers differ on 84 percent of the survey’s 21 key questions, fundamental to good governance—with the exception of the Supervisory Committee survey section, where there is more agreement. (Please note: Percentages throughout the report are rounded up to the nearest decimal; therefore, figures may not total 100 percent.) Board member and CEO perceptions diverge based on tenure. Board members who have served on their boards for a long time have more positive views concerning governance than those board members who have less tenure. Conversely, CEOs with longer tenures tend to be more negative than CEOs with shorter tenures. Bigger really may be better. For 18 of the 21 key questions asked, board members and CEOs of credit unions with assets of $1 billion or greater had survey scores that were statistically significantly higher overall (and therefore more positive views of the CU’s overall governance) than those credit unions with assets ranging from $500 million to $999 million. That is, larger credit unions tend to rate their governance practices higher than those of smaller credit unions. Credit unions that don’t undertake a more comprehensive assessment may have a skewed perception. Those credit unions that participated in survey-only assessments, opting not to include interviews, a document review and a retreat as a part of their process, tended to have more positive scores in many of the areas that we assessed. While the exact reasons for this more rosy viewpoint are unknown, it is a finding that is of genuine concern: Such a skewed—overly positive—viewpoint could cause some credit unions not to take corrective actions when, in fact, some action may be prudent. Respondents are concerned about recruiting future board members. Survey participants expressed concern with the board’s ability to attract the right people to serve on the board in the future, with a full 46 percent of respondents describing their effectiveness in finding, recruiting and nominating new talent as only adequate or less than adequate. CEOs and senior staff perceive lower levels of trust. Just 27 percent of senior staff and 25 percent of CEOs reported that their boards were very effective at building a leadership culture of trust, compared to 53 percent of supervisory committee members and 44 percent of board members. Previous Next

< Back Great Things from the Great North Michael Daigneault Jul 25, 2017 Three overarching Canadian principles that can be applied universally I love Canada. After all, my birth name is Michael George Daigneault. (You’ve got to say it with a strong French accent!) It’s as French-Canadian as you can get, and yes, you’ve guessed it – my family emigrated to the U.S. from the wheat fields of Weeden and Valcourt in Quebec. In all, many cool things are from Canada: governance geek, along with snowmobiles, egg cartons, insulin, Trivial Pursuit, Péché Mortel beer, Justin Trudeau, Celine Dion, Peter Jennings, Dan Aykroyd, Dwayne “the Rock” Johnson, Margaret Atwood, Shania Twain as well as the “Ryans” (that’s both Reynolds and Gosling) all are from Canada. In addition, the first credit union to open its doors in North America did so in Canada – at the start of the 20th century in Levis, Quebec. There Alphonse Desjardins organized La Caisse Populaire de Levis. Just about 10 years later, he helped organize the first credit union - just down the road a bit - in Manchester, N.H., and so credit unions were born in the United States in 1909. A few years ago, CUES began working more directly with its credit union members in Canada, and Quantum Governance had the good fortune to begin doing so, too. We have learned that while there isn’t just one set of standards in Canada there are, none-the-less, a number of overarching principles that guide Canadian credit union governance and are worth thinking about. They include: 1) A robust commitment to ongoing education: Canadian best practices and regulators focus on continuing education for all CU board members, CEOs and audit committee members. Now, we’re not suggesting that credit union education in the United States needs to be regulated. We would, however, stand up and cheer if more credit unions would require regular training for both board members and senior staff. So much is changing; so much has yet to be learned. 2) A durable culture of responsibility and accountability : We’re doing more and more studies for our U.S.-based clients on board member compensation. One of their stated interests is an increased measure of board member responsibility and accountability. We’ve seen this in our neighbors to the north, where compensation for board members is a normal course of business, along with a remarkably high level of responsibility and accountability. 3) Ongoing board member skills evaluations. A unique aspect of the Canadian regulatory framework is to require regular evaluations of board member skills. While it has increasingly become a best practice in the United States to evaluate boards as a whole , our Canadian credit union clients pushed us to create a new tool to support their special needs – a “ Director Skills Assessment .” This assessment goes a step deeper to help evaluate individual board members’ contributions to the leadership of the credit union across five key areas: 1) governance culture; 2) personal attributes; 3) leadership skills; 4) engagement; and 5) knowledge centers. And so we say thanks to our friends to the North -- for peanut butter, Trivial Pursuit, some delightful beer, credit unions and some great ideas to help us along the way. Previous Next

