Three Steps to Successful Credit Union Succession Planning
by: Henry Meier, Associate General Counsel, Credit Union Association of New York
As much as it pains me to admit it, in my self-appointed role as a regulatory gadfly and industry curmudgeon (my wife assures me that the second attribute comes naturally), I find myself agreeing with almost everything that chairman Matz said in her speech before CUNA’s Government Affairs Conference last month. She’s right on the money when she says that credit unions have to start attracting younger members and embracing the new technology upon which they rely if credit unions are going to be relevant when the hundredth anniversary of the Federal Credit Union Act is celebrated in 2034.
The question is, what can a credit union do to ensure that it is relevant 10, 20 and even 30 years from now? I think one of the most basic steps they can take is to examine their board succession processes and try to involve a more ethnically diverse and younger group of persons in the credit union movement.
In January CUNA’s Community Credit Union Committee released an excellent report analyzing board succession practices that is worth a read for anyone who feels, as I do, that this is an issue that credit unions must address. My take away: credit unions are falling behind the diversity curve and aren’t doing enough to catch up.
As Chairman Matz pointed out, the average age of credit union members is 47; up from 40 just a few years ago. In contrast, the peak borrowing age is between 25 and 44.
Age diversity isn’t the only problem. According to the report, males outnumber females on boards three-to-one; and, at a time when America is becoming more ethnically and racially diverse, 89% of credit union boards are comprised of non-Hispanic whites. As a matter of fact, the 500 companies that comprise the Standard & Poor’s index have more diverse boards than do credit unions.
Now I should point out, as the author of the Filene report does, that I have nothing against older white males and hope to be one eventually. Nor do I believe that you have to be a young member of an ethnic or racial minority to devise ideas for attracting a more diverse demographic. But I do believe that diversity in ideas and backgrounds can help bring about the type of fresh thinking that all institutions need to succeed in the future.
The report highlights credit unions that have succeeded in improving their succession planning. For these credit unions, succession planning is approached systemically and is a top priority of both the board and the CEO. For example, the boards have written criteria of the attributes they want in potential board members. They make a conscious effort to cast the net for potential recruits as widely as possible by telling organizations throughout the community that board terms are expiring and that they are looking for applicants. Finally, most of the credit unions profiled had unofficial term limits to ensure that new persons take leadership of the credit union.
I know many of you are saying that it’s impossible to find volunteers willing to take these positions, let alone engage in a selective vetting process. But is this a self-fulfilling prophecy or a reflection of indifference to the credit union movement? You won’t know until you try yet again to generate interest in credit union leadership.
Here are three steps you should take before conceding defeat.
- Make every board member not up for election produce a list of at least three candidates for every board opening.
- Network with organizations and individuals to put them on notice that recruits are being sought.
- Develop a job description. If you don’t have one already, form a nominations committee and have it interview the prospective candidate or candidates. This will help people realize that being on the board is a big responsibility.
Link to CUNA report
http://cuna.org/download/Effective_Credit_Union_Board_Succession_Planning.pdf
Matz speech
http://www.ncua.gov/News/Documents/SP20120319MatzGAC.pdf
Henry Meier, Associate General Counsel, Credit Union Association of New York
As associate general counsel for the Credit Union Association of New York, Henry is actively involved in all legislative, regulatory and legal issues impacting New York credit unions. Whether he’s joining in the Association’s advocacy efforts, lending his legal expertise to the Association and its affiliate companies or arguing before the New York State Appellate Division, his voice is unique and influential. Before joining the Association in 2006, Henry served as a counsel to the New York State Assembly Republican Conference for seven years. Henry is a graduate of American University in Washington, D.C., and Hofstra University’s School of Law in New York. New York’s State of Mind Blog www.cuany.org
