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credit-union-board-best-practices

Oftentimes a person’s greatest weakness is an extension of their greatest strength. Apply that idea to credit union boards, and you might find that directors’ deep commitment to serving members’ financial needs can make it hard for them to leave the job — even when, ultimately, that might be the best thing for the credit union.

That’s not to say that board turnover simply for turnover’s sake is a good thing. In fact, a 2012 report sponsored by CUES found that 81% of directors and 75% of CEOs reported satisfaction with the level of turnover on their boards. 

The report goes on to point out that having a formal board renewal process provides boards with an effective tool for understanding if and when turnover is needed. Here are two best practices in board renewal that your credit union might want to take a serious look at, if you’re not doing them already.

Board Succession Planning

The job of building the board is more than "just filling slots." It is about being strategic in the way a board looks at its composition and its governance responsibilities. That's where board succession planning comes in.

Board succession planning is the process through which a board takes a proactive approach to ensuring that it has (and continues to have) individual directors who possess the skills, qualifications, experience and attributes necessary to govern well on behalf of the credit union’s members.

According to “The Board Building Cycle” by Berit M. Lakey, there are nine steps to finding, recruiting, and engaging credit union directors that address two major purposes: to replenish the board’s people-power by bringing in new members and to strengthen the board’s performance. Effective boards don’t happen by accident. Just like you plan for the strategic direction of your credit union each year, it’s critical that you also plan for the strategic future of your board of directors.

Board Self-Assessment

Board self-assessment is just that, the board assessing itself. It's not a performance evaluation of the CEO, the organization, or even individual board members. Instead, it is an opportunity for the board to look at itself and ask, “How are we doing as a board as a whole?”

credit-union-board-assessmentAny self-assessment survey will ask the board members to review a list of core responsibilities and best practices and then indicate how well they think the board is doing in achieving them. 

For example, the following areas of accountability are typically included:

  • Understanding the credit union’s mission and vision
  • Financial oversight
  • Legal and ethical oversight
  • Providing guidance and support to the chief executive
  • Level of commitment and involvement
  • Knowledge of the credit union’s programs, products and services
  • Evaluating the chief executive
  • Understanding board responsibilities
  • Monitoring the credit union’s performance
  • Strategic planning and thinking
  • Recruiting new board members
  • Community relations and outreach
  • Increasing board diversity

Credit union board members deserve to have engaging and rewarding experiences. Credit unions deserve to have the leadership and support of a board that brings their best to every meeting and to the organization. The board self-assessment process is a great way to see whether your board and your organization are meeting these mutual goals. 

Remember, however, that providing your board with a board self-assessment tool to fill out is just the starting point. This is a long journey that should proceed at a steady pace. Ideally, every step along the way will result in a stronger board and a stronger organization.

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