7 minutes
Today’s high-performing boards are redefining the term “credit union board.” They are shifting from focusing on fiduciary and policy-related items to having future-dense, strategic conversations. They’re implementing new ideas for leading. And each member is engaged, contributing and self-aware.
These boards are efficacious—they’re more likely to produce the results they desire and intend. This makes them (and hopefully the credit unions they oversee) much more successful than boards that focus on effectiveness or efficiency.
“This focus on efficacy is how great boards lead,” explains CUES member Gerry Agnes, CIE, president/CEO of $1.7 billion/115,000-member Elevations Credit Union, Boulder, Colo.
Grounded in Good Governance
“Great boards also institute principles or rules of engagement to help them to lead at a high level,” Agnes adds.
This points to Elevations CU’s great governance structure. In the mid-1990s, the CU’s board of directors began to transform its approach to strategic governing. First, it instituted term limits to encourage healthy board turnover. Initially the limit was nine years of service; today board members can serve for 12.
“The goal was to promote diversity in the thought process,” says Agnes, noting that diversity can include age, gender, ethnicity, profession and background. “Today we have representation in each decade age group from the 30s through the 70s, a blend of professional expertise and a balanced number of men and women.”
Importantly, the board represents broad strategic thinking and differing opinions that ultimately shape terrific decisions, Agnes says. The credit union publicly positions this unique group as an organizational asset. (See its board webpage.)
The second part of the board’s transformation came about when it hired a governance coach, Les Wallace, Ph.D., president of Signature Resources, Inc., Aurora, Colo. “The board wanted to take its leadership and performance to the next level, and it realized more self-discovery was needed,” says Agnes. As the board evolved under Wallace’s guidance, it discovered high-performing boards share certain commonalities:
- fully-engaged with few committees;
- functioning as a collective body, not segmented (operates holistically);
- rotates leadership roles, including the chair position, to cultivate a pipeline of future leaders and
- diverse board members.
“Being a high-performing, strategic board is so much bigger than ‘the oversight of financial performance,’” adds Wallace, author of Principles of 21st Century Governance and A Legacy of 21st Century Leadership. “Board members remain the voice of the member, but are losing their ‘volunteer’ mentality. Instead, they’re embracing highly strategic, pivotal roles better defined as trustees. Different from a volunteer, a trustee is an individual who has been given control or the powers of administration of property, with a legal obligation to administer it solely for the purposes specified.
“As trustees, the board is in charge of the members’ total financial security, which spans service delivery, marketplace analysis and long-term strategy,” says Wallace. He adds that a strong CEO will embrace a board of high-caliber leaders who will make him or her as successful as possible.
“Board members who lead are strategists. They understand the business environment; they advise and serve as a sounding board for the CEO. They thrive on the challenges and the more provocative issues facing today’s progressive financial institution.”
Instead of rehashing fiduciary items, which can be covered through other avenues, boards that want to become more high performing need to focus on “future-dense” conversations, Wallace says. High-performing boards will have frequent in-person meetings that don’t revolve around the mundane.
“For example, we schedule monthly online web portal meetings to share reports and financials, and we deliberate those topics before in-person meetings,” Agnes says. “Monthly fiduciary oversight items (financial, compliance, regulatory, and management analysis) are handled online. Our personal meetings can then focus on well-designed, strategic conversations that are truly elegant, based on the future needs and prosperity of the CU, the employees, members and community.”
Wallace adds that making space for high-level discussion will help the board track shifts in the business environment, so the credit union stays relevant and abreast of trends.
Seeing the Big Picture
John Oliver underscores the idea that top boards follow what’s going on outside the organization. CEO of Global Bank Training, Palm Springs, Calif., Oliver says high performing boards “see the big picture, including the economic and competitive environment, and they recognize and analyze the trends impacting current and future member needs. If a board is not equipped to examine the external environment and perform trends analysis, a credit union is jeopardizing future viability.” Oliver stresses that top performing boards become accomplished in all facets of leadership as it pertains to strategy, rather than staying operationally focused.
“Boards can either be quantitative (tactical) or qualitative (strategic),” explains Oliver. “The quantitative board tends to focus on the daily minutiae, like numbers or ratios, performing basic fiduciary duties and can lack market awareness. Conversely, the preferred, qualitative board focuses on leading, understands trends, and asks questions to ratchet its thinking to the next level.”
According to Oliver, qualitative boards will be asking themselves such strategic questions as:
- What is our value proposition?
- Why do members come to us?
- How do we align with the fintech world?
- How is great member service defined? Is it different from convenience, technology or brick and mortar locations?
- What will drive the members of the future to us?
- What societal needs are changing?
- What will members need in speed and convenience?
- Are we positioned to meet these changing needs in the long run?
- How is the world changing around us?
- Do we need to make a shift to stay relevant?
Oliver says that shifts to a qualitative approach can only take place when the CU and its board see a compelling need to change. “But should it be at a point of crisis in a CU’s business model? Or as an intended, well-designed shift in thinking and strategy?” Obviously, a planned change with intended consequences is always preferable.
Great director leaders understand that their role is an evolving one and a learning journey for the CU. “They realize the information they need to gather, understand and embrace the future,” says Wallace. “Great boards dig deeper into the issues and don’t cross over to operations. They invest time in more strategic dialogue to enhance their learning journey.”
New Board Model
Oliver reflects on the industry’s volunteer-board business model, successful for more than 100 years. “Will this same model take CUs to the next level?” he asks. “Will it drive members of the future to the CU? Boards that simply govern will not be good enough.” The agent for change will be the board that embraces a proactive approach to co-leadership with the CEO.
Indeed, many credit unions are successful, despite having weak boards, because of their strong CEOs. As the industry becomes increasingly competitive, weak boards will impact future performance, regardless of a CEO’s individual talents.
“Passive boards will not keep a credit union relevant and may very well become a liability,” says Michael Daigneault, CCD, founder and principal of Quantum Governance L3C, Vienna, Va., and CUES’ strategic provider of governance services. “Only with a high-performing board can a credit union begin firing on all cylinders.
“Sophisticated boards realize they don’t have all the answers, but want to find them,” Daigneault adds. “Things are changing so dramatically; there has to be a change in the thought process of how a board leads. The most exceptional of boards want to be part of this change. They will also ask the most profound questions. They will need to govern and co-lead the credit union with the CEO they have hired.”
Stephanie Schwenn Sebring established and managed the marketing departments for three CUs and served in mentorship roles before launching her business. As owner of Fab Prose & Professional Writing, she assists CUs, industry suppliers, and any company wanting great content and a clear brand voice. Follow her on Twitter @fabprose.