< Back Help Your New Chair Move Up Michael Daigneault and Jennie Boden Jul 1, 2017 Here's what a top board leader needs to know to be successful—and what you need to know to help. Credit union boards often talk about ways to orient new directors. Many lament not having a defined process. Others have the CEO give an orientation on the credit union and its management team that doesn’t go so deep as a true board orientation. Such limited approaches leave new board members adrift in uncharted seas, and it can take years for them to find their governance sea legs. Another vital orientation process gets even less attention—the one for orienting new board chairs. Be honest. How much time have you given to thoughtfully defining the role of the chair and then—as objectively as possible—assessing and orienting the person who would best fit the role moving forward? If you are like most credit union boards, the answer is, unfortunately, “We really don’t do that.” Most CUs—maybe including yours—can do better with chair orientation. A first step for all directors to consider (since they could all become chair eventually) is to define the responsibilities of a chair, so your CU can map training to what the chair needs to know. Here are six key things your “board manager in chief” needs to be able to do or support. 1. Build a Positive and Healthy Board Culture and Structure Being able to meet this responsibility is driven partly by the chair’s character, values and beliefs. The culture of your credit union over the years also plays a critical role. But do not rely on your credit union’s culture alone. The incoming chair must buy into the current culture wholly and add to that his or her own commitment to a healthy and deepening culture. On the structure front, ensure that your board chair commands a keen knowledge of governance best practices, including roles and responsibilities of board members and officers, committee structures and charters, board meetings and information architecture. 2. Inspire and Engage the Board Inspiration is the ability to “fill someone with the urge or ability to do or feel something, especially to do something creative.” Is your incoming chair an inspiration? Does he or she bring personality, charisma and values to the table? Are they, themselves, inspired to lead? Beyond the personal, ensure that your board chair is adept at building relationships, reading people and identifying a match between skill level and challenge. Add to these skills the right committee structure, clear charters and appointments to those committees based on talents and interest, and you have a great recipe for engagement. 3. Set and Model High Standards for the Board and Staff Some education about ethics and compliance issues will be necessary. We are finding more and more that credit unions would benefit from maintaining a code of ethics (also called a code of conduct), and we encourage you and your board to consider the development of one. Ensure that your incoming chair understands the difference between ethics (standards of conduct or principles arising from an organization’s core values about how we ought to act or decide) and compliance (following or obeying a law, rule, regulation, policy or procedure). Both are important and both need to be adhered to by the board and staff. Finally, ensure that your incoming chair embodies and adheres to the highest ethical standards and practices. Not only will your board members be watching, but the staff will take note (and follow suit), too. 4. Craft and Effectively Facilitate Meetings Everyone thinks this is the easy part of the job. But trust us, it’s not. Of the credit union board and staff that we’ve surveyed, only about a third believe that they do a very effective job of allocating enough time at board meetings to discuss important strategic issues, and more than a third of the same respondents report that they are doing a less than effective job of achieving the right balance between strategic versus operational discussions in the boardroom. Effective board meetings begin with the creation of the board agenda—a task best practice assigns to the board chair and the credit union’s CEO. How often do you ask “What’s the purpose of the next board meeting?” A board chair should be trained in strategic thinking and planning, to ask good (and hard) questions, and to keep the big picture in mind. Seldom, if ever, do board chairs receive formal training on meeting facilitation. This can be worthwhile. Also, consider exposing potential chairs to leadership roles at the committee level. To help develop potential chairs, you might also identify portions or segments of board meetings that could be facilitated by vice-chairs and other emerging leaders. 5. Act as the Key Liaison With the CEO Some management experience or awareness of basic HR principles will be helpful as your board chair gets started in the role. This difficult task is made more challenging by the fact that the CEO does not report only to the board chair. The board as a whole has the power to hire or terminate the CEO, and thus, the CEO reports to the full board, not just one individual or committee. But the chair does play a critical role in the board-CEO relationship. He or she should serve as the coordinator of activities between the board and the CEO—setting a tone for communications, helping to identify priorities and providing high-level guidance and counsel as needed. The chair should also ensure that a fair and effective process of evaluating the CEO’s performance is regularly conducted. Such a process should be transparently agreed upon by the board as a whole—and the CEO. The evaluation should be one where all board members provide genuine input—not just the chair or a small subset of the board. 