4 minutes
Discover how credit union boards can become agile strategic partners and lead their institutions to future success.
“Plans are worthless, but planning is everything.”
–Dwight D. Eisenhower
“I always say don’t make plans, make options.”
–Jennifer Aniston
Credit union board directors often ask me how they can improve the way their boards provide strategic oversight and support. They describe member expectations growing as quickly as the new channels, products and services being offered by competitors. Consumers expect more convenience, bespoke service, and assurance that a provider has their financial back. Or else! As the financial services ecosystem faces ongoing disruption, credit union leaders see a need to become more agile and better prepare for multiple uncertainties. Board directors must get involved if they want to support their credit unions becoming more nimble and resilient as part of their long-term strategic direction. How can boards become better strategic partners?
As credit union board directors learn during their first onboarding session, directors carry fiduciary responsibilities and bear ultimate responsibility for ensuring the safety and soundness of their credit union. But fiduciary responsibilities are often where board meetings go to die. It is so easy to fall into a “report-out” agenda with Q&A that takes up all of a board’s time and energy deliberating over what happened in the past. Boards must also devote their time to strategy. And strategy is all about the future.
In order to fulfill their role as leaders of their credit union, boards must provide strategic focus and direction. In Quantum Governance’s The State of Credit Union Governance, 2020 study, we asked What are the skills that add the most value in the Boardroom? The top answer from leaders was “Ability to focus on the future” with 76% of respondents checking that box. Boards can begin supporting strategy by developing and applying their long-term perspective to help prepare the credit union for the future. Dialogue on strategy should be ongoing, not reserved solely for the annual strategic planning retreat. Are you finding ways to keep directors informed about the future of financial services so they understand emerging risks and opportunities? Do your board meetings have substantial blocks of time dedicated to strategic dialogue? Are board directors equipped to ask future-oriented questions that enhance planning and preparedness?
Returning to those fiduciary obligations, boards are typically well versed and skilled at risk mitigation for safety and soundness. But risk also comes in another form: the judicious taking on and managing of risk to gain strategic advantage. Every strategic plan includes risk! Strategic boards understand that addressing risk taking in a mindful and calculated manner is an essential element of strategic planning. A failure to pay attention to risk taking hampers a board’s ability to provide both fiduciary and strategic oversight.
Consider, for example, how a credit union might advance a strategic goal by taking on more lending risk. Would extending loans to lower grades deepen member engagement, contribute to growth goals and support the mission? Or will it over-extend your lending team, balloon charge offs, and damage your reputation? What is the right balance to strike? This type of deliberation is best addressed when a board and CEO/senior management are working in concert. I am not suggesting boards take the strategic planning steering wheel out of the hands of their CEOs! Boards need to know their lane. For example, operational planning still belongs to the CEO. Boards should endeavor to engage in regular dialogue with their CEO/senior management (and likely others) on high-level strategic matters. Boards can provide constructive feedback and help ensure accountability. Credit unions enjoying a healthy constructive partnership between the board and CEO are likely to make better strategic decisions.
If we are to take Ike’s and Jennifer Aniston’s quotes at their word, credit union boards would do well to learn how to contribute to their credit union’s strategic planning. Boards that understand and support their credit union’s strategy and the risks being taken can help create parameters that foster greater operational agility for staff. The benefits can make the difference between a credit union set to thrive in spite of an unknown future versus one slowly drifting into irrelevance. Strategic boards provide the kind of understanding and support that empower CEOs and their teams to execute the strategy more nimbly and confidently. Planning is indeed everything, and boards should play a central role. When that unexpected storm blows in your face, the planful credit union will be able to review the options that were developed, pivot, and keep moving forward. All with the confidence by staff that their board understands the game plan, the risks being taken, and has their back.
Paul Dionne, Chief Strategy Officer & Lead Consultant with Quantum Governance, L3C is a wealth of strategic thinking, research, and activation skills. Prior to joining Quantum in Spring 2023, Mr. Dionne served as the Research Director at Filene Research Institute and served on the staff at Beloit College as their Associate Director of Student Success, Equity, and Inclusion.
