There is a long history of credit union staff taking pride in being more than a financial institution and more like a family to colleagues and members. While this may feel right, it is an attitude that can challenge the productivity of organizations that have become extremely complex. It is often not effective to behave like a mom-and-pop shop anymore.
By Kevin Smith
This may not be a very popular post. But I hope you’ll hear me out and consider the perspective that I’m bringing. Too be absolutely clear, this is not a clear-cut issue with easy sides to be on. It is a complicated tight-rope walk for credit unions. Those who figure out how to navigate this balancing act my lock onto a great differentiator and market advantage.
During my recent travels, during a keynote session I was giving I asked about some of the concerns the board members were having. Someone spoke up from the crowd with a troubled look on his face. He said something to the effect of, “We’re always talking about how we’re ‘family.’ But I have a problem with that. We’re NOT a family. We are a business, and we need to act like it.” This took me off guard, precisely because in the credit union movement, particularly in smaller and midsized credit unions, we talk like this all the time. It was a minor stir in the room, with some chatter. Some looked thoughtful, some concerned, and some puzzled. The gentleman spoke up again to say sometimes acting like family is getting in the way of us getting things done, because we are not acting professionally enough in an industry that demands it in order to keep up, much less thrive.
He’s got a point. I don’t love it, but he does have a point.
Two (Or More) Sides
We credit union people love to be something other than bank-like and other than corporate. It’s a way for us to set ourselves apart and differentiate ourselves from cold, profit-driven businesses that don’t care about us as humans, who only want our dollars. There’s a lot to be said for this human approach to members and colleagues.
But there’s a difficult side to this approach as well. Often when we treat people like family rather than colleagues we don’t take the rational and pragmatic approach to getting things accomplished. We all know that we’d generally give family more chances at redemption than we would others. Blood is thicker than water, as the saying goes. And you can’t choose your family; you’re just stuck with them. (I know it’s more nuanced and complicated than this, but there’s a point here.)
With as much consolidation as there is and as many mergers as there are, we know that there are some that are not making it. It is a challenging and complex industry that does not look like it did ten years ago much less than its inception a hundred years ago. I’m not saying that this is all due to this family approach. But are we evolving as much as we need to?
Can We Balance This?
I have to tell you that I’m really uncomfortable with the direction this blog post is going. I don’t like it. No sir. Not one bit. The family aspects of this industry are a draw for me. At the same time, the change that I’ve seen over my 18 years here are jaw dropping.
Perhaps there are ways to walk this tightrope between family and business. Maybe you know how to do this or have examples of this done right. I’m eager to hear. Send them along. The right balance might just be the magic approach. And I’ll say very quickly – some of you think you’re doing this already. I’m not sure I agree.
Family Versus Humans
There’s a distinction necessary here: it’s two different approaches between treating people like family and treating people compassionately as humans, with some serious overlap. Simon Sinek and Gary Vaynerchuk (and others) are proponents of the empathetic human approach to business. It’s distinct from a family approach.
Kevin Isn’t Sharing Any Advice
Surly you’ve noticed that I’m not doling out any advice as to how to navigate this. (Yes. And don’t call me Shirly.) The truth is that I’m not sure how to handle this. It was a thoughtful, thought-provoking comment from a board member at a conference. Hurray for that. Kudos to him for bringing a challenging idea to the table. I certainly hope that happens as often as possible, because I see an awful lot of opportunity to collaborate on these difficult ideas.
Sometimes I’m thrown off. I’m sure I need to think about this one more. But it’s been weighing on my mind for a bit and needed to get it out there for you smart people to work on. Let’s face it: some families are dysfunctional.
What do you think?
What do you see?
If you think you’re doing this balancing act well, what makes you so sure?
I want to hear from you.
https://forteamresources.com/wp-content/uploads/2023/09/Overlay.png11271504Kevin Smithhttps://forteamresources.com/wp-content/uploads/2020/06/Team-Resources-Logo-2020.pngKevin Smith2023-09-19 18:43:312023-09-19 18:43:31Are We Family? Should We Be?
Credit unions as an industry have had to lean in towards rapid change and evolution over the last decade, exacerbated by the pandemic. Boards of directors are starting to (finally) acknowledge the need to try to lean in to these changes. Yet, despite these good intentions, often the lean in turns to lip service when they fail to actually “do things” differently in the boardroom.
By Kevin Smith
There certainly aren’t a lot of silver linings from the pandemic. As a matter of fact, I don’t even like presenting it in this light. But one angle that I think we can all agree on is that credit unions, who aren’t known for their speed in change, found out that they could pivot on a dime when they had to. It was fabulous to see worried credit union leaders and their staffs adapt and figure things out pretty quickly. It’s my hope that we all embrace this as a new skill set and keep flexing that muscle. Indeed, many have.
In that light, we also saw some slow to move boards have their eyes thrown wide at the steps necessary to keep working towards the credit union’s purpose. Directors faced the unsettling predicament and supported their leadership and staff as they made fairly radical moves to keep the organization open and serving members who desperately needed their help. Most rose to the challenge and it was fantastic to watch (stressful as it was).
I Worry About Lip Service (and everything else)
Now when I worry (and I do worry), it’s about falling back into old patterns, inertia and complacency. Mostly what I notice from directors is significant embracing of the language of change, particularly when they talk about their leadership and the operations. But what I’m seeing less is boards leaning in themselves to changing their patterns and approaches in the board room and in their governance work.
It’s not exactly lip service to embracing change that I see. Board members seem very genuinely supportive of the need for faster evolution and development at the operational level. Though it looks a lot more like lip service in regard to changing at the governance level. The two need to happen in synchrony to be most effective.
Snark Alert
Hence the snarky title of this post: You can’t do things differently, if you don’t do things differently.
Does your monthly agenda basically a template reused month to month?
Do your board meetings have a very predictable flow?
Are the same people talkative (or quiet) without fail?
Has your board packet had the same format for, oh, over a decade?
These may be red flags that the board is in a rut.
