Effective Leadership by Your Board

How well does your board “lead” your credit union? Leadership by the board is very different from leadership by management. As a matter of fact, leadership by the board requires a different skill set than leadership by management.

Boards govern. What does that mean? It means they don’t “operate.” I know that doesn’t answer the question, but it is an important point. The area of Operations, led by the CEO, is day-to-day activities requiring active and present oversight.

Governing is a team (the board), who should be:

  1. Setting a direction for the organization;
  2. Creating boundaries for the management team to abide by; and
  3. Establishing an environment of accountability.

Governance is not a day-to-day activity. It is a periodic, “hands-off’ activity done best from a distance with good information systems.

Board leadership works best when the team (board):

  1. Ensures the organization has a clear purpose;
  2. Clarifies the corporate values that everyone must follow (including the board);
  3. Agrees on a vision of success;
  4. Guarantees there is a strategic plan to achieve the purpose and vision;
  5. Monitors the plan periodically; and
  6. Employs a competent CEO to carry out the plan.

That’s it!

It seems so simple when thinking about it. So does retiling your shower. It’s not always so simple to carry out. That is why leadership within the board is very important. And the chair is key in ensuring disciplined board leadership. One of the chair’s roles is keeping the directors focused on the big picture and out of the operational “weeds.” Board discipline starts with the chair: at the monthly board meeting and in staying focused on governing overall. Yet, other directors must be actively involved in maintaining discipline. It is not solely the chair’s job; it is a shared responsibility.

One rarely heard but essential governance duty of the board is to protect the CEO from individual directors. This means that chairs must work hard at maintaining the discipline of the board. This also means that:

  • Board meetings should be focused on the big things;
  • Passing authority to the CEO must be done by the board as a whole and not any individual director; and
  • Any individual director who attempts to give instruction to the CEO should be held accountable for having overstepped the director’s governance role.

Leadership by the board is simple, but not easy. Done wrong it can lead to dysfunction. Done right it can lead to smooth sailing toward your purpose and vision.

 

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