In the face of waves of changes from digital disruptions to shifting demographics, credit union directors face a critical task: to be vigilant stewards of their members’ funds and make crucial strategic decisions to steer their credit unions towards success. Yet credit union boards have not always performed to their optimum capacity.
In our latest report with Quantum Governance and CUES, we offer a snapshot of the state of US credit union governance in 2020, from the shifting recruitment priorities of boards and how they define leadership, to the nature of dissent within the boardroom.
The report is based on the analysis of board assessments conducted by Quantum Governance between 2012 and 2019, and a survey conducted with directors and CEOs of some 170 credit unions across the US.
We found that credit union boards are making progress in important areas of governance even as they continue to falter in other ways. Here are some key takeaways from the study.
Demographic diversity is the number one recruitment priority for boards
More than ever credit union boards recognize the value of board members who are diverse in terms of age, gender and race/ethnicity. For the first time, respondents identified demographic diversity as the number one priority during recruitment. However, it may not be enough to prioritize demographic diversity – directors need a plan to find the right people, and they must also importantly consider how to balance the demographic needs of the board with the technical and soft skills required for the board to fulfill its responsibilities.
Board members must achieve greater alignment on what ‘effectiveness’ means
While most boards encourage constructive disagreement, it is also important for there to be clarity and alignment between board members on where the boards stands and where it aspires to be in the future. We found that board members often had widely differing views from each other on how ‘effective’ their boards were on a range of processes relating to decision-making and renewal. Board members should ask themselves: how do my fellow board members define the ‘effectiveness’ of our current renewal and decision-making processes? And if there is disagreement, how can we achieve greater alignment?
The board chair leads seven functions
The board chair has one of the most critical roles in the boardroom: she or he not only presides over meetings, but also creates the conditions which allows other board members to shine. We found remarkable consensus among respondents on the core functions a board chair leads. These responsibilities are centered around establishing the processes (e.g. allocating time, setting the agenda, facilitating participation) and people (e.g. appointing committee members and committee chairs) to ensure that boardroom discussions are productive and that the board can carry out its responsibilities as effectively as possible.
Boards need to invest more time in strategic dialogue
It is an eternal challenge for boards to strike the optimal balance between discussing operational and strategic matters. While three out of four directors ranked ‘an ability to focus on the future’ as the skill that added the most value in the boardroom, directors still struggle to move beyond their comfort zones and invest the right amount of time on strategic discussions. Board members should ask themselves: does the board currently fulfil its strategic responsibilities? If not, what are some of the strategies and tools it can use to do so?
READ THE REPORT
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