*(Here’s a fun, or maybe terrible, exercise: Challenge the senior leadership to do the funniest skit possible, while performing as the board of directors. This “court jester” approach will reveal any predictability and stereotypes that bubble to the surface. Warning: you may need thick skin for this, but it will certainly be educational.)
Yeahbuts
Naturally I come prepared for the Yeahbuts.
“Yeah, but it took us a long time to develop this approach and it works really well.”
“Yeah, but we have a lot of work to do and this is efficient.”
“Yeah, but the regulators are expecting xyz.”
“Yeah, but you’re suggesting change for change’s sake.”
“Yeah, but all of this change is going to cause a lot of extra work for the board and the staff.”
I’m not suggesting reinvention every month, or change for change’s sake only. I am suggesting that the entire board look carefully at what they do, question it, and evaluate it in light of the changes the world has made around you. Make sure that anything that fits the category of “this is the way we’ve always done it” gets careful examination for relevance.
Suggestions for Inspection
The board agenda: are there interesting discussions, not just monthly updates?
Once a year (or as needed), make a determined effort to refine an element of the board packet that makes it easier. [Some of you may need a full revamp. This is more effort. Tackle it. Others may be able to do a regular tweak.]
Board chairs: review the personalities in the room. Find out how to change the dynamics of predictable discussions. (Have a one-on-one chat with all directors and ask them for help.)
Support for the Change-Hesitant
Not everyone embraces change. Some actively push back against it. But the adage holds true: “The only constant is change.” So, I encourage directors to have a discussion to really understand how you may be doing things differently to support the change in the operations. You will need to support and understand those who are resistant and help them face the approach with strength. It’s worth it.
https://forteamresources.com/wp-content/uploads/2023/08/Picture1.png11251502Kevin Smithhttps://forteamresources.com/wp-content/uploads/2020/06/Team-Resources-Logo-2020.pngKevin Smith2023-08-18 18:01:212023-08-18 18:38:04You Can’t Do Things Differently Without Doing Things Differently
I asked ChatGPT what is the biggest failing of credit union boards of directors. It spit out a very interesting (dare I say “thought”-ful?) list. A healthy director and board will consider these potential failings with a hard look in the mirror.
By Kevin Smith
What does ChatGPT know about credit union boards of directors?
I’m generally not a bleeding-edge adopter of technology. But I’m no Luddite either. My preferred category is fast-follower. So, this whole AI, large language model of machine learning thing has finally gotten my attention. (Given it’s prevalence in the media, it’s no wonder.) And I decided to try it out. What’s this got to do with credit union boards of directors, you say? Well, let’s see.
I decided to find out what ChatGPT had to say about something I felt I knew something about: credit union boards, so that I could evaluate the response. And the prompt that I chose was this:
What is the biggest failing of credit union boards of directors?
And here is ChatGPT’s Response to the prompt:
While credit unions generally operate with a member-centric focus and strive to fulfill their mission of serving their members, they are not exempt from potential challenges and failings. One of the most significant failings that credit union boards of directors might encounter is a lack of diversity and inclusion. Here are some aspects to consider:
Lack of Diversity on the Board: Credit union boards may suffer from homogeneity in terms of demographics, professional backgrounds, and experiences. This lack of diversity can limit the board’s ability to consider different perspectives and adequately represent the diverse needs of their membership.
Insufficient Expertise and Skills: Sometimes, credit union boards might lack specific expertise, such as financial, technology, or marketing knowledge, which are crucial for making informed decisions and staying competitive in the financial industry.
Limited Understanding of Membership Needs: If the board is not adequately connected to the credit union’s membership or lacks insight into their evolving needs, it may lead to misaligned strategies and services that do not effectively address member concerns.
Ineffective Governance and Oversight: Boards that do not have clear governance structures or fail to provide proper oversight might face challenges in ensuring financial stability, managing risks, or maintaining compliance with regulations.
Resistance to Change: In rapidly evolving markets, credit unions must adapt to new technologies and member preferences. If the board is resistant to change or slow to respond to shifts in the financial industry, the credit union’s ability to remain competitive and relevant could be compromised.
Inadequate Succession Planning: A failure to plan for board member succession can lead to a lack of continuity in leadership and a loss of institutional knowledge. Effective succession planning ensures a smooth transition and fosters a long-term vision.
Weak Communication and Engagement: Boards that do not actively engage with their members and fail to communicate transparently may lead to dissatisfaction among members and weaken the credit union’s sense of community.
It’s important to note that not all credit unions will experience these challenges, and many credit union boards effectively address and overcome these potential failings. By promoting diversity, fostering a culture of continuous learning, engaging with members, and maintaining strong governance practices, credit union boards can improve their ability to serve their members and fulfill their mission effectively. Regular assessments, training, and ongoing self-evaluation can also help boards identify areas for improvement and ensure they are meeting the evolving needs of their members.
End of ChatGPT and back to Kevin.
Keep in Mind
Keep in mind that what ChatGPT does is “scrape” the interweb-tubes for its information, which means that what you see above is information that came from humans at some point.
What do you think? What do I think?
What do you think of this list of “failings?” Does it resonate with you? With your board? With your experience of the credit union movement?
What I think is that people in our industry don’t like to dwell on the negative for fear of being seen as pessimistic. But a lot of what is said above, is also said in hallways outside of conference rooms, or in one-one-one conversations. And I agree with most all of what’s in that list … to one degree or another.
Before You Get Defensive
Now before you start drafting a salty comment or email to me about how your board isn’t like that and isn’t failing, etc., please take a breath. I make a clear caveat quite often: This list of failings that I agree with represents a broad generalization about boards in the credit union movement as a whole. Notice very carefully the final paragraph from the results, starting “It’s important to note that not all credit unions ….” Isn’t that interesting how ChatGPT has its very own caveat about this not being true of every organization? I’m giving it some added style points for that flourish as I wasn’t expecting that.
What Do We Do With This?
