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How Many Committees Does the Board Really Need?

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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.

Who’s Doing the Talking in Your Board Meeting?

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Who’s Doing the Talking in Your Board Meeting?

Here comes the new “talking” audit.

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.

When I Worry About Credit Union Board Members …

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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.)

Don Arkell, CU Lending Advice, LLC, https://culendingadvice.com

  • 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.)

Matt Fullbrook, Ground Up Governance, https://groundupgovernance.substack.com

  • 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!)

Mark Arnold, On the Mark Strategies, https://www.markarnold.com

“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.

Don’t Go Back: Boards Returning to In-Person Meetings

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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:

  1. A few boards are moving back to in-person only. But they are the minority.
  2. 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. 
  3. Some are moving most meetings to in-person with several, scheduled virtual meetings per year.
  4. A few are moving to mostly virtual meetings with a few in-person per year
  5. 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.

Playing the Dandelion Card, or Keeping Meetings Out of the Weeds

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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!

“Nice” Can be Deadly for a Board

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Nice Can Be Deadly to a Board

Midwest Nice, Board Culture & What to Do with Evaluation Results

Great board culture is more than simply having everyone “get along,” and having good discussions. It requires mutual accountability, a culture of ongoing learning, and increased complexity. Boards that want to thrive must move past old school habits of collegiality and evolve to higher performance.

By Kevin Smith

 

When I ask board members how things are going in the boardroom. Mostly I hear about how well the board members and the staff get along. Now, I presume that everyone is familiar with the concept of “Midwest Nice,” but just in case you’re not, or you need a good refresher, have a look at Charlie Berens’ work here. I grew up in Ohio and live in Wisconsin. I’m steeped in Midwest nice, which has many, many wonderful aspects. But here’s another truth: Nice can be deadly for boards.

The Irony of Collegiality

Yes, there’s a healthy dose of irony here to deal with. Of course we want and need directors to be collegial, and to get along, and to enjoy working together. But this goes too far when the result is a lack of accountability.

The Boardroom is Tricky

We already know that the boardroom can be a tricky space. There is no hierarchy in this space, no boss. (I’ve talked to a few of you board chairs that really believe that you are the monarchs of the board. Consider this a less than gentle reminder that you’re wrong about that.) The board is a group of equals set out to represent the membership, to set strategy, and provide oversight. No individual director has any authority outside of the collective decisions made by the board. This is our superpower, but not without some kryptonite. Most of us don’t come to this setting with great experience in governance and collective decisions. Most of us come from backgrounds with ingrained hierarchies. This can be a problem in holding each other accountable. This is where my struggle with Midwest Nice comes in.

Two examples that I’ve come across:

  • At ABC Credit Union, everyone on the board and management team knows that board member X is not up to the task. But board member X will continue to be on the board because it’s an issue that no one has confronted or dealt with.
  • At XYZ Credit Union, the board is dedicated to improving board diversity, they have a strong set of policies and high expectations for directors for engagement and ongoing education, etc. The problem is that “many board members don’t know when it’s time for them to step down of their own accord.” But they don’t want to have term limits. They just want people to “know.”

I could write down dozens more examples. Directors who fall asleep. Board members who are clearly not prepared. Those who ask questions that are waaaayyy off topic and cannot be reigned in. (Feel free to comment or to send me your versions. I love these stories. I believe in the power of the cautionary tale!)

Too often, it’s the wonderfully human “nice” in us that prevents these circumstances from being dealt with. That coupled with the structure of this group of peers makes us not to deal with anything that feels like confrontation, particularly among equals. This version of “nice” also prevents people from speaking up, and for festering groupthink. Nice can be deadly to a board.

This isn’t about confrontation. This isn’t about being mean. This doesn’t have to sour the tone of the boardroom and make people less friendly. This is about accountability and making sure everyone is doing the job to the standard that is required for a modern board, to the board’s expectations. And in the board setting, that means putting systems and policy in place to create the guardrails.

How To Do This

Written Policy. You’ve heard me say this before, and I’ll keep harping on this: write it down as policy. The board has to ratify policy with a vote. When it’s codified, everyone has a tool for holding each other accountable. It’s not personal; it’s about the policy that we agreed upon.

Board Evaluations. Again I will repeat myself. Annual board evaluations can be a tremendous help in this regard. I’ve been beating this drum for years. Still there aren’t enough boards incorporating evaluations. Part of this is that it can feel like confrontation and a lack of “nice.” I also have a word of caution for those of you who ARE using board evaluations. (First of all, kudos to you for doing it. Really!) Make sure you’re doing something substantive with the results. Evaluations are not just for patting yourselves on the back for a job well done. This is for finding ways to improve and identifying those areas. Ergo, you must follow up the evaluations with an action plan for improvements.

(True story: I once went through a stack of almost ten years of evaluations from a single board. Without fail, one board member is highlighted year after year for his lack of preparation, his constant comments about operations, sleeping in board meetings, etc. Yet, he’s still on the board.)

