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How Many Committees Does the Board Really Need?

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.

The Board of Director’s Education Policy

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.

Bullying in the Boardroom

 

Bullying in the Boardroom

Bullying in the Boardroom

Bullying in the boardroom can take a variety of forms, but none of them are acceptable. Yet in an environment where no one is the “boss” it can be difficult to control this behavior. Directors have a variety of tools to use to counter the bully including written policy and parliamentary procedures, among others. Often it requires many simultaneous approaches. But one thing is certain – bullying cannot be tolerated.

 

By Kevin Smith

I’m finding that my blog posts are feeling more and more negative these days. Just look at today’s title. It’s a bit depressing. However (comma) my desire in this space is to provide help based on a wide range of boards I’ve observed, interacted with and heard from. So, I suppose it’s not actually a benefit for me to simply provide pep talks, and rah-rah speeches here, though I will work on a post that does share all of the great things I see as well.

Now – on to the topic. Bullying in the boardroom.                         

Forms of Bullying

Bullying can take on many forms. Intimidation. Interrupting. Condescending talk. Demeaning jokes at a colleague’s expense, in front of a group or behind their backs. Withholding critical information. Harassment. Side talk. Snide body language. Social isolation (not including someone). There are probably endless examples well beyond what I’ve provided. As a matter of fact, I’d like you to add to my list. Please add the examples that you’ve seen. It’s not only cathartic, but it may help someone else reading this to see and perhaps realize that they are dealing with a bully. (It’s not always black and white.)

No Simple Answers

Movies and TV will have you believe that simply standing up to the bully will cause him or her to back down. This may be true some of the time, but I’ve been witness to times when it doesn’t. Rarely do you get a storybook ending where Prince Humperdink (the bully) gets put in his place with a raised voice and a threat of retribution. It’s usually more complicated than that.

The Outsized Impact of Bullying on Women

The Impact of Bullying on Women

The Effects of Bullying

One thing is for sure, bullies of all kinds and all sorts are detrimental and must be stopped.

Bullies:

  • Shut down discussion that doesn’t go their way
  • Intimidate people from providing perspective
  • Affect the tone and culture of the group
  • Make it difficult to recruit new members
  • Make trust impossible
  • Create an environment where staff have reason to hide things.

Bullies do this and more and worse.

How to Counter a Bully in the Boardroom

You probably know and understand how unique the boardroom dynamic is. Directors are at the top of the hierarchy for the organizations, but there is no hierarchy among the board members. They are equals. This complicates the dynamic. And when someone uses intimidation any bullying tactics, the remedy lies with solely with the peers in the room. It can be extremely difficult to stand up to this behavior. Most of us don’t exhibit these traits and aren’t comfortable using them or leaning into the confrontation and conflict needed to stop it. So, what to do about it?

Written Policy as a Tool

The strategic governance approach that we take here at TEAM Resources relies heavily on written policy in order to establish the clear tone and approach of all things that the board will do. This doesn’t just mean about liquidity targets and ALM investment limitations. This is also policy about how the board behaves and approaches its work. This plays out in things like what the ongoing education for each board member will be, and in how the board will speak with one voice, where no individual director will have any authority over the CEO or staff.

Now, it might be hard to write, “there’s no bullying in the boardroom.” But you can write about the expected tone of respect for all involved people in the organization. It’s an area that everyone thinks ought not need to be said … until it is. By starting at a very foundational level and saying what people generally presume, the board establishes basic ground rules in writing. And when it’s time to put this in writing, the board as a whole has to discuss this and agree upon the terms and terminology. You verbalize what generally goes unsaid and presumed. And ultimately, you have a vote on accepting the policy. Now you have a foundation for when someone is not following the policy. The board then has an agreed upon document. This prevents the need for one, sole courageous sole needing the speak up alone.

(Most of the time when I talk to directors one-on-one about confronting a bully, they tell me that others on the board will discreetly tell them that they agree. This can be frustrating when you want everyone to speak up. Try to be patient. At very least, you are building a coalition against the bad behavior. Standing up to a bully is difficult.)

Majority Rule and Voting as a Tool

But when ratifying policy is not the only time that boards vote. The quorum or the majority works in your favor when countering the bully. Using the voices of the majority when a motion is called can outweigh the bully, particularly when you already know that others on the board are struggling with the problem behavior. Calling for a motion and a vote, if well prepared and knowing the temperature of the room can make the problem more clear. It can call out the elephant in the room.

This approach may need some preparation and planning. The worst thing that can happen is a motion and a vote that comes as a surprise, from out of nowhere. For those who do not like conflict, being put on the spot like this may make them abstain and stay quiet. But when handled thoughtfully, this approach can bring forth a strong, unified front against the bully’s behavior. It may be enough to be a wakeup call, or to make the bully realize that the intimidation won’t work against a group.