Every board would be prudent to review this list and put it on an agenda for discussion. (This would be a great topic to bandy back and forth on your board portal.) Every board should reflect in an honest way about where they stand on all of these issues. It’s very important to acknowledge that it can be very difficult to see your own failings, to have anything but a rosy view of how your board is doing. No one ever says, “Yes, it’s me. I’m resistant to change.” But it is very clear that credit union boards can be prone to this issue. What’s worse, is when there’s one board member with this problem that is holding back the full board but no one will confront them on it.
This requires candor. It requires trust. It requires a full-fledged desire to do what’s best for the credit union. And it’s very worthwhile.
So, thank you to ChatGPT for this interesting exercise. Now … what do you think? As always, we’d like hear your thoughts.
https://forteamresources.com/wp-content/uploads/2023/07/Picture1.png11251504Kevin Smithhttps://forteamresources.com/wp-content/uploads/2020/06/Team-Resources-Logo-2020.pngKevin Smith2023-07-18 17:25:402023-07-18 17:25:40What Does ChatGPT Know About Credit Union Boards? (And Do You Want to Know?)
Committee work on credit union boards is a slippery slope into operational territory. Boards should limit committees to as few as possible and maintain their focus on governance work. Committees of the board should not include staff, but only directors. We recommend the following four: Governance, CEO Relations, Nominating & Recruiting, and Supervisory/Audit.
By Kevin Smith
You might not think it possible, but I’ve gotten into some very interesting, and sometimes slightly heated discussions recently regarding committees. I know, I know. There are only so many governance nerds in the world willing to get fired up about committee work, but it does happen on occasion. And it’s usually because Tim Harrington and I push very hard that credit union boards only need four committees, at most. (Some boards can get away with fewer.) We recommend Governance, CEO Relations, Nominating & Recruiting and Supervisory.
Why So Few?
John Carver, the creator of Carver Policy GovernanceTM argues that committee work is a slippery slope into operational work and that the board should remain at the strategic level of governance and not meddle in the weeds. We tend to agree. This is why we suggest with a very heavy hand that board committees should include only board members as no staff. If staff are included, the committee has already slipped into operational territory which should be avoided at all costs. It’s not where the expertise of the board members’ lies. For you dear readers who are about to demand that I explain what to do about the Asset-Liability Committee, please have patience. I will get to that forthwith.
With the average credit union board being seven to nine people, in general, you should be able to get things done with the whole group. And indeed, having the full board should bring in an adequate number of voices and points of view on most topics, which really is the point of having a board in the first place.
The Reason for Committees
The reason to have committees on the board is to get more “stuff” done. When there is too much work to do, or there is a topic that needs research and a proposed governance/policy solution, then a committee of board members is appropriate. The committee’s work results in a summary presented to the full board along with a recommendation for action to be voted on by a quorum of the board.
Committee Recommendations
Governance Committee
The TEAM Resources approach is that of strategic governance that the board manages via written policy to establish the values of the board and the credit union, driven by a strategic plan with measurable outcomes. This policy-based approach requires some significant work, particularly when you first implement it. The governance committee:
Develops Governance Policies for board approval
Keeps Governance Policies up to date
Ensures board members obtain necessary education
Ensures board evaluations and self-evaluations are completed annually
Maintains Governance Calendar and keep board on schedule
Holds directors accountable for their self-improvement
CEO Relations Committee
This committee is necessary because of the increased complexity and ongoing evolution of the CEO’s role in credit unions. I’ve heard too many stories of credit union board who start to sweat and panic about Halloween because they suddenly have about three weeks to gather a full year’s worth of data and come up with a CEO “annual review” and raise. And I still hear from CEOs who have never, that’s NEVER, had an annual review. This is unacceptable. At the organizational level, employees are well past the age of once-a-year annual reviews. The HR world recognizes that regular check-ins (quarterly at a minimum, or monthly) with feedback and measurable goals are state of the industry. This should apply to the CEO too, and the board is the “boss” here. This suggests ongoing work throughout the year in order to make this manageable. The committee:
Remains in touch with CEO on important issues
Ensures the board evaluates the CEO at least annually
Monitors and plan CEO Compensation issues
Salary via comparison or other process
Retirement
Deferred Compensation – Golden Handcuffs
Incentive compensation – best if linked to Strategic Plan
Works with CEO on Annual Strategic Planning Process
Recruiting & Nominating Committee
We used to call this simply the nominating committee, but that’s not enough these days. Succession planning at the board level is critical and more complicated than it used to be. The emphasis here is on a recruiting plan that will involve the whole board to some degree. Our approach also suggest that a sitting board member must qualify for re-nomination. It’s not automatic. (See the blog and downloadable checklist on renomination here.) The committee:
Actively identifies and recruits potentially qualified candidates
Reviews evaluations of board members
Annually review potential board candidates
Recommend qualified candidates to the board for nomination
Responsible for orientation of new board members
Supervisory/Audit Committee
Federally chartered credit unions are required by regulation to have a supervisory committee. Some states require this as well, but even if it isn’t, it’s a good idea. This is the watchdog function for the board and the organization. And this isn’t a committee that is made up fully of board members with the same mission as the committees discussed above. So, we won’t go deep on this here. It does need acknowledgement however.
Yeah, but … what about?!
I know where the argument is going, and thanks for your patience. The question is about the Asset-Liability Committee (ALCO). It seems to fly in the face of everything I’ve said so far: It’s got board members and staff members, AND the NCUA seems to want to see the board’s heavy hand on this. You’re certainly not shocked to hear that I don’t agree with everything that the NCUA does or suggest. But frankly, they have waaaay more authority than I do. Take that into account. I follow Tim Harrington’s wisdom on this (and many other) fronts. He suggests that one or two board members attend the ACLO meetings … as guests there to learn. He calls ACLO the “rocket science” of credit union work. As such, it needs the most expert involvement that the credit union can muster. This is not what director’s bring to this committee most of the time. It is, though, a great place to get an education and understand the complexity of the credit union more thoroughly, which board members should pursue enthusiastically. Listen to the experts and their recommendations. The NCUA wants you there to keep an eye on risk, and directors tend to be pretty risk averse in this industry.
