Are You Holding Your Credit Union Back? A Directors’ Guide to Stepping Up Your Game & Staying Relevant

Your job as a board member is to push forward, not to hold back. Credit union board members may not always have a good sense of how their behavior impacts the credit union itself, often in extremely negative ways. Lack of awareness of the industry and of self can be at play here. Even with the best of intentions, sometimes boards are a drag on the organization without knowing it, creating the environment for catastrophic results.

By Kevin Smith

I know … I know. I’m coming out of the gates here with a negative perspective. I tried to put a positive spin on this but I decided that I didn’t want to beat around the bush on this.

Of course, you need to hear the immediate caveat: NO, not ALL boards are like this. But there are enough that are, that make me feel the need to call attention to this. And my flair for the dramatic says that this headline might just make you indignant enough to stop and question, “He CAN’T mean me, can he? … or can he?” Before you dismiss me, I want you to think long and hard about this. If you’re unsure at all – start asking around, immediately!He can't mean me.

Some boards and/or individual directors are simply not stepping up to do enough work to be helpful to the credit union. They are governing as though it’s 1985 or 1975 or … worse. Sometimes the amount of effort is barely enough to count as fiduciary oversight, let alone cutting-edge strategic thinking. Here are some things to ask yourself about your own service and your board as a whole:

How well do you know the numbers?

The financials in this industry are critical for understanding how things are going. You know, your fiduciary duty of oversight. They’re also complex. I recently wrote about learning these so well that you don’t have to pay much attention to them. If you don’t know these well enough, are you voting on things that you don’t fully grasp? Also to consider – if you don’t know them well enough, are you requiring your CEO or someone else in the organization to spend valuable time reviewing and explaining the fundamentals?

How well do you know the industry?

Many board members I’ve encountered THINK they know everything they need to know, but aren’t really up to date with the 21st Century in financial services. It’s difficult for CU staffers to keep up and they’re in this 40+ hours a week. What are you doing to catch-up. Here’s the dreaded scenario I hear from senior executives: “It took me months to educate and convince the board that XX is a good idea. Now we’re playing catch up in our area/market.” Most of what I see in the context are cases of boards who don’t know what they don’t know. It’s a lack of awareness. Heck, I’m in the business and read about this stuff every single day, and I have a very hard time keeping up. How much effort are your board colleagues spending to keep up? Don’t throw the “I’m just a volunteer” card at me. This is real work. The credit union’s viability is at stake. It’s frustrating for all of us that this industry is as complex as it is now, but that can’t be an excuse for not doing the work. If you don’t know enough about the industry, you are holding the credit union back.

Can you clearly explain the CU’s business model in an elevator pitch? (a minute)

If you answered this with, “We’re like a bank,” or “we take deposits and make loans,” or “we have the best customer service” then I don’t believe you have this firmly in your understanding.

Do you require spending approvals that are relatively low? (“weasel” word alert)

Yes. The word “relatively” is a weasel word here. I can’t give you one number that’s right for every credit union. There are a range of critical variables. But do you and your colleagues have the intenstinal fortitude to ask your CEO this question and be open to really hearing an honest answer: “Is our spending aproval policy at the right level, or is it too low?” Too often what I hear is a number that’s too low.

(*Right now, some of you think that I’m backing only the CEOs, and being paid off to spout off like this. I’m not. You’ll have to trust me.)

You’re thinking: “that’s my oversight role. I need to know what’s being spent and how.” But what I really see most of the time is well-intentioned directors who dig in here to feel like they’re adding value, protecting members’ money, and having control. If fact, what’s going on is friction for the CEO’s attempts at momentum.

Let me ask you this: Generally speaking, how does a CEO benefit by spending more money except for it adding value to the organization on the whole? If anything, a CEO spending recklessly or wastefully is going to hurt the CU’s financials and ratios, making the CEO look bad. Unless, of course, spending the money will create a wise return. The response I usually get is, “We want to make sure that the members’ money is well spent, and isn’t being used on anything too risky.”

Do you hold your board colleagues accountable? (And Vice Versa)

“Accountable for what?” you ask. For:

… when they come to meetings unprepared?

… when they ask questions that are in the weeds?

