Article

Good Governance: The Sophisticated Art of Ensuring Your Board Grows Alongside Your Credit Union

sophisticated black executive woman
Gisèle Manole Photo
Dir. of Communications & Assoc. Consultant
Quantum Governance L3C

4 minutes

Four areas to focus on

Whenever we interview credit union directors or senior leadership and ask about strategic priorities, we hear them talk about some version of growth—asset growth, membership growth, loan growth, SEG expansion, and the list goes on. We rarely hear about growth as it relates to the board.

As credit unions continue to grow operationally, boards just seem to be along for the ride. Some are keeping up, but many are not.

Would you hire the same CFO or director of finance for a $5 billion credit union as you would for one with $5 million in assets? Of course not. You know that as your credit union grows operationally, your staff must have the experience and expertise to do their part with excellence. So too, must your board.

One of the situations that should prompt an assessment of your credit union’s governance is growth itself. As your credit union’s assets crest $1 billion, $5 billion and especially $10 billion, regulatory requirements change, the complexities of your institution’s financial structures will increase, and your board will be challenged to govern quite differently than it once did when your institution was smaller.

CUES member Chris Parker, president/CEO of $1.5 billion Northeast Credit Union commented recently that “for so long we have all focused on working with our boards. We need to shift our foci now to working on our boards—bringing our boards along as our credit unions grow operationally.”

This struck a chord with us. Yes!

How are you growing as a board to complement the sophistication and expertise of your credit union’s executive team? Beyond the continuing education that so many dedicated board members diligently pursue, what are some of the things you should consider and important questions you and your board need to ask to ensure that your board is growing and keeping pace with your credit union?

Four Areas for Board Governance Growth

Committees. Has your committee structure evolved to inform the strategic work of the board? Ten years ago, governance committees were a rarity. We are happy to report that whenever we ask a room full of credit union directors how many of them have a governance committee, at least half if not a third of their hands go up. A formal governance committee provides boards with a specialized forum in which to oversee critical issues, including nominations and renewal, monitoring board performance, and ensuring that board policies and procedures are relevant and contemporary. These are all deeply important to ensure the continued achievement of your credit union’s vision and mission. Developing an active and forward-thinking governance and nominations committee is one of the most strategic and forward-thinking moves a credit union can make.

Policies. If you are regularly hosting hybrid or even fully virtual meetings, do you have a policy on virtual board meetings? As countless boards talk about the importance of diversifying their boards, how many of them have a formal DEI policy? Governance policy manuals are not evergreen. Look beyond updating what you already have and ensure that your board-level or governance policies support your strategic growth and direction.

Board Meeting Agendas. In The State of Credit Union Governance, 2020, published by CUES and Quantum Governance, directors revealed that they spend only 26% of their time in board meetings on strategic matters. Further, our review of credit union board meeting agendas and minutes suggests that 26% might be an overestimate. Boards must become deliberate in allocating time to strategy regularly, and board chairs and the CEO must collaboratively master the fine art of developing agendas to prompt strategic and even generative discussions. Consider the use of digital technologies, for example, to approve budgets or conduct trainings. Meeting tools such as consent agendas and dashboards can speed the transfer of data and reports. Then, with the time you have left, ask yourself, are our board meeting agendas routinely focused on strategic matters? If not, how do we modernize and change them to keep up with our evolving governing role?

Board Composition. Just as a $5 billion credit union wouldn’t hire a CFO that didn’t have an appropriate level of expertise or experience, your credit union board needs directors that have the mix of skills and experience needed to effectively advise your CEO and executive leadership. You can’t know if you have the director talent and expertise your credit union needs unless you develop matrices that illustrate where your directors currently have strong skills as well as areas of needed development. Does your credit union have a plan for retiring directors who are unable or unwilling to contemporize their skills and practices to keep up with the growing needs of your credit union? Don’t suffer gaps on the board because you are urgently filling a board seat, either. Plan carefully and properly for director departures. Thoughtfully onboard new directors with knowledge of what they as unique individuals bring to the table and how their talents and expertise may translate to your credit union’s vision and mission.

Gisele Manole is director of external affairs and a consultant with Quantum Governance. 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 50% of Quantum Governance’s clients representing credit unions, the organization fields more engagements in the credit union community than in any other. Quantum Governance is a CUES strategic partner in the field of governance and is home to more strategic governance experience than any other practice in the country. The firm is a unique L3C organization that integrates the best elements of both the for- and non-profit communities into one practice. It is a low-profit, limited-liability service organization dedicated to the public good and one of the very first such legal hybrid organizations in the United States.

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