Disruptive change has come to the credit union movement. Competition, regulation, mergers, technology, and generational shifts are creating previously unseen vectors of concern.
I’ve been a CU member since I was 16, and I can tell you that I see and feel the movement from both my current credit union and the 50 or so with whom I’ve had the pleasure to work. I’m no stranger to the cooperative movement and a big fan of the contemporary value of the credit union model for communities. However, we are not simply a cooperative anymore. We are big business getting more complex every day, and having to behave more entrepreneurial each year.
Disruption has also enveloped credit union governance. Talks of term limits, younger board members, mandatory retirement ages, assuring diversity and ensuring that the board is a strategic asset has changed the governance conversation. I speak to over 300 credit union executives and board members every year and I hear the grumbling, the chatter and the excitement.
Put simply, boards are looking for fewer volunteers and more trustees. They are seeking more seasoned members. And, to hear board members talk about it, finding the right competency and experience mix is becoming harder.
This has taken an interesting tangent with some of my clients, a tangent that I speak about at every credit union governance conference—“the journey to find the outside board member.”
More and more credit unions are widening their circle of board recruitment to include community leaders and business people who have the enterprise seasoning and executive level competencies to be a strategic asset for the credit union. On average, I find close to a third of the board members I run across are significantly underprepared to keep up with the permanent business whitewater and the resulting strategic decision-making credit unions now demand.
Boards are recognizing that the member who is passionate about the movement, yet without the experience to make a significant strategic contribution, must move on.
Over the last four years, one of my long-term, larger credit union clients has searched the community for fresh business leadership and found four outstanding new board members who admired the cooperative model and willingly became credit union members to join the board.
How do successful credit unions navigate the search for new, outside-the-membership board members? They define the desired board mix they are seeking, identify people who may fit that profile, screen them to find prospects and then screen even more heavily to discover targeted board nominees. From start to finish, this is most likely an 18-month process. Try these four steps:
Step one: Boards need to plan the director competency mix for where they are going, not for where they are. Where most of us are going, whether we all recognize it or not, is to more complex business models and more nimble strategic movement. Therefore, the developing board profile includes new directors with experience in complex enterprise, strategic thinking and innovation, organizational transformation, the use of technology as a differentiator, and the creation and support of an organizational culture that is highly engaged and creative.
Step two: The governing, nominating or executive committee works with the board and credit union staff to develop a list of possible directors. These are leaders in the community believed to have the desired competencies and experience but who haven’t yet been vetted to confirm they are “prospects.” This can be a three- to six-month process and should not be rushed.
The community around you is alive with leaders with the experience and capability you seek. Try looking in these domains:
- colleges and universities—faculty and graduate students;
- chambers of commerce;
- specialty chambers—Black, Latino, Asian, Native American;
- young professional groups;
- professional associations;
- small business alliance groups;
- specialty legal societies;
- state non-profit societies;
- mid-to upper managers of businesses in your area; and
- your network of high-performance leaders.
Please don’t overlook the 20- to 40-year old citizen. Surprisingly, there are plenty of them with deep enterprise experience who would serve your board and members well. I advise boards to have at least 50 percent of the list of directors you consider be under 40. (Check out my related presentation on board recruitment, “Securing the Future of Your Blood Bank Through Succession Planning.”)
Step 3: The governing committee, usually with help from the CEO and/or other top executives, begins informal screens of the prospects to confirm (a) the capabilities and (b) potential interest in board service. A conversation something like, “Harriet, our board has identified you as a talented and experienced community leader who might be interested in service on our credit union board.” If Harriet says “tell me more,” we do. If Harriet further says, “let’s talk” then we go about confirming that what we thought to be her “competency and experience tool box” is indeed as strong as suspected. This phase, likely to take six months, will weed out about 50 to 70 percent of the people you originally listed because people are busy, it’s not a good time in their life (new baby or grandchild), they serve on other boards, or they don't end up having the skills mix we thought they had. So if you started with 30 suspects on your list, you are now down to about seven.
Step 4: This is the hardest part—confirming the seven you’re still considering have the talent and commitment to serve with integrity. This is likely another six-month phase of vetting.
You should conduct lengthy “behavioral interviews,” learning about how they have applied their competence in other enterprise settings. You should also do a background check on this prospect list. Why a background check even before a decision has been made to seek a board nomination? Because I’ve seen this go to the wire with unfortunate consequences—a highly prized prospect became a selected “target for board nomination” only to discover through a late background check that they didn’t pan out.
In this fourth phase, you’re most likely looking to get down to at least two targets. I’ve seen some of these targets agree to become “associate board members” waiting in the wings for a term to expire before they ran for a seat on the board. It’s not ideal, but it does seem to work for the motivated.
Remember this is at least an 18-month journey. You might get lucky and find a golden nugget future board member right away, but try not to rush the process. Having conversations with board members whose terms will be expiring soon is also important, so you can assure a system of board refresh and seats for new members you find. Giving up a seat for a new member who brings the next level of competency and experience is a “legacy” gift to your members.