By Karen Hodgkiss
Benchmarking against other similar institutions can be an excellent reality check for any business. Credit unions that regularly compare their results to others can capitalize on strengths, shore up weaknesses and indentify potential opportunity and pitfalls that may be on the horizon.
A companion to benchmarking is looking at industry best practices. If benchmarking reveals outcomes, best practices reveal strategies and effective methods of achieving results.
CUES’ Board Benchmarks & Best Practices survey collects information on board practices in all areas—from the number of board members per credit union to the methods used in strategic planning. Based on these responses, CUES and partner Clarkson Centre for Business Ethics and Board Effectiveness at the University of Toronto’s Rotman School of Management, have released five summary reports.
Here are a few highlights from a summary report on CEO evaluation and compensation:
- 95% of boards surveyed are confident their CEO pay is closely aligned with performance.
- CEO performance evaluation typically involves a combination of written evaluation and verbal discussion, with only 5% percent of boards using a less formal, verbal-only approach.
- A significant number of boards (40%) require the CEO to perform a self-evaluation in addition to the board’s own assessment.
Regarding CEO succession planning:
- 35% of participants indicated their CEO plans to retire in the next five years. The average tenure of these CEOs is 21 years, compared to nine years for those who are not planning imminent retirement.
- Most credit unions have a formal CEO succession plan in place (85%).
- However, 20% of respondents with formal succession plans indicated they are not sure whether their CEO plans on retiring in the next five years, which raises questions about the true formality of their processes.
A strong board of directors forms a foundation for success. With timely and effective tools in their hands, these crucial volunteers will be equipped to make decisions to the benefit of your credit union and your members.
Karen Hodgkiss is a freelance writer.
CUES is calling for credit unions to participate in the Board Benchmarks & Best Practices survey. Learn more here and then select “participate now” to complete the survey or “run reports” to purchase and gain access to all available data.
