Governance best practices will energize your credit union and assist the board and senior management in carrying out their duties. Good governance goes beyond ethical behavior and following procedures. It ensures that the credit union is focused on sustainable long-term value creation for members and other stakeholders, including employees and the communities served. Actionable elements of good governance lead the board and management to support and maintain a healthy culture based on values and trust. Good governance means fostering a collegial relationship of trust and open, candid dialogue among the board, the CEO and senior management. This sets the tone at the top for a healthy culture, where honest robust discussion ensues at all levels of the organization, and where listening and collaborating become part of the fabric of the culture.
Good governance charges the board of directors with oversight of management, monitoring company performance, and preparing for senior management succession. Beyond the minimum requirements, however, a highly performing board can provide an informed and appropriate level of partnership in strategic planning and strategy implementation that assures clarity, alignment, inclusion and buy-in throughout the organization. The board then is not just the evaluator of senior management, but an advisor and strategic partner with them.
Governance best practice finds the board and management clearly articulating the company’s purpose and values and guarantees that the organization is true to them. Values can make the difference between having the people with skills needed to implement your strategy versus watching them go elsewhere. More than ever before, talented people want to work at a company that shares their values, is true to those values, where leadership lives those values, and where the culture is defined by caring about all stakeholders, including the members, employees, and the community.
Following best practice, every director needs a thorough understanding of the credit union’s business. They understand how the credit union maintains its financial health, its revenue stream, its profit ratios and its balance sheet. Yet, the success of the strategy for financial health and growth is not measured only in financial terms, but in member service improvement, and value provided to the community. Directors understand the credit union’s business risks, including cybersecurity issues, disruption from new technologies, regulatory and economic demands, political uncertainty, and managing and protecting the organization’s reputation. Performance evaluation guides directors by identifying and strengthening areas of weakness in the board. The board evaluates the performance of individual directors, the full board, and board committees on a regular basis, generally annually. Externally facilitated evaluations from time to time assure that the board receives an independent view.
Continuous learning on issues facing the credit union means more than just attending board meetings. Best practice starts with robust orientation for new directors and regular and thorough on-going, in-depth learning for all directors. Seminars, tutorials, facilitated meetings, and site visits that give directors access to the workforce, all enhance director education. External experts, such as independent counsel and trusted experienced consultants bring a level of external perspective and the best current thinking and practice. Their support offers the directors and the leadership team the conﬁdence that they are accessing the knowledge resources they need to address the complicated, industry-wide challenges that continuously barrage the organization. Good governance is the board’s and management’s duty, and it is also good business.