6. Serve as One of the Credit Union’s Chief Ambassadors In partnership with your credit union’s CEO, your board chair will be expected to serve as an ambassador-in-chief. Rarely does a chair ascend to the position fully briefed and trained on how to deal with the public, let alone the media. This position will require that and much more. Consider formal training on dealing with the media and communicating with the public. 7. Ensure an ‘Optimal’ Chair Now that you’ve defined the job, you will want to ensure that your incoming board chair’s skill level matches the requirements of the job. Do not just assume that the current vice-chair is ready to be chair or is the best person to assume the position at any given time. Some vice-chairs are great in the vice-chair role but falter when they take the helm. This is particularly the case if they have not had the experiences or training designed to assist in making the transition as smooth as possible. Further, be mindful of the state of your credit union when identifying a new chair. If you are in the midst of a big merger or acquisition, it would be great to have someone in the chair role who has experience with such endeavors. Similarly, a candidate for chair with a background in human resources may not be the perfect person to lead the credit union through a financial crisis but might be a terrific resource if you are experiencing rapid growth or a major shift in the management team. Clearly, a great chair for one period of time in your credit union’s history might not be the right chair as circumstances change. It reminds us of the title of a great book by executive coach Marshall Goldsmith: What Got You Here Won’t Get You There . Being board chair demands a high degree of responsiveness that is particularly vital in times of swift and unpredict-able change. Credit unions need a chair that can effectively steer the board in a manner consistent with the rapid changes impacting your credit union, as well as being the right leader for where your credit union is on its unique journey. Finally, be sure to institute a mentoring program for emerging leaders, including your chair. Consider including your immediate past chair or an effective chair emeritus in the process. Individuals who have “walked the path” can be tremendous resources for those just beginning their journey. It can be lonely to be chair. If a mentor is not available, consider a coach for your new chair. Much like executive coaches for CEOs and other credit union senior staff, coaches can be helpful in guiding new chairs to acclimate and flourish in their new role. Very few board chairs come to the job fully trained and ready to go. Most of what your current board chair knows was likely learned on the job. But you can change that for future chairs and help them (and your credit union) step up to success. Previous Next

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

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

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

Lynette Smith Chief Engagement Officer Lynette is a celebrated and long-tenured former credit union executive. Through her work with Quantum Lynette can be seen at countless conferences and industry events connecting credit union leaders with governance and strategy support services, expertise, and resources. Lynette retired as the President/CEO of TruEnergy Federal Credit Union before teaming up with Quantum. She was recognized by NAFCU (National Association of Federally-Insured Credit Unions) in 2011 receiving its CEO of the Year Award and enjoyed a long career at Treasury Department Federal Credit Union where she served for 19 years as the Vice President/ Finance and Administration, Vice President/ CFO, Vice President/COO and Acting CEO. Lynette is a 25+ year CUES member and in March of 2021, she was inducted into the African-American Credit Union Coalition (AACUC) Hall of Fame. Lynette served on the Board of the AACUC and has also served as Chairman of that Board. She is a founding member of Credit Union Women’s Leadership Alliance (CUWLA) and continues to mentor other women and CEOs. Lynette was recently appointed to the Supervisory Committee of Educational Systems Federal Credit Union. Lynette has a B.S. in Accounting and graduated cum laude from Morgan State University where she was the first President of Delta Mu Delta Business Honor Society in 1978. Lynette lives in Maryland with her husband. Back

