Governance & Mergers … or Mergers & Governance

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Shhh

D’oh! I just said the “M” word. Shhhhhh! We don’t want to talk about that. The leadership in the credit union movement treats merger talk as verboten. You don’t see much on conference agendas, or on webinars. And I get it – talking about it might come across as endorsing it, and there’s a school of thought that says that more credit unions are better for the industry.

Well…it’s no secret that there are a LOT of credit union mergers. According to the NCUA, there were 234 mergers in 2015, which actually represents a slow down of late.

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Credit Union Merger Governance

We must acknowledge that having stronger but fewer credit unions is better than simply trying to keep a large pool of charters and weak assets. Credit union membership is growing, as are the assets, despite the falling number of institutions.

Which brings me (finally) to my point: Merging credit unions need to have extensive discussions about governance as part of the process. Cultural fit is one of the most significant issues for merging institutions and that starts at the top, with the board and this is a governance issue. I can’t count how many times I’ve talked to directors and consultants about mergers that failed because of incongruity among the board. As often as not, these are problems/failures AFTER the merger is complete. Too late.

  • Talk about what governance model you follow. (Carver Policy? Chait, et al? Hands on, old school?)
  • Where are you on the governance spectrum: Working – Managing – Governing – Rubberstamping – Failing
  • Align yourselves with some training, with everyone in the room and literally on the same page.
  • Discuss governance successes and failures that each group has had over the years. How did they get there? What were the results/changes?
  • Figure out exactly how the culture of each organization manifests itself and examine the differences.

If you have boards that are merging and you don’t address these issues ahead and head on, there will be bumps at the top that make waves that ripple larger and larger as they spread through the organization, causing bigger and bigger problems.

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