5 things your board should discuss
Plenty of surveys tell us what CEOs think about their boards. In general, they would like a bit more of a risk-taking attitude, less diving into tactical/operational areas, enhanced governance literacy and lots more tech savvy. During my work with over 300 boards over 20 years and many educational seminars with credit union board members, I’ve developed my own list of what might be worthy considerations for your board to discuss early in 2018.
1. Greater board insight into strategic thinking. Most surveys testify that directors would like more strategic dialog, and most CEOs wish that their boards were more strategically savvy. Your board can raise its level as a strategic asset by investing more in the following: tracking such trends in the financial industry as mergers, digital strategy, customer experience advances and customizing products by member life stage (younger, older, business, retired). Increasing efficiency in fiduciary oversight can repurpose board time for more dialogue on strategic trends and more discussion about how your strategy is performing. Don’t overlook the need to understand what disruptive/innovative directions your CU might want to consider.
2. Greater governance savvy. Unfortunately, over half of CU board members that attend my seminars have never picked up a governance book. Serving on a board means making a commitment to continue to develop your level of knowledge and competency. As we move toward compensating for credit union board service, this development becomes even more important as a means to validate your potential value. In addition to getting your board members out to the many governance seminars offered in the industry, I suggest two additional investments: One, pick two books on governance that you expect every prospective director to read prior to being accepted as a candidate for the board. Two, select at least one governance book or a couple of articles for the entire board to read and discuss during the year. Or use articles and videos from CUES’ Center for Credit Union Board Excellence to this end. These discussions can be carried out a little at a time during meetings or during a committed period at the strategic planning retreat. Quality of governance, is, after all, a strategic issue.
3. Greater commitment to board refresh. Board term limits and board refresh (bringing on new members with regularity) are both top items of concern in the governance literature. Overall, credit unions are behind other industries in that we celebrate length of board service rather than look for regular turnover. When I ask CEOs and chairs privately how many board members they would like to see replaced, I always get at least “two” as an answer and frequently as many as “five.” Today’s trustee is a more complicated commitment than that of yesterday’s volunteer. Throughout the governance literature, you will see prominent discussions of board competency expectations and regular turnover as standards for 21st century governance. What competency profile does your board believe is critical as you enter the next five years of business? Also ask your CEO that question. Don’t look to today; look to tomorrow’s challenges of governance and develop a desired profile based on those challenges—digital competition, shifting member demographics, community banking competition, merger and acquisition opportunities, and so on.
4. Greater board-member-to-member accountability. Boards are generally poor at policing their own performance, as demonstrated by statistics indicating less than 50 percent of boards conduct a self-assessment. CEOs complain about it, and chairs ask how to achieve greater individual member accountability for coming to meetings prepared, committing to governance and business environment education, and being an active contributor during meetings.
While the chair plays a key role in providing feedback about accountability, there are a couple of other activities that help board members look into the mirror. One, conduct a “member-to-member” assessment where each director provides every other board member the answer to one question: “How could I add greater value to governance?” This confidential survey assessment could be facilitated by the credit union’s legal counsel or board governance coach. Each board member would then get a personal report of how others see their contributions and what they might do to add even greater value. Two, have the governance or executive committee create a governance development plan for each board member that might include conferences to attend over a couple of years and other governance education. Then, track commitment to this learning and have board members report back from each conference or educational session they attended about what they learned. You might start with helping the vice-chair find opportunities to refresh his or her meeting leadership skills.
5. Development of board officers prior to service. Being a board officer, especially a chair, is not an easy assignment. Despite the fact that many chairs believe they are ready for the assignment, they quickly find out how challenging running a meeting can be when you’re in charge. Rather than learning on the job or following the model of the last chair, many boards are encouraging those interested in being an officer to invest in some educational development ahead of time. Boards with term limits for officers—a standard governance practice these days—can anticipate transitions a couple of years ahead of time, inquire whether any directors are interested in becoming an officer, and then assist interested members in learning about facilitating meetings, staying on agenda, dealing with bullies, managing conflict and disagreement, providing individual coaching to board members, and how to give feedback to the CEO. All of these topics benefit from updated and informed learning. Being an officer is not a natural role, and boards are beginning to see the benefit in preparing skills ahead of officer service.
Les Wallace, Ph.D., is president of Signature Resources Inc. and author of Principles of 21st Century Governance and co-author of A Legacy of 21st Century Leadership. He is a frequent speaker and consultant on leadership and governance.