Tag Archive for: #boardeffectiveness

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You Can’t Do Things Differently Without Doing Things Differently

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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.

What Does ChatGPT Know About Credit Union Boards? (And Do You Want to Know?)

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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

ChatGPT

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.

In Camera or Executive Sessions for the Board (Without the CEO)

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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?!”

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.

Dedicated to YOUR Success . . .

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