The board? The CEO? It's actually both, together. By Lisa Hochgraf
Imagine that tennis greats Serena and Venus Williams are teaming up to play doubles. Who is the leader of that team? Serena? Venus? They're both awesome individual players, but when they are both on the same side of the net, who is the leader? Neither one, said Michael Daigneault, CCD, during the Directors Conference pre-conference workshop yesterday in Orlando. To win, the sisters just have to play well together. Daigneault, founder and principal of CUES strategic provider Quantum Governance L3C, Vienna, Va., and co-leader of yesterday's session, said boards and their CEOs must similarly "play well together" as the co-leaders of their credit union. "Is the board a leader of the credit union? Absolutely. Is the CEO a leader of the credit union? Absolutely," he explained. The key question is: "How can we work more effectively together to meet whatever challenges are confronting us?" During his part of the pre-conference session, Steve Williams, CIE, gave a specific example of how board-CEO teams co-lead. Principal of CUES Supplier member and strategic provider Cornerstone Advisors, Scottsdale, Ariz., Williams said that directors and CEOs must work together to successfully manage the credit union's financial situation. According to the National Credit Union Administration's director financial knowledge rule, Williams said, directors must be able to, at a minimum, "read and understand their credit union's balance sheet and income statement and answer" key questions about them, including "What does each ... line item mean?" "Is the value of the line item changing over time? And if so, how?" and "Is that change significant to the credit union?" Williams said that if directors are to do well in interpreting the CU's financial situation, the CEO and his or her senior team need to do a good job of presenting the right amount of relevant and timely information in a format the directors can understand. "At the same time, your duty is to ask appropriate and substantive questions," he told the almost 100 directors in attendance at the event. If a credit union is making a lot of adjustable rate mortgages, Williams gave as an example, a board member might say to the CEO that it would make sense to put away more dollars in the credit union's allowance for loan and lease losses, Williams said. "He might disagree with you, but that's how a conversation gets going." Daigneault stressed that effort--and even preparation--is necessary to have good conversations between the CEO and the board as they jointly lead the credit union. One of the saddest conversations Daigneault has with CEOs is the one where he asks: "So who on your board would you turn to for advice?" "If the answer is 'nobody,' that hurts the organization; it hurts the members," he says. "If you are co-leaders, you have to be up to co-leading," Daigneault emphasized. "You have to be strategic, you have to be competent. You have to be able and nimble and innovative and thoughtful enough to be a true co-leader with the CEO and the management team of the organization."
Lisa Hochgraf is a CUES senior editor. CUES Symposium: A CEO/Chairman Exchange is designed to build the bond between these two key leaders.
Daigneault is speaking at Execu/Summit, He is also the expert behind CUES' CEO Assessment for Credit Unions and Self-Assessment for Credit Union Boards, as well as CUES' governance consulting services.
Learn more about Cornerstone Advisors' enterprise risk management services.
