Good Governance: What You Need to Know About Board Assessments

We don’t know what we don’t know. It’s such an obvious thing to state, and yet we would suggest this simple statement of fact may be the key to the future of your credit union. 

Often our clients approach us with a sense that although their credit union has a healthy balance sheet and continues to grow its membership and assets, there is something they could be doing better--that their board and committees could be more effective in the work they do on behalf of the credit union. Without an obvious or discernible problem, they just can’t put their finger on it. Maybe it is time to “take stock” or assess. Remember, the fact that your credit union is doing well doesn’t mean that your board is following suit. 

In our experience, a number of situations may be opportune for doing an assessment, including:

1. When a new chair or CEO comes on board. Fresh ideas can get caught up in a web of procedure. Clarity and understanding of best practices and why they are in place makes getting to the heart of matters more efficient and ultimately more productive.
2. When you want to take the CU’s leadership or strategy to the next level. If you’re sensing that your leadership is relying on older methods or governance practices that need modernization to keep up with the demands of the marketplace, or if your strategic plan is not agile enough for the credit union to accomplish what it has set out to do, the time has come for a deep-dive assessment.
3. After a crisis. Any major internal or external shake-up that causes board members and management to pause and ask “what happened and how do we prevent it from happening again/” signals the right time to revisit what is working with your governance and what is not.
4. When you’re experiencing very high-or very low director turnover. If your board is struggling to keep up with orienting new members each year, or if it needs to break out of its routine to advance your credit union and its mission, a targeted assessment may gather the intelligence necessary to shift lanes.
5. When you have not done an assessment in the last three years. Simply stated, best practices indicate that there should be regular assessment to ensure that your board, culture and governance are fine-tuned and prepared to shoulder the responsibilities of exceptional leadership and service to your credit union.

Where do you start once you have recognized the need to undertake an assessment? Although most groups, including ours, will tailor assessments to the needs and issues facing your specific credit union, there are a few general types of assessment to keep in mind.

• Assessment of the board “as a whole”
• Review of board committees
• Assessment of board officers including the chair, vice chair, secretary, treasurer and committee chairs
• Self-assessment by individual board members, which may also include peer-to-peer evaluation
• Appraisal and review of CEO 
• Risk assessment to address such topics as financial risk, strategic planning and risks associated with growing technologically

Assessment in and of itself is strongly recommended (CUES and Quantum Governance together offer a survey-only assessment tool). But in our recently published The State of Credit Union Governance 2018 report, we discovered that credit unions that don’t undertake a more comprehensive assessment at some point may receive results that skew almost exclusively positive. Such a skewed and rosy viewpoint could prevent some credit unions from taking necessary and corrective action. In many cases, a full governance assessment inclusive of surveys, interviews and document review is essential to truly understanding the challenges facing your credit union.

Since we don’t know, what we don’t know, we need to stay curious. Asking critical questions of yourselves and holding yourselves accountable is the only way to ensure the success of your governance and leadership efforts, as well as its impact on your community. 

Michael Daigneault, CCD, is CEO of Quantum Governance L3C, Vienna, Va., CUES’ strategic provider for governance services. Daigneault has more than 30 years of experience in the field of governance, management, strategy, planning and facilitation, and served as an executive in residence at CUES Governance Leadership Institute. 

Gisèle Manole is an associate consultant with Quantum Governance L3C. With almost 20 years of related communications experience, she provides support and research to the entire Quantum Governance team and has interviewed more than 100 active board members in the last year. 

Quantum Governance provides credit unions, corporations, nonprofits, associations and governmental entities with strategic, cost-effective governance, ethics and management consulting, facilitation and evaluation. With more than 40 percent of Quantum Governance’s representing credit unions, the organization fields more engagements in the credit union community than in any other