New board members can lend their perspectives and expertise to pressing governance challenges.
As new credit union directors settle into their roles and responsibilities, they can offer valuable views on several persistent challenges facing many boards, which may be informed by their own experiences being recruited and trained for board service.
Stagnation and Demographic Homogeneity
Credit unions have more long-tenured board members than other business sectors, which increases the likelihood of a default toward the status quo, suggests Matt Fullbrook, manager of the David & Sharon Johnston Centre for Corporate Governance Innovation at the Rotman School of Management, University of Toronto. Fullbrook is also and faculty at CUES Governance Leadership Institute™ at Rotman. And especially for historically SEG-based credit unions, board membership may skew toward people from the same or similar professions.
“People who are familiar with each other and used to interacting tend to be much less likely to challenge each other and to step outside what they’re used to in recruiting new directors,” he says. “There’s a huge amount of both scientific and anecdotal evidence suggesting that diverse perspectives dramatically enhance the ability of groups to make good decisions. They’re more willing to challenge each other. They bring diverse perspectives to what might seem like a mundane question or decision, which may raise new opportunities.”
As more credit unions look to increase board diversity in terms of demographics, geographic regions, professional backgrounds and other factors, recently elected directors may have fresh ideas on expanding recruitment and policies that build in periodic turnover. One way to support that aim, suggests CUES member Shanna Yonke, a director with $2.9 billion Connexus Credit Union, Wausau, Wisconsin, is to be up-front with prospective directors about the length of commitment expected for board service that builds in both continuity and regular turnover.
“I’ve met directors at conferences who’ve served on their board for 30-plus years, but that’s not a realistic expectation in today’s world,” she notes. “I also don’t think it’s good for credit unions because they need new ideas.”
Effective Board Assessment
During a discussion about board assessments at a conference, Fullbrook asked for a show of hands of how many credit unions had a formal assessment process in place. About half the directors raised their hands. Then he asked how many of those processes yielded valuable, actionable results to enhance board performance. No hands remained in the air.
The gap between evaluation and improved performance is not unique to credit unions, he acknowledges. “The first step is difficult: ‘Let’s talk about something.’ The second step is more difficult: ‘Let’s actually try to improve the assessment process.’ But the most difficult step is to make sure the behavior that you’ve implemented actually yields positive results.”
Again, new directors may be more willing to commit to a more rigorous assessment process and to look inward and ask tough questions, he adds.
Director Recruitment and Development
Peter Myers, senior vice president of CUESolutions provider DDJ Myers Ltd., Phoenix, hears plenty of questions and frustrations from veteran board members about difficulties attracting new directors. Being able to pitch a well-designed and comprehensive onboarding program can help alleviate the concerns potential candidates may have about joining the board, he suggests.
“We have a huge problem with board succession and development in the industry,” Myers acknowledges. “How do we demystify board recruitment? One of the ways to do this is to really show prospective directors the infrastructure and foundational principles from a strategy, management and governance perspective. The promise that directors will learn all this right out of the gate is much better than ‘Stick around for a few years, and you’re going to pick up a few things.’”
Mentoring programs can be useful for new directors, especially with additional leadership and facilitation with resources to guide people on both sides of the mentee-mentor relationship, says CUES member Russ Siemens, who serves on the board of $1.9 billion Innovation Credit Union, Swift Current, Saskatchewan, and as the current president/board chair of SaskCentral. And on the educational front for all directors, continuing education plans could include the expectation that they report back to the full board what they’ve learned from the seminars and conferences they’ve attended.
A decade ago, the worldwide financial crisis heightened awareness about the critical importance of the board’s oversight role, Siemens says, and the complexity of financial services delivery today compounds the need for directors to stay informed and educated about emerging challenges. Toward that end, he has completed certification in an MIT fintech course and in the Canadian Centre for Diversity and Inclusion program (ccdi.ca).
At Connexus CU, every board associate and director needs to come up with, in effect, a career plan—where they want to go in the future and how they’re going to get there, Yonke explains. Those plans are shared with the board secretary, who chairs the governance committee, and the board chair and CEO, all of whom provide feedback and help guide directors and associates to find the right resources they need to stay on track to achieve their goals.
The development goals set by each director, taken together, can help identify capability gaps for the board as a whole, so that the group can help identify desirable skillsets and expertise of future board candidates, Yonke adds.
To enhance efforts to recruit a new generation of directors, credit unions should underscore their collaborative nature and commitment to their member communities, two aspects likely to appeal to millennials, she recommends.
“And they should express clearly that serving on the board offers opportunities for personal growth and to be part of something that’s bigger than yourself,” she adds. “Directors are there, first and foremost, because they care about the credit union, but they also appreciate some benefit to their personal or professional development that they can carry with them from the experience of serving on the board.”
The cooperative structure of credit unions—the fact “that the customer and the shareholder are one and the same”—can be an appealing differentiator in recruiting new directors, Siemens agrees. And the opportunity to develop new competencies that may be useful in the careers of board members may be another selling point.
Siemens was a high school principal when he joined the Innovation CU board. “As I got into the credit union system, I realized the value there was for me in learning from the strategic planning that was taking place at our credit union. That was something I was able to carry back into my profession,” he recalls. “And I thought the credit union system might gain from adapting some of the qualitative assessments that take place in education. There was potential for a mutual gain.”
Karen Bankston is a long-time contributor to Credit Union Management and writes about membership growth, operations, technology and governance. She is the proprietor of Precision Prose, Eugene, Oregon.