Ad Hoc – If You Insist on Others
Like I said, there are some who are adamant that there is other committee work that’s appropriate for the board. I generally disagree, but I’m not willing to carve that in stone. If the right reasons arise for board work that you will accomplish via committee, then please make it an ad hoc rather than a permanent committee. Write into its charter the goals of the committee and a general “sunset” clause for disbanding the committee when you meet the goals. Many of you out there have admitted to me that there are ongoing committees that only really exist because “that’s the way you’ve always done it.” Committees should have strategic/governance goals and should be made up of board members. If your committee just “reviews” things, but never has any other goals, really ask yourselves, “Does this need to happen?”
Charters
All committees, permanent or ad hoc, should have a charter that establishes the purpose of the committee, its measurable goals, the scope of its authority, and, if appropriate, the end of the committee. The charter maintains the good governance practices of the board by providing clear, written guidelines and prevents mission/committee creep.
IT Committees (or any other hot topic committees)
Recently at an event, I was almost persuaded by a director of the value of an IT Committee with board participation. I said “almost persuaded.” My first question is always, “what value do you bring to the committee?” He indicated that he does, in fact, have an IT Security background and that’s partly why he was recruited to the board. (Kudos to the board for getting that kind of expertise represented. But here’s where it gets tricky.) It can feel like this is a good idea. But it’s not the board’s job to do staff work. His argument to me is that he needs to participate on the committee so that he can translate to the rest of the board and make sure the board understands that the staff are doing what’s necessary. He also admitted that this is a way to help rationalize the high IT budget to the board, by having an expert voice. This is what almost convinced me, because I really value the board understanding and supporting what’s happening there for the security of the organization. But here’s where it feels like it echoes our advice about the ALCO. He is “participating” in the committee meetings, not simply learning, which means he is doing staff work under the guise of translating to the board. You can fill in any hot topic that’s very complex and make this argument. (Is the A.I. committee next?) This feels like a communication and a trust issue rather than real “stuff” that board members need to do. Directors have enough to do. Stay in your lane and be efficient there.
(Not) Executive Committees
Here’s another sticky area where I’ll put my two cents in. For the sake of redundancy, I’ll remind you that we like the four committees listed above. We don’t see the need for an executive committee. But here’s where it gets more complicated. Many boards that I have dealt with have an “Executive” committee, but the role that it serves is almost a perfect overlap of what we call the governance committee. Naturally, I don’t have an issue with that. The roles and the goals are most important. Names matter though. The reason this is significant here is that, historically, the executive committee of a board consisted of the officers. Beyond that, this committee was given significant power and authority to wield in the absence of the full board. It was a concentration of power. This is problematic these days. Boards needed this historically when there were emergency decisions for the board to make, but it was difficult to communicate with the full board (and that might be 25 or more people). These issues don’t exist for us now but there are still some boards that have aggregated power in the executive committee. It’s a recipe for problems. Make sure you’re reviewing the charter and the bylaws to make sure they are up to date and there’s nothing that the board is taking for granted.
There. I’ve said it. I’ll step off of yet another soap box. But Tim and I believe that this approach works best for the board and for the CEO. It allows more time for strategy and learning. As always, I’m eager to hear your thoughts and approaches. I’m always up for a scrappy argument. I learn a great deal when I do.
https://forteamresources.com/wp-content/uploads/2023/06/Committee-blog-overlay.png11251502Kevin Smithhttps://forteamresources.com/wp-content/uploads/2020/06/Team-Resources-Logo-2020.pngKevin Smith2023-06-22 16:14:202023-06-22 16:14:20How Many Committees Does the Board Really Need?
The annual credit union budget is a statement of its values, the things the organization thinks are important. The values in that budget should reflect (and be directly tied to) the strategic plan that the board and senior management has developed together. It is critical that the board have a clear understanding of how the budget has been shaped, and takes pains to make sure that it’s appropriate.
Kevin Smith
I’m pretty sure that the fact that I’ve picked May to write about the budget is some sort of Freudian avoidance of trauma approach given what I’ve been through. I’ll be curious to hear about how you feel about the budget cycle. You’ve gathered some insight as to my feelings. Here we are in May, headlong into the 2023 budget but pretty far from next year’s budget development. That feels pretty safe. But come November things get a bit more messy.
Politicians from all sides and businessfolk like to spout the aphorism, “A budget is a statement of values.” And I agree with this. Where you’re putting your dollars reflects where your priorities are. But I’m not always sure how closely board members follow this idea even when they agree.
Stereotyping
Here’s my broad stereotype from lots of experiences in this area: The board and senior management do their strategic planning sometime in the fall. Then not too long after, the CEO, after some voodoo, witchcraft, and pencil chewing with the staff in a secret room, submits a draft budget to the board that they will finalize by January. The board reviews the draft budget mostly by looking at the big round numbers on the right side of the page, and the amount and percentage that they went up from last year’s number. They ask a few questions for clarifications and it’s off to ratification/approval.
For Instance
Let’s play the “for instance” game. For instance, your strategic plan suggests that the organization is going to have to build a new focus on wealth management services for your older membership to keep them at the credit union. Building that out as a new service is going to require funds. The board should make sure that’s reflected in the budget.
For instance, the strategic plan involves a shift from front line staff to a heavier call center approach, but also a focus on sales and service. I’ve seen this one play out in a variety of ways where directors completely understand the amount of $ that goes to technology for the call center, but not get why the training budget has doubled and salaries for call center staff have to be raised. (Sales and service skills require a LOT of training and proper rewards.) Here’s the curve ball – six months later one rogue director yells after a trip to the lobby, “what do you mean we don’t have any money for MSRs?!?!” Because he hasn’t internalized the values that the budget reflects and are tied to the strategic plan.
What Should Board Members Do?