< Back Are Women Better Leaders? Jennie Boden Sep 24, 2021 They are when they act with humility, self-awareness, self-control, moral sensitivity and kindness. I just finished an interview with the female CEO of a fairly large credit union. I love conducting interviews. It’s my favorite part of my job, and luckily, I get to conduct a lot of them. As president of consulting services at Quantum Governance , I’ve probably interviewed thousands of credit union board members, supervisory and audit committee members, CEOs and members of senior management. And each time, I learn a lot. During this interview, the CEO was talking about adding her opinion in the boardroom on a sensitive topic. She stopped mid-sentence and stared off into space for a minute. (We were, of course, on Zoom.) I pushed her just a bit, inviting her return: “What are you thinking?” I asked. “I’m wondering how much I can say, how much I should say,” she replied. “What’s the right balance for me to share in the boardroom?” I paused before I spoke. “I can’t imagine a male CEO ever pausing, even for a minute, to ask himself that important question,” I said. And I do think it’s an important question. There’s a lot of data out there that suggests that women are currently better leaders than men. For example, this article in The Washington Post reported that countries led by women “suffered far lower death rates” than those led by men during the first wave of COVID-19. A study by Pew Research Center found that while most Americans find few differences between women and men in terms of leadership, women are perceived as more compassionate, empathetic leaders. A recent Forbes article reported on Gallup data that suggests that “in 1953, 66% of Americans preferred a male boss—today the figure is 23%.” The author of the Forbes article, Tomas Chamorro-Premuzic, asks the million-dollar question: 'If women have more potential for leadership, then why are they still the minority group among leaders?' - Jennie Boden via X (formerly Twitter) That same Forbes article also cited studies demonstrating that among the central qualities that “make leaders more effective, women tend to outperform men. For example, humility, self-awareness, self-control, moral sensitivity, social skills, emotional intelligence, kindness, a prosocial and moral orientation are all more likely to be found in women than men.” And that’s what the CEO I was interviewing was demonstrating as she paused and considered her next steps: skills that make leaders more effective, such as humility, self-awareness, self-control, moral sensitivity, social skills, emotional intelligence. Yet women often don’t get much credit for applying their winning leadership characteristics in the boardroom or in executive roles. The author of the Forbes article, Tomas Chamorro-Premuzic, asks the million-dollar question: “If women have more potential for leadership, then why are they still the minority group among leaders?” Charmorro-Premuzic answers his own question by saying that employment choices are made more based on “ style rather than substance , so we pick individuals for leadership on the basis of their confidence rather than competence, charisma rather than humility, and narcissism rather than integrity. … The typical leader is not known for their humility or competence, but arrogance and incompetence.” Now, clearly, this isn’t always true. Some boards value humility more than charisma when recruiting new directors or hiring a CEO. And I’ve met many male CEOs and C-suite executives (within the credit union community and outside of it) who fully embody substance over style. I’m lucky to say that I work for one. And of course, men, too, can demonstrate self-awareness, self-control, emotional intelligence and all of the rest. Yet female leaders with substance, humility and competence still have a harder road to top roles. Chamorro-Premuzic suggests that this has to do with maintaining the status quo. I think he’s right. But even if it’s just a little bit true—this maintenance of the status quo, we all need to work together to shift this paradigm and begin to value even more substance over style and humility more than charisma. -Jennie Boden, via X (formerly Twitter) Fortunately, some significant inroads are being made in the credit union community. CUNA recently reported that 52% of credit union CEOs are female, compared to only 3% of bank CEOs, 5% of top leaders in commercial banks and 6% of chief execs in Fortune 500 companies. And having a substantial representation of women in the top job is not just common among the smallest credit unions anymore: At credit unions with between $1 and $3 billion in assets, more than 14% of the CEOs are female. Great. Good for us. Truly, that’s good for our community. But even if it’s just a little bit true—this maintenance of the status quo—we all need to work together to shift this paradigm and begin to value even more substance over style and humility more than charisma. Because we want our credit unions—as they pursue their mission to be people helping people—to be led by the best possible leaders. Previous Next

< Back Why Directors Are Chess Pieces, Not Checkers Jennie Boden and Dr. Alexander Stein of Dolus Advisors Jan 25, 2022 Every director should be ‘chair material’—even if they wouldn’t make a good chair. We worked with $6.5 billion Hudson Valley Credit Union , Poughkeepsie, New York, on an extensive board renewal project. During that effort, the CU’s nominations subcommittee decided that every candidate on its slate of nominees should be “skilled enough to be board chair” or “chair material.” But what does that really mean? Does it imply that you should only recruit people to your board who have the intelligence, experience, qualities, hard and human skills that indicate this individual could readily assume being chair of your board? Does it suggest you should raise the level of expectation that you and your colleagues on the nominations committee—indeed on your board—have for yourselves in terms of the type and the caliber of individuals you recruit and nominate to your board and supervisory or audit committee? Our answer to both questions would be a resounding, “Yes!” What it doesn’t mean is that anyone or everyone on your board should actually become