…when they show that they haven’t done the professional development/learning that they should (or that they said they would).

… when … (fill in your own comment)

Enabling bad behavior does not push your organization forward. It holds it back.

Now many of you reading this are going to believe that you’ve just read something that confirms that you’re part of the best-est credit union in the country. You answered all of my questions and are convinced that you do all of the right things and none of the wrong things. But … how do you know? Are you sure? Do outside sources confirm your suspicions? Or are you just answering with your gut? I challenge you to get feedback and be open to all answers, challenging and not. Be willing to confront issues and hard responses, all in the interest of serving your members and pushing your credit union forward. It’s not personal. We’re all flawed human beings who can work together and achieve great things. This is about making an effort to do better and to be “people helping people.”

I spend a great deal of time talking to CEOs, board members, senior staff members about these kinds of educational issues for boards. At conferences I have sidebar conversations with dedicated members of the movement who are troubled by what they witness. I take phone calls, and respond to emails on this. I spend time training, speaking with and listening to these groups. Enough of this to know that this is a significant issue.

Look for the Helpers: Some Guidance to Directors for Working with your Liaisons

More and more, credit union boards of directors have a staff member who helps with the board’s work. The complexities of the organization require this. This person may go by many different titles and have myriad responsibilities. It’s important for directors to know and understand how this help should (and shouldn’t) work. These “helpers” can make a huge difference in the productivity of the board, and likewise should have a thorough education about governance and the boundaries of the position.

By Kevin Smith

Mr. Rogers always said, “Look for the helpers.” This post is dedicated to him and to the spirit of helping that is at the heart of the CU movement, albeit in a very focused way here.

Recently, I was invited to do a Q&A session for CUES with their Board Liaison community. Straight off the bat, kudos to CUES for recognizing this as a distinct audience in CU world that has specific training and education needs. It’s a growing audience that is hungry for information and eager to be of service. It was a great session and I hope to help further and be involved.

That session made me reflective about the development of this position in CUs and the interactions between them and the board. In my 16 years in the movement, this group has clearly grown. It wasn’t uncommon (and still isn’t, really) that the “liaison” was the CEO themself or it is an “other duty as assigned” for someone in HR for example. But more and more, the liaison role is bigger role. The growth in complexity of credit unions and the demands on board members suggests that this kind of support to the board is becoming an imperative.

Things to Consider

Now … all that I’ve suggested above leads me to some conclusions:

  • There will be growing pains.
    Many job hats.

    Liaisons to the board wear many different hats.

  • A new kind of position will mean a learning curve for both the staff person and the directors.
  • Establishing clear rules and boundaries will be very important (and you probably won’t get it right the first try).
  • Board liaisons wear a great many hats.

For Directors to Keep in Mind

  • Respect the difficulty of a position which requires that many hats.
  • The liaison is not there to do board work, but to support board work.
  • For example:
    • An acceptable request: research board portal products and provide comparisons.
    • An unacceptable request: write a board job description and create an onboarding packet for new board members.
  • Be reasonable in your requests. This is not a personal errand runner.
  • Consider the training/education needs and budget for this position. They should understand board roles, issues and governance as well as you do in order to support the board. They also have a thousand other things to know and understand on the operational side of things.

For Liaisons to Keep in Mind

  • You can make a remarkable difference in how productive your board is with your support.
  • Be careful to keep the boundaries clear between your role and the board’s role.
  • Learning about your board members will help you anticipate their needs and keep things easier for both you and them.
  • Overcommunicate: you live this stuff full-time. Board members do not.
  • Learn as much as you can about board work and roles, including board governance. This will help you anticipate director needs.

Over the years, I have a collaborated with dozens of board liaisons, some talented enough to be running the United Nations. For one offsite retreat that I was facilitating, not only were board members attending, but also a great number of senior staff members, and being over the weekend in the summer, significant others and family members would be there as well. Before I left to travel to the event, I received document that included everyone’s name, role, email, cell number, and the names of their attending guests. It was incredibly helpful, but above and beyond in my opinion. Then when I thought I couldn’t be more impressed, I found out that she had taken note of the favorite drinks and snacks of most of the attendees and made sure that they were available during the retreat. Over the top!