The review of the budget should be an exciting event, not a perfunctory task once a year met with a yawn. (I know. Some of you are skeptical.) The board’s efforts here are to ensure that the values of the organization are given the priority that you have discussed and agreed upon. To make sure that the budget is tied to the strategic plan in a noticeable way. It sounds like I’m inviting the board into the operational weeds to nitpick. Nothing could be further from the truth. This is a call for thoughtful analysis of the budget at a strategic level.
Don’t underestimate the pain and suffering that may be involved when the staff creates a budget. Respect the process and the analysis they give you.
Ask thoughtful questions about how the budget is tied to the plan, not just “why did line 12 go up so much?”
Reel in your rogue directors if they aren’t getting this. (I know that some of you are thinking about how you understand this but there’s that one director on your board who just doesn’t.) It’s your job to hold them accountable and make them understand, for the sake of your CEO and staff.
Make sure you incorporate ranges for results. The budget is not a crystal ball. This also means that you need to know how to adjust when the environment has changed along the way.
Be prudent with the members’ money, which is not the same thing as being cheap with the members’ money. Support thoughtful investment and make sure that you understand what it costs to do business these days. (Versus comparing everything to the value of your first car, house, candy bar from decades ago.)
The annual budget is as important as the strategic planning process. In fact, they are intertwined. Often the budget gets short shrift. Don’t let your eyes glaze over in the volume of numbers in the spreadsheet. Get excited about the promise of value to the members that you instill in the budget and provide support to the CEO to execute this vision.
https://forteamresources.com/wp-content/uploads/2023/05/Picture1.png11251502Kevin Smithhttps://forteamresources.com/wp-content/uploads/2020/06/Team-Resources-Logo-2020.pngKevin Smith2023-05-15 18:07:132023-05-15 18:07:13Your Budget is a Statement of Values: Treat it with the Appropriate Diligence and Respect
It is a good practice for each board meeting to include an in camera or executive session where board members can meet privately, without the CEO present. In camera is simply Latin for “in chamber” or private. These sessions provide the board the opportunity to have candid discussions without non-board members present.
By Kevin Smith
First, let’s deal with this wonky phrase, “in-camera.” This is one of those holdover Latin phrases that, like many others, are going by the wayside. So why am I still using it instead of simply “executive session”? The simple reason is that some non-profit boards still have an executive committee of the board, a subset of the full board. This is increasingly rare I’m happy to say, but there are a few. So, to call this an executive session can lead some to think of a meeting of that committee. What I’m talking about here with the phrase in camera is a meeting of the full board without non-board members (primarily the CEO) present. We can use both phrases here so long as you know what I’m getting at. (And I’m a sucker for anachronistic phrases in non-English languages.)
Why Hold In Camera/Executive Sessions
In camera sessions provide the opportunity for board members to have a space to speak candidly, to ask questions of each other that they might not be comfortable asking in a meeting with non-board members present. Consultant Christie Saas puts it this way,
When handled correctly, an in-camera session is used for private discussions about legal matters (fraud), hiring/firing of employees that report directly to the board, annual evaluation of employees that report directly to the board, and the annual audit.
When handled incorrectly, an in-camera session is used to gossip, socialize, or to intentionally exclude non-board members from being part of meeting procedures.
I agree with these comments, but would take this a bit further and suggest that these sessions are valuable beyond discussion of problems, like fraud or hiring/firing. They can be helpful places where are director can say that they aren’t comfortable with something, or if they have sensitive questions to ask, or simply to get a candid “temperature check” of how the full board is feeling about a topic.
What Happens if This is Rare
Let’s be clear – if the board only uses in camera sessions very rarely, or only for the difficult topics that Christie Saas suggests above, then the CEO is going to get the jitters as soon as its called. In these circumstances the session is going to appear to be a giant red-flag to the CEO. In our experience, it’s not uncommon for other senior leaders of the credit union to come and go from board meetings depending on the needs. They generally don’t see that as unusual. But on the other hand, we see CEOs who are involved with every minute of every board discussion. In many ways that makes sense given the complexity of our industry. So when the board calls an in camera session the hairs on the back of the CEO’s neck stand up in warning of trouble ahead. That’s not a healthy scenario, and the sessions shouldn’t always be about difficult or negative topics.
Some Guidelines to Consider
Add an in-camera session to every board meeting agenda. It can be short or uneventful. Or it may delve into significant topics. This regularity makes this an expectation that everyone gets comfortable with. It may also draw out more candid commentary from quieter board members.
To start the session, a director makes a motion that the board must pass to do so.
Take minutes in the session including deliberations and reasoning behind motions and votes. But these minutes are not included in the general board meeting minutes.
The general topic of the in-camera session should be in the board minutes; however, the content specifics are confidential.
The board can approve the in-camera minutes at the next open board meeting, but only by those who attended the sessions.
This approach will provide that transparency expected of a not-for-profit board while maintaining the confidentiality needed for the sessions.
And do yourselves a favor and give the CEO a heads up that you are going to take on this process and explain why. That way when it shows up on the agenda, they don’t immediately scream, “Are you firing me?!”
https://forteamresources.com/wp-content/uploads/2023/04/overlay-in-camera.png11291502Kevin Smithhttps://forteamresources.com/wp-content/uploads/2020/06/Team-Resources-Logo-2020.pngKevin Smith2023-04-14 18:51:322023-04-17 19:00:30In Camera or Executive Sessions for the Board (Without the CEO)
It’s not unusual for the CEO to do the most talking in board meetings. But it’s critical to get the right balance of voices and to have input from everyone in the group. Paying attention to this balance and making some intentional changes can move the board and the organization towards greater strategic focus.
By Kevin Smith
Let’s do another poll and see what comes from the question, “Who’s doing the talking in your board meeting?” See below. You have to take the poll before you read on. Ok? Pinky-swear? And be honest. There are only three questions.
