Are You Holding Your Credit Union Back? A Directors’ Guide to Stepping Up Your Game & Staying Relevant

Your job as a board member is to push forward, not to hold back. Credit union board members may not always have a good sense of how their behavior impacts the credit union itself, often in extremely negative ways. Lack of awareness of the industry and of self can be at play here. Even with the best of intentions, sometimes boards are a drag on the organization without knowing it, creating the environment for catastrophic results.

By Kevin Smith

I know … I know. I’m coming out of the gates here with a negative perspective. I tried to put a positive spin on this but I decided that I didn’t want to beat around the bush on this.

Of course, you need to hear the immediate caveat: NO, not ALL boards are like this. But there are enough that are, that make me feel the need to call attention to this. And my flair for the dramatic says that this headline might just make you indignant enough to stop and question, “He CAN’T mean me, can he? … or can he?” Before you dismiss me, I want you to think long and hard about this. If you’re unsure at all – start asking around, immediately!

Some boards and/or individual directors are simply not stepping up to do enough work to be helpful to the credit union. They are governing as though it’s 1985 or 1975 or … worse. Sometimes the amount of effort is barely enough to count as fiduciary oversight, let alone cutting-edge strategic thinking. Here are some things to ask yourself about your own service and your board as a whole:

How well do you know the numbers?

The financials in this industry are critical for understanding how things are going. You know, your fiduciary duty of oversight. They’re also complex. I recently wrote about learning these so well that you don’t have to pay much attention to them. If you don’t know these well enough, are you voting on things that you don’t fully grasp? Also to consider – if you don’t know them well enough, are you requiring your CEO or someone else in the organization to spend valuable time reviewing and explaining the fundamentals?

How well do you know the industry?

Many board members I’ve encountered THINK they know everything they need to know, but aren’t really up to date with the 21^st Century in financial services. It’s difficult for CU staffers to keep up and they’re in this 40+ hours a week. What are you doing to catch-up. Here’s the dreaded scenario I hear from senior executives: “It took me months to educate and convince the board that XX is a good idea. Now we’re playing catch up in our area/market.” Most of what I see in the context are cases of boards who don’t know what they don’t know. It’s a lack of awareness. Heck, I’m in the business and read about this stuff every single day, and I have a very hard time keeping up. How much effort are your board colleagues spending to keep up? Don’t throw the “I’m just a volunteer” card at me. This is real work. The credit union’s viability is at stake. It’s frustrating for all of us that this industry is as complex as it is now, but that can’t be an excuse for not doing the work. If you don’t know enough about the industry, you are holding the credit union back.

Can you clearly explain the CU’s business model in an elevator pitch? (a minute)

If you answered this with, “We’re like a bank,” or “we take deposits and make loans,” or “we have the best customer service” then I don’t believe you have this firmly in your understanding.

Do you require spending approvals that are relatively low? (“weasel” word alert)

Yes. The word “relatively” is a weasel word here. I can’t give you one number that’s right for every credit union. There are a range of critical variables. But do you and your colleagues have the intenstinal fortitude to ask your CEO this question and be open to really hearing an honest answer: “Is our spending aproval policy at the right level, or is it too low?” Too often what I hear is a number that’s too low.

(*Right now, some of you think that I’m backing only the CEOs, and being paid off to spout off like this. I’m not. You’ll have to trust me.)

You’re thinking: “that’s my oversight role. I need to know what’s being spent and how.” But what I really see most of the time is well-intentioned directors who dig in here to feel like they’re adding value, protecting members’ money, and having control. If fact, what’s going on is friction for the CEO’s attempts at momentum.

Let me ask you this: Generally speaking, how does a CEO benefit by spending more money except for it adding value to the organization on the whole? If anything, a CEO spending recklessly or wastefully is going to hurt the CU’s financials and ratios, making the CEO look bad. Unless, of course, spending the money will create a wise return. The response I usually get is, “We want to make sure that the members’ money is well spent, and isn’t being used on anything too risky.”

Do you hold your board colleagues accountable? (And Vice Versa)

“Accountable for what?” you ask. For:

… when they come to meetings unprepared?

… when they ask questions that are in the weeds?

…when they show that they haven’t done the professional development/learning that they should (or that they said they would).

… when … (fill in your own comment)

Enabling bad behavior does not push your organization forward. It holds it back.

Now many of you reading this are going to believe that you’ve just read something that confirms that you’re part of the best-est credit union in the country. You answered all of my questions and are convinced that you do all of the right things and none of the wrong things. But … how do you know? Are you sure? Do outside sources confirm your suspicions? Or are you just answering with your gut? I challenge you to get feedback and be open to all answers, challenging and not. Be willing to confront issues and hard responses, all in the interest of serving your members and pushing your credit union forward. It’s not personal. We’re all flawed human beings who can work together and achieve great things. This is about making an effort to do better and to be “people helping people.”

I spend a great deal of time talking to CEOs, board members, senior staff members about these kinds of educational issues for boards. At conferences I have sidebar conversations with dedicated members of the movement who are troubled by what they witness. I take phone calls, and respond to emails on this. I spend time training, speaking with and listening to these groups. Enough of this to know that this is a significant issue.