But I’m focusing on the minutia here – beyond all of that, she had a tremendous understanding of board governance and the roles of the directors, and had the ability to anticipate needs and questions that would arise and have things at her fingertips to keep things moving and frictionless.

Oil in the “Well-oiled Machine” … Ghost in the Machine … or Both!

I’m hesitant about the metaphor here, but a great liaison is the oil in a “well-oiled machine.” And I’d like to make sure that they are recognized for their value. I want to make sure that they have the resources they need and the training that they deserve. This is beyond restocking the coffee in the board room. And believe me when I say that I’ve planned and hosted enough board/volunteer conferences in my time to know that this audience drinks A LOT of coffee.

I’d love to hear from the liaison audience here, because I’m sure there are things that I missed. Give us a shout and let us know what you think. The board members need to hear from you. 

Cheers to the “Helpers”! Let’s enable them to be support for our own higher levels of productivity.

Board Members and Staff Surveys: Yes, get them AND be careful!

The staff survey is a long-standing, valuable way to get feedback about the organization for all involved, top to bottom. Board members should absolutely pay close attention to them, but they should also be very careful with them. They can be misleading.

By Kevin Smith

Board members are you getting the full value that the CU can get from the staff survey? Are you getting the results and do you know what’s being done as a result of the information? The value of staff surveys can be tremendous, for all involved. If you’re not using them, you’re missing out. But simply running a survey every year and “using” a survey to its full effectiveness are two very different things. Often, in the TEAM Resources experience, the board is not seeing the full value of this resource; they could be getting significantly more out of them. Boards must make sure they know what they’re looking at and how to understand the context of the survey so that they interpret the results correctly. It’s trickier than it sounds.

Value to Staff

  • Being heard
  • Being part of transparent two-way communication
  • Building a trusting environment

Staff members may or may not appreciate the survey. It depends. If there’s an annual survey but then no one ever hears about the results, then much of the value is gone. The board and management may be getting some great insights, but that’s one-sided value. There’s much more value if everyone hears about what the results are and, most importantly what action is happening as a result of information in the survey. (No this is not a knee jerk reaction to say that if the staff complains about stuff in the survey they automatically get what they want.) It does mean that, at an absolute bare minimum, the staff needs to know by clear communication and acknowledgement, that they have been heard by the board and senior management. And when the staff sees something, any kind of action, that comes as a result of the survey, it signals that the leadership is paying attention to some details. (You’d be surprised at how often this doesn’t happen.)

Real Scenario I’ve seen – We finally got around to the staff survey. We fully intended to share the results with everyone and to talk about the results. Then we got the results and they were really yucky. Someone then decided that we could no longer share them. They got buried.

Value to the Board and Sr. Management

  • Insights into the culture of the organization, good, mediocre and bad
  • Feedback that the board uses for their oversight of the CEO – among many other feedback options

Board Usage of the Survey Results

In general, I see the staff survey used by boards of directors as part of the governance feedback mechanism. That’s a great thing. Boards that have a wide range of feedback tools that are regular and easy to interpret are more likely to stay at the strategic level and less likely to micromanage or spend too much time “in the weeds.” This is one of many feedback tools the board needs.

And very commonly, board members use the staff survey as a CEO oversight tool. The responses provide a temperature gauge of the climate within the organization. Are the employees content? Do they find meaning and purpose in their work? Do employees feel like they are making an impact, moving the needle towards the stated goals? Are their roles clear? Are their operational and emotional needs met? Are they gruntled or disgruntled? All of which reflects on the CEO to whom you’ve delegated operational authority.  

Warning to Board Looking at Survey Results

Given the board’s distance from the staff in general, it’s important for directors to know how to look at staff survey results. This means that board members will need to get some context to the survey. There are many factors that can affect these results that the board will need to have a handle on.

For example: A new CEO (or new Sr. management member) … will cause some vibrations. This could be good shake up or simply time for settling in. If you hired a new CEO to make overdue changes, you can bet the survey results are going to be affected as well. But consider carefully the timing and the context to understand how they may affect the survey results.

