Good Governance: Tuning Up Your Board’s Meeting Practices

Have your board and staff leadership teams been running a little hectic lately, as you respond to COVID-19? As things slowly start to get more settled, it could be a good time to re-ground yourself in governance best practices.

Ideas about what constitutes good governance have been evolving in recent years, as boards have responded to the substantial growth in oversight responsibilities. Some of the areas in which governance practices are evolving include:

• Role of governance and nominating committees
• Role of other board committees
• Role of supervisory committees
• Assessment of board and director performance
• Recruitment and nomination of officials
• Board diversity
• Director onboarding and training
• Selection of board officers
• Board meetings
• Governance policies
• Compensation of directors and supervisory committee members

Let’s take a closer look at just one of these critical areas of board functioning: board meetings.

With the growth in board oversight, board meetings (and packets!) can become overwhelming in complexity and length. This can affect the performance of the board as well as recruitment and retention of capable directors. It is essential that your board meetings be focused, as well as tailored to the needs of your credit union, so that they are effective and efficient. Ten considerations and techniques are set forth below.

1.    Focus, Focus, Focus.

It is an understatement to say that boards have a full plate. Boards need a clear focus on what is appropriate board business for their credit union and what is not. With the COVID pandemic raging, boards have necessarily had to focus on related matters. Is your board getting adequate information and providing oversight on the credit union’s COVID response?  Has re-consideration of strategic initiatives fallen by the wayside? Does your board spend too much time down in the weeds of operations or on unimportant matters? A governance committee can make recommendations to improve board meetings, using the board agenda template to bring needed focus to the board’s deliberations.

2. Selection of Board Chair

The chair is a critical position for the functioning of the board in general and board meetings in particular. How is the chair selected? Is there lock-step succession through the board officer positions to become chair, without regard to the skill set needed to be an effective chair? As external and internal environments change, different skill sets may be needed in the chair.  Does the nominating committee recommend individual directors for board officer positions?

3. Virtual Board Meetings; Frequency of Board Meetings

Does your credit union have the authority to conduct virtual board meetings? If so, has it utilized this authority? Have the meetings been effective?

The boards of credit unions with charters from certain states are not required to meet monthly. By taking advantage of this authority, state CUs can cut back on the frequency of meetings, saving the board time and expense, and easing the burden on staff to produce monthly board materials. Obviously, decreasing the time spent in board meetings requires even greater meeting focus.

4. Board Meeting Agendas.

In many CUs, one of the first items on the agenda is the consent agenda, which is a good technique for facilitating meetings. Is the last item on your board meeting agenda an executive session? This, too, is becoming a more common practice. As appropriate, the chair can include the CEO in the exec session, or invite in other senior staff—such as the chief risk officer or chief compliance officer—for frank discussions. And if it turns out an exec session is not needed, the chair can simply move to adjournment.

5. Staff Materials Presented to Board

Have you set expectations for staff materials presented to the board, in terms of the level of analysis and detail, length, etc.? Typically, staff will submit the same materials to the board that it used for staff-level decision-making, when in fact the board needs a higher level of analysis and lower level of detail.

6. Who Prepares Board Meeting Materials?

Traditionally, the executive assistant to the CEO prepared the monthly board packet and made arrangements for board meetings. In larger CUs, this responsibility may be too much for one individual to handle. If so, the board-related duties can be assigned to another individual who, working with the board and senior management, can focus on the entire board logistical function. Sometimes this person is called the board liaison.

7. Board Meeting Minutes

Minutes are important; many a battle has been fought (internally and externally) over them. Do your minutes accurately reflect meeting decisions and discussions without too much detail? Are they sufficient to satisfy your examiners? Who is responsible to review draft minutes before submission to the board for approval at the next meeting?

8. Does the Senior Team Attend Board Meetings?

If so, what role do these individuals play? Their attendance and (limited) participation in board discussions can bring a higher level of detail in answering questions, facilitating directors’ understanding of the CU.

9. Delegation to Committees

Does the board delegate decision-making (not just analysis and recommendation) on technical matters to its committees? This approach can bring greater expertise and focus to bear on analyzing issues and, ideally, lead to better decision-making. As the board tries to manage its focus at board meetings, this can be a valuable approach, with appropriate reporting back to the full board.

10. Do You Have a Board Governance Policy?

Do you have a written board governance policy that covers board meetings as well as other essential governance practices and protocols? Does your governance committee periodically review the policy for updating? Such a policy helps maintain consistency in board governance practices and settle questions that arise regarding these practices.

To perform at a high level, boards need to bring a clear focus on their own functioning, including board meetings. Many considerations go into achieving this focus, and many techniques are available for this purpose. A board governance committee can assess board meeting practices and bring recommendations back to the board to improve its effectiveness and efficiency.

Parker Cann consults with credit unions and their trade associations, with an emphasis on board governance and regulatory policy. Parker offers insights gained from serving credit unions in a variety of capacities over his career: as the head credit union regulator for the state of Washington; as a board member of NASCUS; as CEO of a large credit union; as a board member of a credit union trade association; and, most recently, as SVP/general counsel for one of the largest credit unions in the country.