chair of your board. Remember, board members are more like chess pieces than checkers. They each come with their own unique skills, attributes and experiences. While you want to ensure that you are only recruiting individuals of the highest caliber, not everyone is cut out to be a board chair. Some people are natural leaders and make excellent chairs. Others, while still amazing leaders, are more comfortable in positions with less authority and better suited for serving as vice chair or other important roles. Still others have a razor-sharp mind for numbers (a great treasurer, for example), but might be challenged when it comes to building consensus or running an efficient meeting—both requisite skills for any good chair. So, remember, when you’re recruiting for new board members, ask yourselves these questions: Does this person embody the most desired skills, attributes and characteristics? Is he or she good enough for our board? Will he or she elevate the level of our discussions? But, when you’re identifying your future chair, also consider these: Is this person a consensus-builder? Can they facilitate difficult decisions? Build a strategic agenda that delivers effective outcomes? Are they a leader who will inspire followers? In other words, choose your chess pieces wisely, and deploy them strategically. Alexander Stein, Ph.D . , is founder of Dolus Advisors , a consultancy that helps leaders address psychologically complex organizational challenges. Previous Next

< Back 'Quantum' Board Engagement Michael Daigneault Jul 22, 2014 Six questions to help you more fully get your board engaged The board meeting is a good place to start working on board engagement, as I discussed in my last Good Governance column . However, you’ll need to go well beyond the board meeting experience to really make headway on director engagement. At Quantum Governance, L3C , we recommend answering these six key questions to help you more fully engage your directors in their work toward fulfilling the mission and vision of your credit union: Are your directors emotionally connected to your mission? The roots of the credit union movement are deep. For more than 100 years, credit unions have been providing quality financial services to their members. Are your directors aware of and committed to the cooperative principles that drive the movement? Are they committed to democratic member control? Voluntary and open membership? Cooperation among cooperatives? Do your directors understand what they can do to help? Does each board member have a sense of the value that are contributing? But for their active contribution, how would the work of the board and credit union be less? This question also reflects on the very purpose of board meetings and how their agendas are crafted. Don’t just focus on telling or reporting – this tends to foster a type of passive oversight from your directors. Are they working at the appropriate skill and ability level? Nothing dampers someone’s interest more quickly than feeling like they’re either over- or under-whelmed with the task at hand. Be sure your directors are adequately briefed and appropriately assigned to the right committee or taskforce, one that matches – and engages, their interests, skills and abilities. Are you sustaining their involvement throughout the year? This question extends beyond your monthly meetings. Are directors actively engaged between board meetings? Are you exposing your directors to other aspects of your credit union’s business? Are they attending outreach and community events? Are they serving as enthusiastic ambassadors and representing the credit union with real pride? Do you and your colleagues challenge yourselves to improve everyone’s performance? Not surprisingly, the notion of continual learning and improvement is often a key to sustained engagement. Stagnation begets stagnation. This is particularly a key issue in the credit union community where board turnover takes place slowly. As such, it is even more important for you and your fellow directors to participate in a regular process of self-evaluation and improvement. Is your leadership constantly building the web of relationships you need to succeed – both internally and externally? Focus on the resources available to you and your directors – from members of your senior management team to community resources and national educational resources like those offered by CUES. There are about 7,000 credit unions in the United States and more internationally. It’s safe to say you are not alone in your experiences and questions. Reach out. Actively engage, share what you have learned and keep learning from others. The rewards will be plentiful – for you – for them – and for your members! Previous Next