Okay, now that you’ve taken the poll, I’m willing to bet that it’s the CEO who does the most talking in most board meetings. It seems intuitive, doesn’t it? Let’s examine that more closely. Why is the CEO doing all of the gabbing? There are reports to give, detailing updates to projects, updating the numbers from last month, last quarter, last year. This is the person that the board entrusts with the operations of the credit union and the execution of the strategic plan. So, the CEO has the most to say. And if the board has questions, generally they go to the CEO (or a delegate thereof).
If you take this as “matter of fact”, then you’re probably asking yourself why I’m bringing this up. High performing boards and organizations spend their most precious limited resource – time – on strategic stuff, on strategic discussion. That’s not effective if there’s one (or two) voices that take up the largest chunk of the speaking opportunity.
The Common Scenario(s) That We See
What I gather all too often is that the CEO spends an extraordinary amount of time preparing for board meetings (another topic to dive into), where they are mostly reporting out about status and updates. Don’t get me wrong. This is work that needs to get done. But too often directors view the board meeting as simply a place for those reports and updates. Updates can be handled in other ways. Focus on the strategic, the future oriented and the discussion.
So, if you didn’t say that the CEO talks the most, then the next guess is the chair, or perhaps one misguided director who can’t help but talk constantly. At TEAM Resources, we look for those poignant board chairs who ask the right questions, quickly, and then spend more of their time listening and drawing everyone out. And for that one offender with verbal-diarrhea – it’s up to everyone to let them know when to shut-up … respectfully. (We’ve all seen it one time or another, but too few of us will speak up to make it stop. Some of you have heard me railing on the problems of “Midwest Nice” lately and know what I mean.)
How To Deal With This
There are a lot of ways to get after this problem. (Yes. It’s a problem.) The first thing to do is take an audit of who’s doing the speaking and for how much of the time. You could do this secretly, I suppose. That way no one would modify their behavior knowing what’s going on. But that feels a bit sneaky and sly.
Next, you address any processes that are in place that reinforce the static unbalance of voices. This is all of the “this is how we’ve always done it” features that may not be obvious until you dig in and look carefully. This may be as simple as how the board agenda is structured to give all of the air time to the CEO.
Now, you talk about this as an issue. Give it air time and acknowledge that it’s going on and suggest that it could change for the better. This can be the chair, or any director, or the CEO. Anyone who notices. It may take a bit of gumption to bring it up.
When everyone agrees that this could be more balanced, you decide how it’s going to be addressed. Keep in mind that not everyone who is typically quiet is going to speak right up. It may take time to work up to this. Remember that introverts do NOT like to be put on the spot. They like to have time to think things through and craft a response. So issues may need to be teed up before the meeting for people to prepare. (Do you know who on the board are introverts, ambiverts, or extraverts? Or do you just presume? You might be surprised.)
The Elephant in the Room
Now, I might get some blowback on this, but here goes nothin’. I’ve seen some, and heard about plenty of CEOs who intentionally take up all of the oxygen in a board meeting. The goal is to stall, deflect, divert, obfuscate, all in order to keep directors away from hard questions, or things going awry. It’s a well-known tactic. By monopolizing the time, they can control, well, pretty much everything. I didn’t say this was ALL CEOs, nor is it even a LOT. But if I’m here to educate, then I have to relay the red flags so you know what to watch out for.
Shake Up the Status Quo
Now – all of those CEO updates and reports: Consider how those might get handled in a different way. They could be written, or recorded. And for cripe’s sake, if they’re written out, don’t make the CEO go over them again at the board meeting! Set the expectation that everyone will do the necessary preparations and come with thoughtful questions. [Please don’t mistake this as an effort to shut down the CEO and shut them up. This is about the balance of voices.]
These steps help you to influence the culture of the boardroom, to move out of the status quo, to move towards the strategic. Directors have a job to do that is more than just oversight; it’s about setting strategy and having good discussion. That can only happen with a multitude of voices. Are you willing to take a closer look at who’s talking in the board room (and for how long)?
What am I missing on this? What do you want to argue about? What’s your “yeah, but …”? I wanna hear. I wanna discuss.
https://forteamresources.com/wp-content/uploads/2023/03/Picture1-copy.jpg11251502Kevin Smithhttps://forteamresources.com/wp-content/uploads/2020/06/Team-Resources-Logo-2020.pngKevin Smith2023-03-13 18:05:052023-03-13 18:05:05Who’s Doing the Talking in Your Board Meeting?
Credit union board members are dedicated volunteers for the credit union movement. They are the embodiment of the CU adage, “People helping people.” As the job gets more difficult and more complex, it’s my job to worry about directors and to figure out where they need help and how to help them. I look around to get help in this endeavor myself.
By Kevin Smith with a little help from some trusted friends.
I worry. I’m a worrier. It got so bad in my early days of grade school that my mom set an ultimatum. She told me, “You’re not allowed to worry about something unless I tell you to.” It didn’t really take, but she was trying hard. Those lines on my forehead (that I try to hide in my pictures), showed up very early in my life. So, yes, I’m a worrier. And naturally, since I care so much about credit unions and credit union board members, I worry about you.
Now … this blog post comes off as negative here. And some of you are going to get your feathers ruffled and clap back with, “I/we don’t do that! How dare you?” Please keep in mind that I’m painting with very broad strokes. I’m generalizing. I’m not calling you out specifically. But I spend time with hundreds and hundreds of board members each year, and some things show up as trends. If my worries below don’t represent you, huzzah! Celebrate. But keep your eyes open, and don’t get complacent.
You’ll also notice that I have included some other people’s worries as well. I reached out to a handful of people that I like and respect to see what they had to say on the topic and have included them (with their permission) as well. (I don’t want you to think that Worry-wart-Kevin is the only one who thinks about this and has concerns.)
When I worry about board members, I worry that …
They’re not always honest with each other about performance.
They aren’t willing to have difficult conversations (see above).
They don’t understand the financials and business models of credit unions well enough.
They underestimate the challenge of CEO succession planning.
They will judge their members’ use of credit and other products rather than serve the actual needs of the membership. (“I would never overdraft, or let my credit score drop, so why would they?!”)
