The fate of most businesses is determined by owners or shareholders. Lacking shareholders, the fate of most credit unions is determined by a small group of insiders.
Technically, boards still govern credit unions and are chosen by members’ votes, reports Stephen Morrissette, visiting professor of strategic management at the University of Chicago Booth School of Business, but the reality is that members attending annual meetings and casting votes to elect directors is long gone. “The old annual meetings were parties where members did attend and vote and win prizes,” he recalls. “It was great fun. Now it is surprising if 30 members show up. They mostly sign proxies and let the current board vote their shares.”
Members’ meaningful influence these days comes from voting with their feet when they switch institutions, not from voting their shares, according to Morrissette. Most directors are recruited by CEOs or other board members and run unopposed.
Concentrated power could lead to abuse, but more often it leads to vulnerability as that insider group could weaken under stress or events and withdraw, leaving a leadership vacuum. Part of the problem, says Ancin Cooley, CIA, CISA, principal of Synergy Credit Union Consulting, Chicago, is due to board fatigue—volunteers who are wearing out from donating time to deal with challenges that just keep coming.
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