< Back The Concept of ‘Constructive Partnership’ Caitlin Hatch and Michael Daigneault Dec 23, 2019 Collaboration, more than control, fuels today’s high-performing boards. The Quantum Governance team has had the opportunity to work with a great many credit unions throughout the U.S. and Canada—often with the core objective of improving the working relationship between the board and the CEO (including the members of the senior management team that report directly to the CEO). Frequently we are asked, “Is there an approach towards credit union governance we should adopt to best achieve this vital goal?” For most, we recommend adopting the framework of a “constructive partnership” between the board and the CEO/senior management team. One of our clients recently challenged us to define what we mean by a constructive partnership and put it in writing. This blog is the result of that thoughtful challenge. Origins of the Concept of ‘Constructive Partnership’ The concept of a constructive partnership was first developed by Richard Chait, Ph.D., a nonprofit governance expert at Harvard University. In his book Governance as Leadership , Chait suggests the best way to frame the relationship between a board and CEO is by focusing primarily on effective collaboration, rather than on effective control (as is the case with the Carver model of “policy governance”). The ways in which the board and management are effectively collaborating, fostering a leadership culture of trust, executing fiduciary oversight, crafting strategy together, offering mutual support and—yes—holding each other accountable to further the organization’s mission is what we (and Dr. Chait) mean by a constructive partnership. The Central Question The central question that the constructive partnership governance framework attempts to answer is this: “How can the board and the CEO (along with the senior management team) work together most effectively while still observing their respective areas of authority to achieve the credit union’s vision and mission?” The keys to success are in effective teamwork, genuine collaboration and mutual accountability, with both the board and CEO creating maximum value to move the strategic goals of the credit union forward. Within the constructive partnership between boards and management, boards retain the primary legal responsibility for governance—the proper exercise of ultimate authority—of their organization. Boards also exercise organizational oversight and ultimate policy setting. They properly delegate to the CEO and the senior management team the responsibility for managing operations, personnel and day-to-day organizational resources. As the BoardSource publication The Source: Twelve Principles of Governance That Power Exceptional Boards notes: While respecting this division of labor, exceptional Boards become allies with the CEO in pursuit of the mission. They understand that they and the chief executive bring essential, complementary ingredients to the governance partnership that, when combined, are greater than the sum of their parts. Exceptional boards recognize they cannot govern well without the CEO’s collaboration and that the CEO cannot lead the organization to its full potential without the board’s unflagging support. This central governance “partnership relationship” was further developed by the work of Ram Charan—co-author of Boards That Lead and probably the leading governance expert in the world today. Charan’s framework emerges from the central question: When is it appropriate for a board to “(1) take charge, (2) partner or (3) [delegate]”? Similar to Chait, the focus of Charan’s work is that the board and the CEO should work strategically and collaboratively as a team for the good of an organization and its mission. There are, according to Charan, appropriate situations where (1) it is the board that should take charge and lead, such as in the choice of the next CEO. There are also circumstances in which (2) the board and senior management should thoughtfully and consciously work to actively partner with each other, such as in the creation of an organization’s vision, mission and strategy. Lastly, there are significant areas in which (3) the board should delegate appropriate management authority to the CEO and his or her team, such as in nearly all tactical, personnel, operational and execution matters. One way to think about the strong partnership focus of this framework is to reflect upon how a doubles tennis team works together. Consider Venus and Serena Williams, each superb individual tennis players, but also exceptional as a doubles team. When they are playing together, each must work to perform individually, but also bring out the best in her partner, so that the team can overcome any and all challenges it faces. The benefits of a constructive partnership model emerge even more clearly when one considers the alternatives. What if the board alone took on the responsibility of determining the credit union’s strategy? Then the CEO/senior leadership team would not be able to contribute their expertise, and they would be significantly challenged to fully understand and effectively implement the board's identified strategic goals. On the other hand, if the CEO and the senior management team developed the strategic goals without the board’s input, they would subvert one of the central roles of a credit union board—being meaningfully involved in helping to set the direction of a credit union. They could also potentially take the credit union too far down a path not supported by the board, creating significant conflict at the leadership level. The constructive partnership model calls for the board to take a strong partnership role as a strategic thought leader and visionary, in true collaborative partnership with the CEO and his or her team. Together, they must work effectively to determine the best path forward for the credit union, its members and the communities where the credit union operates. As such, the two must work closely together to consistently foster the quality of the board’s composition, knowledge and discussions to ensure the entire leadership team can be effective partners to move the vision and mission of the credit union forward. 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