Final score: Board – 1; CEO – All others
“Members of the Board, I would like you to meet our new CFO,” said the CEO of a large credit union as he introduced the newest executive. Pleasantries were exchanged, small talk occupied several minutes, and the CFO excused himself to tend to the afternoon’s matters. The CEO shared the background of the CFO and how happy he was to now have a complete team of managing executives. The scheduled meeting with the Board and CEO continued as prearranged.
In contrast, another credit union’s Board directed the CEO to not relieve an operations executive of her duties. “She’s been with us for years, members love her, and it may send the wrong message to staff, pointed the Board.” The CEO felt her hands were tied. The operations executive was not meeting new expectations, had not delivered on a performance improvement plan, and was actively working against necessary changes in the credit union’s culture and strategic growth plans.
A board of directors has one employee – the CEO. Most breakout education sessions on governance remind us of that steering tenet. How is it practiced at your credit union? Obviously, boards develop working relationships with other executives; the executives are often involved in meetings that involve strategy and board affairs. And, boards often rely on the expertise of executives to share deeper insights into operational matters.
As much as a board desires to ensure the credit union is led by the best, its role is limited to selecting and evaluating the CEO. For the CEO to be effective and fulfilled as the top executive, he or she anticipates having the authority to build and refine the kind of executive team that is suitable for the credit union’s strategic future. While the CEO may choose to discuss issues and candidates with the board; that conversation should be for insights, clarity, and observation. Ultimately, the CEO is responsible for building the organization and accountable for the results that follow.
As for the CEO with the excessively involved board; she ultimately made it clear: the credit union would continue to suffer financially under current operating leadership; and, was about to struggle even more as she considered resigning. Her board decided to commit to its one employee – her. The results? Membership growth, record revenue, higher margins, increased efficiency, lower losses, and newfound profits.
The most effective boards remain focused on governance and oversight; and, the most valuable CEOs remain occupied with strategy and execution. Boards can best help their CEOs succeed with clear support on strategy and the freedom to implement. In return, the CEO can deliver what the board needs most from its singular employee – sound operations, strategic progress, and sustained relevance for members.
