Is your board operating at peak performance?
Your credit union’s members have a real interest in having your board function at peak performance. Sound governance is the foundation of board performance that results in long-term value creation and resilience. The serious responsibility of board governance starts with nominating and electing high quality directors, who express good independent judgement and diligently exercise their duties of care and loyalty. They bring knowhow, perspective, and vital skills. They know they are accountable even though they are volunteers. Working in concert with other directors, each one participates fully in board conversations. They listen, they respectfully consider other points of view, and they share their reasoned judgments. When their views differ from the consensus, they are prepared to respectfully engage in the challenging conversations that may result.
The quality of individual directors and the way they interact as a team determine the quality of credit union oversight, as the board tackles questions of strategy and risk management in conjunction with the leadership team. This is where a high-quality board assessment process comes in. Board and committee evaluations are required for New York Stock Exchange listed companies, yet board assessment is a best practice for all companies, including not-for-profit organizations like credit unions. A regular rhythm of assessment is one of the most effective tools for maintaining high functionality and continuous improvement of board processes. Annual evaluation at the full-board level is a best practice. In addition, committees and individual director assessments should occur at least once every two years.
When board members share and receive candid feedback from each other, senior executives, and trusted external parties, it leads to superior board dynamics, clearer agendas, streamlined processes, enhanced meeting materials and resources, and more suitable board and committee composition. Analyses of board processes, committee operations, and individual director efficacy establish a baseline for identifying the board’s strengths. Importantly, it also uncovers areas that must be addressed for board improvement, which can include learning programs and individual director coaching.
Many smart credit union boards have adopted these best practices, and they turn to trusted third parties to assist in the effort. An experienced expert brings a broad level of knowledge from within the credit union industry and from their work with public and private companies and other not-for-profits. They draw on broad experience to design survey instruments and perform one-on-one interviews with seasoned executives. They bring a level of trust that allows directors to bring to light uncomfortable viewpoints in confidence and without attribution. The data they assemble in confidence provides quantitative and qualitative support for action plans, which they help to create, that are designed to boost board functionality and director effectiveness
High-quality board oversight is the foundation for organizational resilience and long-term value creation for members. A robust assessment exercise will serve to give your credit union’s board every opportunity to operate at peak performance. The result in improved board function will show it was worth the effort. Give your board every advantage by taking a hard look in the mirror. Having an independent trusted party helping you hold up the mirror makes the effort run smoothly, with minimum disruption, and maximum positive effect.
