3 minutes
No individual director can push staff action, or governance consistency is compromised.
I was elected to the CUES Board of Directors in 1996. I had served on local boards, of course, but this was the board of a national organization of professionals. That professionalism carried through to board methods and practices.
As with your credit union, CUES had an orientation for new board members, during which then-President/CEO Fred Johnson introduced me to a concept that changed my career. “One board member has no authority,” he said. “The majority of the board has all the authority.”
This seems like a simple concept, but it carries massive implications.
No board member, even the chairman, should direct the CEO to do—or not do—anything, unless the board as a whole has given him or her that specific authority. Authorized actions actually taken should be reported back to the board.
For example, no matter how loud or long someone talks about a subject in a board meeting, unless the board passes the issue, no action should be taken. If staff takes action on board discussions, they risk individuals usurping the power of the full board.
Also, if a board member dislikes a marketing campaign, wants to have more Christmas lights or a bigger flag, or thinks a branch should be built in his home town, that director shouldn’t expect any action unless the entire board is, well, on board.
After-meeting discussions like “I know what was passed, but here is how we really do it” must be ignored.
The Role of the CEO
Lest you think I am bashing boards, let me point out that most of these problems are the fault of the CEO. A board member will make a comment. The CEO will weigh whether to do what is being requested or ignore it. If it is a small thing, the CEO, exercising risk/return decision-making, might decide to go ahead with the board member’s request.
With this bad decision, the CEO teaches the board member to come to him individually. The board member learns that he can get what he wants without bringing it before the board as a whole. In doing so, the CEO places himself in a position from which it will be difficult to ignore the board member’s next request.
So, how should this have been handled? The CEO has two choices: 1) Listen politely and suggest the board member take the request to the full board. This teaches the board member the CEO will not act on individuals’ requests. 2) Inform the chairman that a board member made a request directly to the CEO. The chair should follow up gently with that director about changing this behavior.
The concept of the board acting as a whole and only acting as a whole is the foundation of every other governance tenet. Without it, there can be no consistency in board direction.
Two Exercises to Try
If there might be issues with the board acting as a whole at your credit union, here are two things to try:
Exercise 1: Chairs, go to your CEOs and ask if individual board members are making requests or attempting to direct their actions. Discuss any problems with the individual board members, carefully pointing out that you initiated the discussion with the CEO.
Exercise 2: Board members, have a discussion on the importance of acting only as a whole and affirm in writing that the CEO will only act on authority of a decision of the full board.
William J. (Bill) Rissel is retired from $1.2 billion Fort Knox Federal Credit Union, where he was CEO for 23 years. During that time the CU’s assets grew ten fold and capital doubled to over 14 percent. Rissel served two years with distinction on the Federal Reserve Bank’s Community Depository Institution Advisory Council. He now sails the waters of southwest Florida and the Caribbean and occasionally assists CUs in financial management and governance issues. Reach him at 941.626.0330 or wjrissel@gmail.com.