The board may also need to take note of homogenous results. It may be counterintuitive but “Everything’s great” survey results may need some drill-down. Yes, it’s very easy see that kind of result, smile and move on. However (comma) in some organizations, particularly small ones, no matter how anonymous the claim of the survey is, there is sometimes a serious reluctance for employees to express their concerns honestly. Individuals fear that their comments will be transparent.

Sometimes this slips out when a director has a one on one conversation with a staff member that starts out casually. This is dangerous territory and the board should tread carefully. Anecdotal evidence is not a trend. Staff members grabbing the ears of board members is not a healthy communication method. But it may just reveal that there is not a safe enough environment for people to be honest about what’s going on. Which means it may be time to start asking questions.

*Sigh* Nothing is simple, is it?

Now What?

  • Surveys are valuable.
  • The board sets the tone at the top.
  • Consider results carefully.
  • Communicate widely and through the appropriate channels.
  • Make sure people feel heard.
  • Take heart when people tell the whole, ugly truth. It can show that they care about what happens to the organization.
  • Be willing to listen, and really
  • Foster transparency, dialogue and culture of safely and support.

Learn the Numbers so Well that you Can Spend Less Time with Them

Credit union board members have to have a very good handle on the organization’s financials. This is often so time consuming that it takes away from valuable time that could be spent on important strategic initiatives/goals. Learning the numbers well enough to get past this is a valuable place that many take years to reach … while others may never get there at all. This holds the credit union back.  

By Kevin Smith

We in the credit union industry do love our ratios, don’t we? It’s a way to make better sense of raw numbers and an attempt to get closer to an “apples to apples” comparison that is of value for strategic or oversight purposes. Now we need to learn and know this stuff well enough that we can spend dramatically less time with it. Sounds a bit contradictory, right?

Problem: What we’ve seen across the country is that new, and relatively new, directors don’t have a reasonable handle on the ratios and financials for a significant amount of time. We measure that in years often, not weeks or even months. (The dirty little secret is that there are also long serving directors who don’t know this stuff well enough.) I remember way back when I joined the CU movement at CUNA, learning them myself. It took some time for this English major. I don’t hold this against the volunteers, but it has very real ramifications for many credit unions.

Context: Too often, board meetings are spending valuable time on reviewing the financials. This is a problem for a variety of reasons. For one, this is backwards-facing information. The financials are looking in the rear-view mirror and asking “how did we do?” This is necessary and is, of course, part of the fiduciary duty of the directors to keep track of. But what I see and hear is that this is requiring CEOs, CFOs and others to spend inordinate amounts of time reviewing these numbers, explaining them, teaching about them … mostly during the board meetings.

Also, board members – stop and think about this: How much time is your CEO, CFO or Chief-Whomever, spending preparing for these meetings? How much time are they spending teaching these things to directors. Remember this when it’s salary review time. You’re having your highest paid executives teach remedial financials to the board. Couldn’t this time be better spent?

Another significant angle to this is the fact that this is all valuable board meeting time that could be focused on strategic items, and planning for the beautiful future, for the things that you’d like to get to, the members you’d like to help. Let’s face it; things don’t typically happen very quickly in the credit union world. Can this be part of the reason why? We’re sucking our valuable time into a less valuable part of the agenda? Nobody wants to have 6-hour board meetings every month, right? The reality is that the board meets for a couple of hours a month and that limited resource should be used very wisely.

One more thing to consider here: Perhaps you want to chime in and tell me that you DON’T, in fact, spend that much time learning financials during the board meeting, and that your crew doesn’t have to ask much about these and that they DO know the ratios. Let me ask again – are you sure there’s true understanding among the board? Or are some directors simply nodding and smiling because they don’t want to admit what they’re not sure about? There are plenty of credit union executives who confide in us, off the record, that their directors are struggling with their understanding.

Solution: Now we’re back to my weird premise. The responsibility for directors to learn the ratios and financials SOOOO well, that they don’t need to spend much time with them. This means treating this like the skill that it is, and the learning curve that is honest and real. It means getting over our own egos and putting in the work. Admitting what we do and don’t know and solving that in a way that doesn’t take up others’ valuable time.

