Knowing the right things to ask is a key governance skill. Ask these seven questions (and more) at your next board meeting.
“Why are you a credit union director?” Ancin Cooley, principal of Synergy Credit Union Consulting Inc., began his breakout session, “Amazing Boards Ask Great Questions” with this seemingly simple query at Directors Conference in December.
Answers varied from participants around the room. Examples included:
- “To protect the assets of the membership.”
- “To make sure members get served properly.”
- “Serve the community.”
- “Bring diverse knowledge to the board.”
Sometimes, Cooley noted, board members get recruited and aren’t immediately sure of their answer, but you can assume directors are in the room for different reasons. However, that doesn’t mean they can’t work toward the same goals. After all, “you have a fiduciary obligation to the membership,” he added. “That means something.”
So how can board members from various backgrounds, with different personalities and areas of expertise govern well together?
“Questions should drive board room conversations,” emphasized Cooley.
“Have you been in a meeting where someone asks for questions and there’s a long, awkward silence?” Cooley asked. “And finally, one person raises and hand and asks a question—and suddenly there are 20 people asking questions.”
(If you’re nodding as you read, you would have been in good company at Directors Conference.)
Here are some crucial questions Cooley recommends asking at your credit union’s board meetings to guide your thinking and strategic planning.
7 Questions Board Members Should Ask in 2023
1. “What if this was your money?” (Of course, it probably is, but it’s a lot of other people’s money too—perhaps your family or friends.) Would that impact your appetite for risk?
2. “How are we measuring our success?” Is it based on ROI, deposits, liquidity, loans, membership or asset growth? Cooley suggests focusing on three areas: mission, strategy and income.
Connect your mission to money, he advised. Credit unions are dedicated to improving the financial wellness of their members. Cooley outlined many of the negative impacts of financial difficulties for members, not least of which included their impact on mental health. Striving to help members improve their financial lives benefits their mental health and more while making an impact on paper—reducing delinquency and improving credit score, for example. That’s a win-win for credit unions, he noted.
Additionally, strategy is not equal to planning, he clarified. “If you pick a strategy and it doesn’t make you a little queasy, it might just be an operational plan.”
3. “Are we adequately discussing longer-term issues, both internal and external?” For example, what is the board’s approach to growth? Consider defining growth before you begin strategic planning. In the long term, do you want to see more organic or inorganic (e.g., mergers, indirect lending, loan participation) growth at your credit union?
“Can you split out the membership growth from indirect lending from the organic growth—the members who have bought into your brand?” Cooley asked. When you’re creating or evaluating your strategic plan, “don’t just say you want asset growth, say you want organic growth.”
4. “Are we rewarding our management in a manner commensurate with their success?” Don’t sleep on this, warned Cooley. “Good CEOs get paid, or they go—and they go do it for someone else.”
5. “Who hired your compensation consultant?” Is it time to reevaluate? Auditing your CEO’s performance and compensation level against industry data is important. Cooley shared multiple news stories from 2022 featuring credit union CEOs and employees behaving badly, which served as a reminder for board and supervisory committee members not to get complacent.
6. “How are we handling succession?” “Succession planning is a component of good governance,” stressed Cooley. Not all CEOs or senior executives have the capacity to think past their own tenure, so the board must own this process. “Make sure long-tenured CEOs turn in the ‘keys’ before they go,” he added.
7. “What are the fundamental areas we should track as a board?” Discussing the questions above should give your board a clear idea of key governance areas, so here’s a related bonus question: What is truly out of scope for the board?
Danielle Dyer is an editor for CUES.