How a board assessment can impact your credit union board
Can a board assessment strengthen your credit union board? The answer is definitely yes. Today’s volatile times are changing the way boards, organizations and leaders need to understand their new roles and resulting accountability. Credit union boards are not regulated in the same ways as public companies. However, they are experiencing overwhelming pressures from members and core stakeholders. Proper and effective responses to these demands require unprecedented skills and strategic thinking.
State of the art board assessments are designed to shine a light on the overall effectiveness of the board, including obvious and less than obvious strengths and weaknesses. Facing the truth will enable your board to make the necessary changes that will put your organization in a position to have great things happen.
Best practice is to periodically assess the performance of the Board, the Committees, and individual Directors so that the Board can continually improve its performance. Utilizing independent experienced third parties for these engagements helps to keep the conversations from becoming political and keeps the assessment criteria and data based. With all due respect, perfunctory assessments, performed by internal advisors, are typically not going to provide the depth of knowledge required or the independence to provide learnings leading to powerful tactical and strategic changes.
The role of Directors has always been to validate strategy and to ensure proper CEO succession planning. Today, validating strategy in a world that is burdened with economic turbulence from wars, climate change, increasing responsibilities surrounding ESG, is increasing the responsibilities of being a credit union Director. How do Directors continue to learn and surround themselves with the necessary data and people with the right skills to validate strategy and change strategic directions to meet the needs of a volatile world? Additionally, selecting a new CEO requires tremendous time and commitment on the part of Directors and it needs to be done right.
One of the Boards in which I served as a Director, required the selection of a new Director. The Chair of the Board recommended someone he served with on several other boards. My sense was that their skills were not fitting for where the company needed to be in the next five years. I raised this issue, and it was brought to a vote. My sole vote of no tabled the whole discussion and we then eventually focused on bringing the right candidate to the table who would serve the organization well strategically. Understanding the skills required for new Directors to add to the Board is critical for ensuring the right Board composition including technology, cyber and changing member demographics.
Strategic communication cannot be underestimated. The most successful CEOs learn how to effectively communicate and share information with their Boards. Many will call each Board member in advance of the Board meeting to make sure their concerns are addressed. Developing a strong CEO dashboard framework will ensure top-down accountability with links to pay-for-performance. Accountability includes clarity of responsibilities for Directors as well. Board accountability must include the importance of establishing the right Board culture and C-suite communications that lead to the highest levels of governance to ensure organizational success. Top level assessments provide a baseline of data by utilizing the most relevant, penetrating questions that are intentionally crafted to lead to a strengthening of the Board and its culture.
Board assessments that prioritize customized questions pertaining to the highest standards of accountability will help to establish a baseline of data leading to strengthening the Board’s culture as well. Is there respectful collegiality where disagreements can occur, in a trusting environment, to get to the most productive outcomes? An additional point with Board trust and collegiality has arisen due to Covid and the need for incredible transparency. With reduced in-person Board meetings, comes reduced communication and reduced Board effectiveness. Multi-tasking when you are not required to sit around a table to contribute, is easy to fall into this trap, even for the most experienced Board members.
Board assessments can reveal some unflattering realities, but constructive dialogue that is data-driven can get you closer to where you want to be in both business and life. If you can dream and hold onto your values, incredible things will happen.