Of all the major decisions that loom in the wake of a credit union merger, perhaps none is fraught with more political and interpersonal ramifications than what the board of directors should look like after the merger is done. Is it best to combine the two boards, or does one board usually continue on largely as is?
When a smaller credit union merges into a larger one, typically the board of the large credit union will remain intact. In some cases, the continuing credit union may expand the board, making room for one of two directors from the merging organization. This most often is a temporary expansion, with expiring terms eventually bringing the board back to its previous size.
In a merger of equals or near-equals, the decision is not always so clear-cut. The ideal scenario may be to assemble a board that includes directors from both credit unions, basing choices on the talent and expertise that each individual will bring to the organization.
Oftentimes there are more talented individuals than spaces on the board, even when additional slots are added. In that case, credit unions will need to get creative to find positions for the displaced board members.
“You have to determine how to utilize the talent and strengths from both boards to drive your organization forward,” says Val Mindak, President/CEO of $290 million Park City Credit Union, Merrill, Wisconsin, one of 25 credit union leaders to weigh in on this topic in “More for Members: Credit Union Leaders Plan Post-Pandemic Merger & Acquisition Strategies,” a three-part DDJ Myers white paper.”
Mindak and other contributors to the white paper had several innovative ideas to accommodate erstwhile board members after a merger, including:
Create an advisory council. As a regular practice, $1.2 billion Webster First Federal Credit Union, Worcester, Massachusetts, convenes advisory councils consisting of board members from merging credit unions. President/CEO Michael Lussier acts as liaison between the board and advisory council, which is typically dissolved within 18 months. “It’s a solution that has worked beautifully for us in 15 consecutive mergers,” he says.
Form a regional board. Creating a regional entity is particularly a good idea when a merger expands the continuing credit union’s geographic reach. Mindak observes that the directors from the merging organization will know the area well and will have valuable input on how best to serve it.
Appoint former board members to committees or foundations. Simon Walton, board chair of $2 billion USAlliance Federal Credit Union, Rye, New York, says that finding opportunities for board members to continue in some capacity is better than showing them the door, “especially when they’ve given service and commitment over a sustained period for the benefit of others.”
Even more importantly, the credit union would gain value from tapping into the expertise of these experienced board members. “Though one organization is not continuing, there’s a lot of knowledge and history from that board,” Mindak says. “To just dismiss that is a real mistake.”
Click the link to download the three-part white paper, “More for Members: Credit Union Leaders Plan Post-Pandemic Merger & Acquisition Strategies.”