Good ‘Ol Roberts Rules of Order

I’m not a fan of Roberts and his rules, in general. They can be archaic and stifling. But parliamentary procedure can be a helpful approach when struggling with a bully. This is best wielded by a confident board chair. These procedures can help to reel in an unruly board member.

Holding Yourself Accountable

It’s very ironic and counterintuitive, but holding yourself accountable is a great tool for countering bullying in the boardroom. By actively asking for constructive criticism, and feedback about your work and behavior is a modeling the behavior that you value. You are setting the example that you have a growth and a learning mindset, that you don’t think you are perfect and that you expect to grow. This approach also verbalizes attitudes for the whole room that often go unsaid, or are whispered in the hallways. Doing this invites and encourages feedback. This can be contagious when encouraged. And again, it makes explicit the expected tone. Now, I’m not suggesting that when you do this the bully will jump right in and ask for feedback. But you are starting a process for buy in on this approach. I could write an entire section on board self-assessments. These too can be helpful, but only if people are willing to vocalize their objections to bullying behavior, which is often the sticking point. If you know TEAM Resources you know we are big proponents of board self-evaluations. The process of accountability is very much related. 

Few Bullies Think They’re Bullies

I have heard of a few occasions where a bully was self-proclaimed as such. But that’s pretty rare. Generally speaking, people don’t think they’re a bully. They may need to have that pointed out to them. That’s rarely easy. I’m not suggesting that anything I’ve proposed above will be simple. It’s just not. And that’s often the reason why the offender gets away with it for so long. But I do know that what I’ve laid out has worked. These are approaches that band people together for a unified voice. You may get through to a person and be the catalyst for positive change. (We can hope, can’t we?) You may be able to back a bully down by neutralizing their tactics through boring procedure. You may be able to force them to see that they are outnumbered and that it’s time to go.

Let’s Write it Down! Transparency and Accountability in the Board Room


Written governance policy is the pathway to accountability, transparency and higher performance for credit union boards. Too often boards will have productive discussion and agreement on an approach only to leave it with the conversation hanging in the air, soon to dissipate.  

By Kevin Smith

Directors – are you writing stuff down? Ok, more specifically – your governance policy? Or is it de facto policy that floats around in the culture and in the air of the board room, to be absorbed by participants? You talked about it and everyone agreed … and that’s where it ended.

We promote strategic governance by way of written policy. Determine the rules of the road with pen and paper. Establish the direction and the limitations. Write ‘em down.

Are You Covering Everything?

Yes, many of you have a lot of great governance policies. But are they complete? Have you covered all of necessary territory?

Many boards I know don’t have a board education policy. Rather they have an “expectation” and don’t feel the need to write it down because everyone “gets it.” How do you know they “get it”? Are you sure everyone has the same understanding? How do you enforce this? What if someone doesn’t fulfill this unwritten obligation?

I recently spoke to a CEO who had never had a formal evaluation and never had any written goals or targets. This is pretty extreme, and it’s unusual. It speaks to the level that people are willing to accept boardroom discussion and agreement as the end of the road, without written documentation.

What about a policy that defines communication between the board and staff members? I’ve seen offhand comments made by a board member to a staff person magically turn into policy, simply because it was a board member who said it. How does this idea fit into the “stay out of the weeds” philosophy? (It doesn’t.) It’s only clear, though, if it’s in black and white and agreed to and signed by the board. Do you have a policy that outlines clear expectations for the board’s unity of voice, and how individual directors should behave and communicate in the organization? This codifies the chain of command.

There are lots of examples and those above are important governance issues, clearly. What I’m suggesting is a way to clarify issues, amplify performance and simplify the process. But “Kevin,” you say, “you just told us to add more to what we have, to write more policy. How is that simplifying?” I’m telling you that this pays off and simplifies things pretty quickly. 

Worth the Effort

Yes, this does require discussion up front, then a little wordsmithing for a short policy. But once that’s done it will eliminate gray areas, remove awkward accountability issues (that are often swept under the rug) and in the long run, speed up all of your efforts. Like all things worthwhile in the world, it’s a little bit complex and requires some effort and nuance.

You may be thinking, “We have everything written down. Why is he bringing this up?” If that’s the case, kudos to you and your board. You can take this as proof that you are keeping up with best practices. But all too often I encounter directors and boards, who, when pushed for detail, are missing some key policies, who don’t have everything written down.

Having things written is the key to:

  • Clarity
  • Transparency
  • Accountability

And these lead to higher performance, efficient onboarding, and a great board culture.

I’ll get down off of my soapbox now. But you know that I only do all of this because I care about you, right? I want to help make things easier and better for you. I love my CU peeps.

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