Ask credit union governance experts what has gone wrong with credit union boards and there’s no hesitation in the answer. Everybody knows what’s wrong with them. J. Keith Hughey, a longtime governance expert, filled in the blank: “There’s still the tendency for credit union boards to put people who look, think, and act like them on the board.”
“We prefer to have nice, collegial meetings,” added Hughey – and the quickest route there is to add board members who think the way we do.
Just one problem: today’s credit unions face a widening world of frictions. Many have expanded fields of membership. They wrestle with digital transformation challenges. Also regulators and regulatory issues. To succeed, today’s credit union has to navigate plenty of choppy water – and that usually necessitates a different kind of board.
Recognizing this is the pivotal starting point to remaking a credit union’s board for the 21st century.
Today’s board has become skills driven. “Today’s board needs to know the skills it needs for the credit union’s future,” said Steve Williams, a principal with consulting firm Cornerstone Advisors. Creating that skills list is a central building block when crafting a purpose built board, and Williams’ advice is to have –in hand– a grid of needed skills before going shopping for new board members.
While you are at board reimagining, think diverse is advice from Cate Agnew, an executive with financial firm Natixis in New York. “A lot of credit union boards,” she said, “are composed of white men. Cast a wider net when seeking new board members, in order to better reflect the institution’s community and its going-forward needs.” She insists, “plenty of women with strong credentials, are actively looking for board opportunities and there are organizations that have in hand databases of ‘would-be’ board members.” She pointed to Athena Alliance as a case in point and there are others. The takeaway: it’s now easy to find women. If you look.
Hughey also urged seeking out more racially diverse members and also younger people – “Gen Y is now the biggest generation,” he observed, “but most boards are composed of Baby Boomers.”
Is it easy to persuade young members to serve on a board? Nope. But the experts insist that with enough persistence, younger members will see the advantages in board service, for themselves and also the credit union.
Another crucial need for the 21st-century credit union: board members with a keen interest in financial technology which, for many credit unions, will shape their futures. Just as NCUA has mandated a minimum level of financial literacy for credit union board members, Hughey indicated it wouldn’t surprise him if a tech literacy requirement emerged. So scout for board prospects who use mobile banking, have made remote deposits via mobile, and maybe even have used Venmo for person to person payments. Not every board member has to be a tech geek, but aim to stock the board with one or two.
All this sounds like it’s going to be hard to recruit new board members – especially since federally chartered credit unions are not permitted to pay them and few state-chartered credit unions actually do. The reality: for most successful board members, serving on a credit union board becomes a labor of love.
Stay alert for that kind of person is advice from many experts. “Make this search intentional,” added Williams who stressed looking for candidates who get the special qualities and values of credit unions.
Make hunting for new board members a big part of the job for present board members as well as senior executives.
For candidates who get the special role played by credit unions, the lack of pay may be no hurdle – not when they can build their resume, add to their skills, and help serve their community.
For these people, the offer of a credit union board seat may be exactly what they’ve been waiting for. Find them, ask them. And you just may be hearing a lot of yeses.