Think back to when you were first learning a sport, an instrument, a language, driving (driving is a really good one). Heck, this might even be back to basic addition. There was practice that you did, over and over in order to master the rudiments. Now you have them so locked in that you can do a lot without much effort and you get a lot of information in the blink of an eye. Heuristics – “a mental shortcut that allows an individual to make a decision, pass judgment, or solve a problem quickly and with minimal mental effort.” 

My goal with credit union financials, from a board member’s perspective, is to be able to squint at a chart and be able to get as much information as I need in order to know whether I need to start asking more questions.

Board members – you have a duty. You are serving the credit union (as a volunteer, I know), and this requires work. It doesn’t have to be onerous. In fact, I want to tell you that making sure you know the ratios well enough to spend less time with them, is an investment that yields great dividends. It saves time, focuses efforts towards the strategic, aka the more rewarding work.

Shameless plug TEAM Resources offers resources for learning this information. Most recently we build the Doorways to Success Series: Financial Mastery. See more about it here. Board members love it, but so do CEOs and CFOs who now have time for important work since their boards have adopted it.

Thanks for listening.
Have a nice day.

Credit Union CEO Salaries: Wading into Turbulent Waters and Pulling the Board Members with Us

As the credit union industry changes rapidly and increases in complexity, board members need to make sure they are keeping up with industry trends and standards. If they don’t, they risk their credit union becoming irrelevant and disappearing. One area that this is increasingly a problem is CEO salaries. Board members are often out of step with industry norms and expectations on CEO salaries, and that gap could become a detriment to their credit union.

By Kevin Smith and Tim Harrington

Here’s the scene: a young, first-time CEO stepping up to her new job, accepting a lower than desired/expected base salary. She rationalizes this as okay because she is a first-time CEO and is very happy to have the shot at the leadership role. After a couple of years, and some dramatically positive results for the credit union, the new CEO asks the board to revisit the salary only to have the board shut her down or offer a token “bump” in salary that is not aligned with the competitive realities of the marketplace, and certainly not aligned with the bottom line value provided by the CEO. The frustrated CEO is looking for ways to communicate with the board and get the value aligned … but that’s not going well.

We’re seeing this enough to call it a pattern.

Credit Union CEO Salary Discussion

Credit Union CEO Salary Discussion

This isn’t just happening with new CEOs trying to elevate their base salary to industry standards, it is also happening with long-time CEOs who are frustrated watching their base salary continue to fall behind the market. We are often asked to weigh-in about credit union CEO salary issues, sometimes by the board, sometimes by the CEO. To be clear, at TEAM Resources, we are NOT compensation experts. This does not fit into the consulting services we offer. But we are often pulled into this from a board/CEO communications and philosophical /theoretical/governance point of view. That’s the point of view we’ll present from here.

The reason we decided to write on this is that we have suddenly seen and uptick in these issues. CEOs and Boards at odds over what the CEO should be earning.

The CEO Pay Patterns

The general gist of all of the discussions is this: CEOs are concerned that their board of directors is out of touch with how to handle CEO pay. The boards are concerned that their CEO is expecting too much in salary or other compensation and is not appreciative of the board’s effort to compensate them fairly. Beyond that, the conversation takes a few somewhat nuanced but predictable patterns.

In each recent situation we have encountered, the CEO has made the following clear: They are thrilled to have the position. They are loyal to the credit union and don’t want to move. But they hit this compensation wall regularly enough that they are likely to seek another position.

There are a number of factors that regularly show up for this, sometimes in combinations:

  • The CEO is aware of the increasing complexity of the credit union and demands on the CEO. Technology, competitive and regulatory demands have all ratcheted-up in the last several years.
  • The board has typically given the CEO a certain annual increase that coincides with the annual increase given to the staff.
  • The CEO is aware – from peers, on-line CEO forums and trade-group salary surveys –what he or she should be earning, and comparing that to what they are currently earning.
  • The CEO is uncomfortable taking this information to the board…until the disparity becomes big enough that something must be done. By this time, there is also pent-up frustration.
  • Directors tend to support a base salary compensation calculation that reflects whatever industry they came from. If they work for the county, they propose a system like the county’s. If they came from the nearby manufacturing plant, they propose a system like the manufacturing plant’s. The problem is, few directors come from the financial services sector and are simply not aware how compensation is being calculated in THIS INDUSTRY.
  • Sometimes, the board is made up of members who never made a salary anywhere near what the new CEO is making and simply can’t see paying someone even more than they are already making.