Evaluations don’t mean anything if you don’t use them for improvement. But the tendency is to use defer to “hope” in the evaluation report. That is, to “hope” that particular board members will see themselves and their failings in the report and self-correct. That does happen, occasionally, rarely. The better approach is to use the evaluations as the tool, the catalyst for human conversations in the interest of improvement. “What can we do to be better?” Which must be followed with a written action plan.

There’s a lot of talk about culture in organization and in board rooms. Creating culture is an ongoing effort with no finish line. My experience tells me that the culture in board rooms is entrenched and slow to change even with the most strident of efforts. It can be done though. My struggle is with wanting a too vague notion of “culture” and hope to solve problems that arise as part of “nice.” And for people to just “know” (as a result of that robust culture) when it’s time for them to step down, or to change their habits. Again, it can be done. What I’m saying is that tools like written policy, and evaluations with action plans, among other things are part of that culture building process that provide guardrails for accountability. This approach can maintain the “nice” while pushing the board forward.

The expectations for credit union boards is not going to go down. Our responsibilities are too significant and increasing in complexity. This requires evolution and progress from everyone including the board.

And finally, before I sign off, make sure to tell your folks I says “hi.”

The Board of Director’s Education Policy

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Ad hoc or lassaiz faire approaches to director education are no longer good enough. The board must have a formal approach, codified into governance policy. The benefits are many: transparency, higher expectations, tracking and accountability among others. The credit union world is complex, requiring directors to have ongoing education to keep up.

By Kevin Smith

Do you have a formal, written policy that covers the education requirements for directors and committee members? (Some of you do. I’ve seen them. Great! But you’re not totally off the hook yet.)

Tone in the Room

At one credit union, I asked about director education. There was no written policy and the approach was only verbal, “If there’s a conference you’d like to go to, just come and ask.” And I never quite got clarity about who was asked. The chair? A committee? And it felt a little like a kid coming to ask a parent to go to the movies. As a result, some people went to conferences, others never did, and never asked. And that was the end of it.

At other credit unions that I have visited, I’ve witnessed a “culture” of training and education, and a general “expectation” that directors and committee members would attend training. Which was working out okay, because people talked about it regularly and that set the general tone of the organization. But the only formal part of this approach for many is the conference fee and travel budget allotment. This is better, but not good enough for our times.

Write it Down

It’s time for boards to have a formal, written governance policy that addresses the training and education expectations for the directors. Directors should discuss this, like everything else, and come to agreement about what this means, beyond a dollar amount.

The education policy should set the expectation that every director or committee member will be required to do some training and education each year as part of board service.  Ideally, this program is customized to the experience and background of each director. But it is also a good idea to establish a standardized curriculum for new members. This approach helps guide their entrance into the industry, speed their onboarding process, and it takes some of the decision-making complexity out of the rookie’s hands, making this easier.

Getting Buy-In

By writing this down, the board must have discussion and buy-in, enough to get the motion passed. This buy-in is very important in establishing a standard and expectation. The written piece then becomes a way to hold each other accountable for doing the work of professional development. A verbal, and cultural “expectation” is not enough. Too often this can be sidestepped, ignored or misinterpreted.  

This is also valuable for new directors. This establishes the tone formally. Newbies know clearly what they are expected to do. The alternative is generally that new directors spend a year or more “absorbing” the prevailing culture and fuzzy expectations. (We don’t have time for that anymore.)

Setting Expecations

So what are the expectations? Well, like all fun things, the answer is “it depends.” And it needs to be customized. I’ve seen this handled in a variety of very effective ways.

It could be:

  • Everyone goes to at least one conference, local or national.
  • A minimum number of directors go to GAC every year.
  • Requirements to go to the state league annual meeting, or acceptable substitute.
  • Require a certain amount of course work online to “earn” the travel and training budget for conferences.
  • A standard list of sanctioned credit union related events as options. (Pre-approved)
  • Events beyond the pre-approved list need to have a clear rationale and an outlined benefit to the director’s service. (Don’t overly limit what a director can pursue, but ensure the connection and value. For example, I’d love to see more chairs taking courses in facilitating difficult conversations, which is not on the CU conference agenda. But the local university or training group may be offering outstanding options.)

This list could be endless. But the bottom line is that each director should pin down what training they will pursue each year. It can be flexible.

I’d like to say that credit union directors everywhere understand the importance of ongoing education and training. But I can’t. It’s great to go to conferences and to speak to directors about these topics, but often I’m preaching to the choir. There are too many directors who don’t think they need to do this. Many who “learned everything” 20 -30 years ago when they started and don’t keep up. Some who simply don’t know what they don’t know. It’s dangerous for organizations and for the movement. What we do is far too complex and dynamic these days. We must have educated and curious strategic visionaries at the board level. A discussion and a formal written policy can be enough to nudge things in the right direction.

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