They don’t put in the appropriate effort to do the job (because they’re just volunteers).
They don’t have a clear enough understanding of the complexity of the business.
They don’t separate their own professional backgrounds that are sometimes less complex than CU business.
They undervalue ongoing education about the industry.
They don’t make enough, or the right targeted effort when trying to recruit new directors.
Sometimes the response to problems is “we’ve tried absolutely nothing and we’re all out of ideas. (see recruiting)
They don’t spend enough time on the job (that gets more complex everyday).
They don’t share the absolute passion that they have for credit unions far enough.
Tim Harrington, TEAM Resources
They don’t get the urgency for change.
(I don’t need to introduce you to Tim. But he was my first mentor in the credit union governance space and I owe an awful lot to him.)
That coming into an economic downturn, they will overreact to ordinary credit losses.
That they will come back from a conference and derail a plan for the business that was previously agreed upon with management.
That they will look to the wrong metrics to measure success.
(Don is our “go-to” guy when we have questions about lending or if we need to refer people who need some help. He’s fantastic. He really knows his stuff. He’s been tremendously generous with his knowledge.)
Steve Rick, Chief Economist, CUNA Mutual Group (And credit union board member) www.cunamutual.com
That as the baby boom generation of board directors retire, the turnover/churn rate of directors is rising. The new board members do not possess the same level of institutional memory of the credit union nor the commitment to the credit union that the prior generation may have exhibited.
(I used to work with Steve at CUNA and he was instrumental in my learning and understanding the complexities of the CU movement and the greater economy. I can’t tell you how much I learned from him while working with him on the CUNA Economics & Investments Conference and then bullying him into doing a monthly video series.)
That they don’t all walk into the boardroom with a clear and common understanding of what good governance even means, let alone how to be a great director.
(I stumbled across Matt’s name in a report by Filene.org years ago and made it a point to follow him and read as much as he would print. He’s helped me add tremendous layers of nuance to our governance approach and my understanding. Matt has a new thing going with Ground Up Governance. You HAVE to check it out. It’s tremendous, and often very funny! Who knew you could do that with non-profit governance? And BTW … he’s a hellva bass player. You need to look up his band too!)
“When I worry about credit union board members, I worry about three issues:
Alignment—do they believe in the direction senior leadership is taking the credit union? Please note there is a difference between consensus and alignment. A healthy board does not agree 100%. But a healthy board is aligned.
Clarity—does the board know where the credit union is going and does the board know what makes its credit union different (without using the words service, member or community). If the board does not know the return it is getting from marketing, they should consider conducting a marketing assessment.
Communication—how well does the board communicate with each other and with the CEO? And how much time are you spending communicating about strategic rather than tactical items? Successful boards communicate about strategy and don’t spend much time discussing minutia.”
(I’ve known Mark since way back. I hired him a couple of times for CUNA programs and quickly learned how sharp he is. He’s the kind of guy that I’d ask for an email with a couple of sentences of advice and he’d set up a call and talk to me for an hour. When it comes to marketing and branding, that’s who we turn to and refer to. He’s a mensch. I hope that as a Texan he knows what that means. 😉 )
What do you worry about when you worry about credit union board members? We want your input as well, those of you who are out there in the trenches experiencing this on the daily. Share your stories, because we will learn from it. We will help each other to get better all the time.
https://forteamresources.com/wp-content/uploads/2023/02/Picture2.png11251502Kevin Smithhttps://forteamresources.com/wp-content/uploads/2020/06/Team-Resources-Logo-2020.pngKevin Smith2023-02-20 18:50:152023-02-20 18:50:15When I Worry About Credit Union Board Members …
After Covid forced boards into virtual meetings, directors learned to adapt. But just because we can, doesn’t mean we should require everyone to meet in person again. There’s value in keeping flexible with virtual and hybrid meetings. Make sure you’re doing what it takes to make them work effectively.
By Tim Harrington and Kevin Smith
We recently received several questions on the topic of hybrid, in-person and remote board meetings. Running a two-day governance workshop recently, this topic popped up and became a lively discussion in the room with 36 directors. Coincidentally enough, we received the same question from a director via our website almost at the same time. It’s certainly bubbling about in the air these days and our approach to this may surprise you.
What We’re Seeing
Here’s a synopsis of what we’re seeing:
A few boards are moving back to in-person only. But they are the minority.
Most boards are using hybrid meetings where members can choose how they attend: in-person or virtual. This requires the board meeting room to have cameras, screens, microphones and speakers that allow all to hear and be heard.
Some are moving most meetings to in-person with several, scheduled virtual meetings per year.
A few are moving to mostly virtual meetings with a few in-person per year
We don’t know of anyone who is remaining totally virtual.
The most common we see is the hybrid option. Along with this method, boards are adding a policy requiring directors to be physically present for several meetings during the year and at the planning session. This is to allow for the human interaction that can only occur in near proximity.
A few boards who are going hybrid have actually scheduled several required, in-person meetings. This means that at two or three meetings per year, all of the directors are present in-person.
This is the Modern World
We strongly recommend that the boards go hybrid. This is the way of the modern working world where employees meet regularly via virtual meetings. If you want to attract and retain younger directors, we believe this is a requirement. Otherwise, they will see the board as not meeting their needs.
Digital and virtual are the new norm in the world. It is important for boards to recognize this and embrace it.
How to Make This Work
Don’t misunderstand us. We know that as the world has worked, in general, face to face meetings generally yield better results. We agree with that. But as a practical matter going forward, hybrid meetings offer a lot in the way of flexibility for board members. This is good for diversity, for recruitment and for boards in general when you can make it work.
And here’s the deal – you have to make some effort to make this work. It’s not going to happen by accident. And you know very well by now that simply plopping things into Zoom or whatever hybrid approach you’re taking, and running things like you did in the “good old days” of the beforetimes is a recipe for failure. Hybrid meetings require adaptations so that everyone can get the most out of them.