Sadly, what has happened a few times is that the CEO reluctantly seeks employment elsewhere. And the board gets sticker-shock when they see what the new CEO candidates are expecting as their salary requirements.

What Should Board Members Do?

The simple answer is learn. It can be disorienting to see the salary expectations if your career background is very different from that of the credit union. But your role as a board member requires that you understand the industry. Comparing credit union salaries to your own background is often an apples-to-oranges comparison. If you can’t make that mental separation and consider your board service from the required fiduciary role, you are not the right board member for the credit union. It’s as simple as that.

Ask the right questions during the compensation process. Are you asking yourself, “I never made anywhere near that much money in a year. How can I vote for that?” or are you asking, “is this what’s right for our credit union, and our members?” Obviously, we’d like to see you asking the latter question.

Establish a Consistent System

What we still see is the board meeting toward the end of the year and saying, “Well, what do you think we should do about the CEO’s pay for the coming year?” This leads to arguments and heated discussions. It leads to inconsistency and arbitrary increases. We suggest you establish a Compensation Calculation System and put it into policy. This system could include third-party salary consultants, it could include references to the trade association salary surveys. Whatever you do, make sure you know what market salaries are doing, set up a system you can follow each year so that you don’t have to reinvent the process every year-end, and know what it will take to retain the talent you have.

Talent War for Leadership Positions

One of the greatest challenges in the next decade will be attracting and retaining talented people… and that starts with the CEO. There is a fierce competition for leadership talent within the financial services realm and certainly within the credit union movement. When you find a good CEO, do everything you can to retain him or her and reward them appropriately. If you don’t, well, what’s that old saying? “Penny wise and pound foolish.” You may have saved a few dollars by not keeping the current CEO appropriately paid. But then you will need to hire a new CEO, with all those costs and a new, higher salary. This is where that Sticker Shock comes in.

We believe that sometimes the board has the expectation that hiring a very young CEO is both a long-term plan (to avoid going through this process again any time soon) and a way to keep the salary lower. Youth is not a rationale for cost savings where the CEO is concerned.

There are plenty of ways to approach the compensation issue, with different methods of determining base salary incentives and bonus structure. Board awareness and interest, and leaving behind outmoded approaches and mindsets is needed in the modern arena. Taking an approach like this is also encouraging the best for the credit union’s sustainability. (I read a fantastic report from 2012 by Mike Higgins Jr. “Improving Peer Group Analysis for Credit Unions” that tackles benchmarking in a way that promotes member value and not simply backward looking ‘profit.’ I recommend it highly. No, it’s not out of date.)

Perhaps we’ve thrown a live grenade into a conversation. It’s not the first time.

It may appear that we’ve come out unabashedly on the side of the CEOs here without “both-sidesing” the topic. We don’t think so. If you know us at all you know that we have spent our credit union careers  primarily educating, supporting, and researching the best interests of credit union volunteers. We believe in them … in you. This is part of that effort.

Certainly, there CAN be CEOs who aren’t earning what they’re getting or those who are asking for more than they’re worth. (Don’t we have that everywhere, in everything?) Don’t throw that at us, please. This requires a more nuanced examination. And no, we don’t think CEOs get to write their own ticket no matter the circumstances.

What we DO believe is that this is a significant issue in our industry and that board members need to make sure their heads are not in the sand. We DO believe that without some recognition of this as an issue, credit unions are going to suffer and some of them are going to lose great talent, or end up with leadership that is mediocre enough to make the credit union go away. That’s not hyperbole.

As always – we welcome your thoughts and comments.

Oh yeah … Happy Holidays!! We’re counting on 2021 being a helluva lot better. Aren’t you?

–  Tim and Kevin

CEO Pushback

The CEO’s Question Conundrum (Board Members – Pay Attention!)

A CEO’s Question Conundrum is the conflict a leader has when dealing with inquiries that come from the board. The board is the CEO’s boss, and can ask for just about any CU related business, yet sometimes the board gets too far into the weeds with information requests. They go beyond agreed upon boundaries, they can be significant distractions, AND they take up valuable executive time. Does the CEO push back?

