Board vs CEO—Who's in Charge of Your Credit Union?

Credit union CEOs and board of directors have different, but very important roles in the organization. The board’s role is to govern, while the management’s role is to manage. When both understand and respect each other’s roles the credit union is stronger and more successful. 

The board of directors provides leadership and oversight. They are guardians of the mission, and they ensure compliance with legal and financial requirements. They are policymakers, ambassadors, partners with the CEO, and strategic thinkers.

The role of a credit union CEO continues to evolve for a variety of reasons, including the growth and complexity of the credit union industry, the increasing professionalism and specialization of the operation, and the growing challenges facing many credit unions today on federal and state levels. 

While there is no one “right” role or standard job description of the CEO, the following constitute the 10 basic duties:

1. Commit to the mission
2. Lead the staff and manage the organization
3. Exercise responsible financial stewardship
4. Lead and manage business development
5. Follow the highest ethical standards, ensure accountability, and comply with the law
6. Engage the board in strategic planning and lead implementation of the Plan
7. Develop future leadership
8. Build external relationships
9. Ensure the quality and effectiveness of products/services
10. Support the board

The following 10 basic responsibilities of a director include:

1. Determine mission and purpose
2. Select the CEO
3. Support and evaluate the CEO
4. Ensure effective planning
5. Monitor programs and services
6. Ensure adequate financial resources
7. Protect assets and provide financial oversight
8. Build a competent board
9. Ensure legal and ethical integrity
10. Enhance the credit union’s public standing

An effective partnership between the board and CEO requires a balance of power and authority. The board must have enough power and independence to carry out its legal responsibilities and to supervise the CEO. The CEO needs adequate authority to manage the organization and exercise leadership in the broader community. Finding and maintaining that balance is essential to an organization’s success.

The Cornerstone Credit Union League’s Annual Meeting & Expo April 22-24 features a number of educational sessions that deal with the relationship between the CEO of board of directors. Following are but a few of those sessions:

• The Role of the Board: Why Boards Govern and Leave Managers to Manage, Featuring Mark Lynch, long-time credit union director—At one end of the spectrum, many boards have traditionally micromanaged their manager or CEO.  At the other end of the spectrum, some have allowed the manager or CEO to simply do as they wish without any real input or oversight from the board.  Good board governance lies somewhere in between.  While it is the most basic principle of board governance, it is also one crucial aspect that a significant number of boards get wrong.  In the engaging presentation, Lynch uses his experience as both a manager working with a board and as a director working with management to discuss the appropriate role of the board, and address ways to ensure board — and the CEO — understand their respective roles and responsibilities.
• Understanding Fiduciary Duties, featuring Kirk Cuevas of Dollar Associates, LLC—It is critical that directors and volunteers fully understand their fiduciary roles within the credit union. This is especially the case in the current economic, regulatory and legal environments. In this thought-provoking presentation, Cuevas provides a complete assessment of the fiduciary duties associated with being a credit union director.
• Assessing & Rewarding CEO Performance with Mark Lynch—Assessing the CEO is one of the board’s primary responsibilities. Unfortunately, many boards either fails to assess or don’t do it properly.  In this session, Lynch talks about clarifying the responsibilities, job expectations and annual goals of the CEO and then conducting a fair assessment of the performance of the CEO based upon agreed criteria.

By Karen Houston-Johnson, VP, Credit Union Resources, Inc.