Considerations for improving hybrid meetings
Spring for decent equipment: cameras, microphones, displays, etc. (Don’t simply “make due” with what you have or get the cheapest options held together with duct tape.)
A great big monitor in the boardroom (or at your desk) can let you continue to see body language and facial expressions from participants on camera.
Set expectations for learning and using technology. No, it’s not perfect. But we’ve all been in the meeting with the one guy who still can’t find the mute button and know how frustrating it can be. Everyone must take the time to know how to do this smoothly.
Part of these expectations are about giving your full attention to the meeting as if you were there. We’ve heard too many stories of people making dinner during the hybrid meeting, or having people in and out of the room. These are unacceptable.
Adjust your approaches for having discussions –
Hold up a post-it note if you want to talk (and avoid talking over each other)
Get a sense of the room with 0-5 hand votes. (“How comfortable are you with this proposal? 0-5. Everyone votes on the count of three.”)
Make sure to bring in the voices of those not there in person. Being hybrid is not a license to be silent.
Participants – be broad with your head nods for yes and no, you’re thumbs-up or down, and your palm to the camera for “wait.” Don’t be subtle here.
Get presentations done before the board meeting in writing or on video and set the expectation that everyone will be prepared and submit questions ahead of time. Be efficient with your meeting time.
Be flexible in the time of day for meetings.
The Chair’s Job
Much of this is under the heading of meeting facilitation which we generally put on the shoulders of the board chair. This is appropriate. Chairs – this is the job you signed on for and it takes a bit more work in this setting. However (comma) we don’t believe that ALL of this HAS to be on the chair’s shoulders even if technically that’s where it lies. ALL directors should take on some responsibility for holding each other accountable and for making an effort to make this work.
Removing Limitations
We believe that with a little effort that hybrid meetings can be just as effective as your old-school in-person events. We caution you about rushing back to strictly enforced all in-person events simply because it’s what you know and are comfortable with. Your adaptability will have an impact on who you can recruit for the board and flexibility for how you get things done.
https://forteamresources.com/wp-content/uploads/2023/01/Picture1.png11251502Kevin Smithhttps://forteamresources.com/wp-content/uploads/2020/06/Team-Resources-Logo-2020.pngKevin Smith2023-01-20 17:45:552023-01-20 22:36:21Don’t Go Back: Boards Returning to In-Person Meetings
Staying at the strategic level and avoiding operational micromanaging is a significant challenge for most boards. This can and should be addressed with systems to prevent it from happening and wasting valuable meeting time.
By Kevin Smith
Some of you have heard me talk about the E.L.M.O. card. If you haven’t, you can go here to catch up. But essentially the acronym is for: Enough. Let’s Move On. It’s a way to stop conversations that are repeating and no longer useful, that are simply taking up time. By playing a card with our furry red friend’s picture on it, you inject some humor into the process and (hopefully) not hurt anyone’s feelings. It keeps things moving.
I’ve been thinking about this and I think it’s time to add another card to our repertoire, and to our board packets: the dandelion card. You see where this is going, don’t you?
An Issue for Most
A significant issue that many (most?, all?) boards face is the slippery slope where conversations migrate from the strategic and the big picture to the operational and into the “weeds.” I’ve been to my share of board meetings and I facilitate a lot of strategic planning sessions as well as board training sessions. And I’ve yet to attend one that didn’t drift into the weeds at some point. Some dramatically worse than others, but every one of them at some point or another. It takes a great deal of diplomacy and gentle directing to keep things on track. It’s not easy, because board members head that direction very quickly.
Board members and CEOs, and committee members, and staff members, and board liaisons all warn me about it ahead of time, and complain about it during breaks. And some groups are more self-aware of it than others, acknowledging that they have this tendency “on occasion.” I can respect that and work with it. It’s the groups that tell me that they never get into the weeds that I watch out for, because they are usually the worst offenders. They don’t recognize when they’re doing it.
Playing a Card
That’s where the Dandelion Card comes in. Much like the E.L.M.O. card, everyone on the board would get one laminated card with a picture of a dandelion on it to go in their board packet. When the conversation takes its slide into operations, a member can throw the card to call that out. And I’m going to make a controversial addition to this by saying that the CEO should have one (or six) to throw as well. Why is this controversial? Because many CEOs I work with tread lightly on this territory, never wanting to step on any director’s toes with this, even though they desperately want to. It takes a lot of trust in the room for the CEO to be able to do this.
If there’s an issue, then the people involved need to do something to address it. Things don’t just go away on their own. Most that I deal with take this slide into the weeds as just something to grit their teeth and suffer through, taking it as inevitable and the cost of doing business with a weird group known as a “board of directors.” But it shouldn’t, and doesn’t have to be that way. I’m encouraging YOU to do something about it. Put systems in place to address the circumstances.
No Magical Solutions – But Progress
Now, a laminated card with a dandelion on it is not a magical solution that will make these conversations dissipate and go away. I’m not that naïve. But what it does is bring the topic to the table for discussion. It gives you permission to talk about this as something that can be or is a problem. You push for agreement about what the parameters are for strategic versus operational. Write this agreement down and use it for reference. This goes a long way towards improvement. And hopefully, using a silly card will bring some levity that makes it easier to deal with. I see too many people who are unwilling to say anything about topics like these for fear of hurting the feelings of their colleagues, which is very nice and noble, but not very helpful for the efficiency of the organization.
It also won’t go away overnight. It will take some time. But it moves you forward.
(BTW – I had to stick with the word “dandelion” here rather than weed. You can guess what happened when I did an image search for “weed.” 😉 )
Now, let’s do a poll to see how we rate on this topic!
https://forteamresources.com/wp-content/uploads/2022/11/Picture1.png11251502Kevin Smithhttps://forteamresources.com/wp-content/uploads/2020/06/Team-Resources-Logo-2020.pngKevin Smith2022-11-22 17:02:502022-11-22 17:16:24Playing the Dandelion Card, or Keeping Meetings Out of the Weeds
Two (Or More) Sides