By Kevin Smith and Tim Harrington

CEO Pushback

Does the CEO pushback on board requests?

The board can ask the CEO anything, right?

Let’s avoid all technicalities and cutesiness for this one. (ex. Anyone can ask anyone anything … technically speaking.) Let’s jump right to: Should the CEO answer any and all questions posed by the board? The TEAM Resources answer: NO. (*Even though I want, with all my heart, to say “it depends.” K. Smith.)

This topic is posed to us regularly. Not from CEOs who are being dodgy, or hiding things, or as lies of omission. Generally speaking this comes to us from earnest and hardworking CEOs who have a tremendous amount on their plates. They are pressed for time. They come to us when their boards are overwhelming them with requests for information that is operational, in the weeds, and far from strategic.

At TEAM Resources, we teach “strategic governance” that creates written policy boundaries between the operational and the strategic, between the board’s role and the CEO’s. By and large CU boards are making an effort to move towards the strategic, but operational views of board service linger in the DNA of the credit union movement.

There are a couple of things at stake here to address:

  1. A well-educated board is key to a board that can function at the strategic level. (That means asking a lot of questions to learn, does it not? Yes, ma’am it does.) But there should be a time and a place for the educational pieces. Taking the CEO’s valuable time to get to these can be a significant problem and a time drain.
    • This doesn’t necessarily just mean the CEO “delegates” the answering of board questions. That doesn’t necessarily solve the problem.
    • The board should have access to lots of data and information to be well-informed and to verify the information that the CEO provides. (Trust, but verify.)
  1. This is a delicate balance as directors shouldn’t be stifled in their information feedback systems, so they fulfill their fiduciary duty and understand what’s happening and the levels of risk in the credit union.

Can and Should the CEO Push Back?

If the board is asking for too much of the wrong kind of information, should the CEO push back? We believe that they should. This is terrifying advice for many CEOs. After all, the board is the CEO’s boss and this could create negative tension. The CEO can push back in a calculated and thoughtful way by asking their own questions about the information at stake. What do they need? And why? What will they do with that information?

It’s our sincere hope that the CEO isn’t terrified to push back on this information. In fact, with the right kinds of preparations, good strategic governance conditions among the board members, and the right kinds of communication between the board and CEO, it isn’t “push back” per se, but healthy navigation of the governance tightrope.

How Does this Work?

The board and CEO create the right conditions for healthy strategic governance by talking about what it means to be operational or “in the weeds” and what it means to be at the strategy level. These are discussions that result in clear governance policy. The board must come to an agreement among itself to know what kinds of information they need in order to do strategic work. We recommend that the board chair be the one who passes along requests from directors, after they have agreed (and voted, if necessary) about what kinds requests they will make. We don’t believe that individual directors should make requests to the CEO or staff members. (This undermines the chain of command and staff members may view this as de facto policy making.)

Information Filters for the CEO

  1. If the question is clearly strategic or aligns with the Key Strategic Drivers, easy: answer it.
  2. If they ask for a report that is new, not typical, or clearly operational, that’s easy too: bounce it back to the board.
  3. If they ask a question that is a clarification of something in the packet and it can easily be answered without research, the CEO may just want to answer it and be done with it.

However (#1), if the question seems purely operational, and NOT just a clarification of something in the packet, pass it back to the board. 

However (#2), if the question requires research or going back to another member of the management team, this requires some discernment. You may want to pass it back and ask if the entire board feels there’s value in getting this answer.

  1. If the answer is easy, and not leading down the slippery slope to operational digging, it is probably worth answering. If it is leading down the slippery slope. Use it as a teaching/discussion tool at the board.

A value in the director asking questions before the board meeting (as long as they are appropriate questions) is that the CEO can resolve the issue ahead of time and it doesn’t take up meeting time. So, the CEO must have some clarity on when to respond and when to bounce it back. When the board and the CEO work together to set up a healthy governance environment, there is no CEO’s Question Conundrum. 

Let us know what you think. Leave a comment below. We’d love to hear from you.

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