Credit Union Strategic Governance Basics by TEAM Resources

Hey Credit Union Friends!

We are thrilled to announce the newest publication from TEAM Resources: A Credit Union Guide to Strategic Governance, by Tim Harrington and Kevin Smith. This book has been long in the works, developed around the strategic governance philosophy that Tim and Kevin have been presenting to audiences over the years and now coming in book form. We anticipate the book to be available in December of this year. (It’s at the designers!)

You can preorder the book now and save $. Click here to order! 

In the meantime, to promote the TEAM Resources Strategic Governance approach, TEAM Resources is offering a free webinar on Monday, December 11 (1:00 PM – 1:45 PM CST).

In this webinar Kevin Smith will provide an overview of the TEAM Resources Strategic Governance approach as developed by Tim Harrington, CPA and Kevin Smith. You will get an overview of the evolution of governance issues for credit unions, hear the basic steps of Strategic Governance (i.e. what to do, and what to stop doing), learn how to maintain proper oversight, and develop an approach to maintaining a strategic approach via policy.

To register for this webinar, click here.

And please share this will all of your credit union friends!

Thanks, 
Tim and Kevin

What Credit Union Directors Should Look for in a Board Portal

by Kevin Smith, TEAM Resources

Recently I had the opportunity to spend some time with a 100+ credit union board members and volunteers thanks to Terri Murphy and the New York Credit Union Association. During a discussion of best practices the use of board portals came up and there were quite a few questions. So I thought this might be a good opportunity to relay those questions along with the “wisdom of the room” that came together.

First, let me say, I’m not exactly an expert at this technology. But over the years I have reviewed quite a number of the products available out there as professional research. And at onepoint I was offered a job by one of the (clearly savvy) providers in the market. I do know many of the features, and the things that I like and don’t like. In fact, I’m a supervisory committee member with a Madison credit union using such technology. I have also gathered anecdotal information from a range of volunteers along the way. So take that for what it’s worth – a relevant and informed opinion that is not coming from a provider’s sales team.

Extra Steps When you Have Time … are Okay?

by Kevin Smith, Publisher, TEAM Resources

On a recent trip to a credit union event, I was actually surprised by an airline customer service effort that was positive. (I know, right?) It wasn’t a big thing, but it was enough to make me notice and jot a note. The airlines aren’t getting a lot of good press these days for their customer service. And I’ve certainly gotten my share of “meh” service over the last couple of years.

For example, last spring I got to fly over my destination … twice … over an eight-hour period … without actually getting to land there because of weather. So, I never actually got to where I needed to go. I missed the event. But I also didn’t get the miles towards my loyalty program status, presumably because I never landed there. There’s not much the airline can do about weather issues, but I did feel doubly disappointed when I didn’t even get credit for my own efforts. Jeez.

Ok, moving on to the better story. (I can’t seem to let the miles thing go.)

You’ve Got the Right to Fight: Healthy dissent in the boardroom leads to better outcomes for your CU.

by Kevin Smith, Publisher, TEAM Resources
(A version of this post was originally published in the July CUNA Directors Newsletter.)

I’m here to start an argument. There. I said it. I mean it.

What I’d like to see is more arguing among credit union board members. What I am seeing is a bit too much harmony for my taste. And no, this isn’t about shadenfreude (no matter how much I like to say that word). This is about board engagement, and avoiding complacency. In general, I’m seeing and hearing about too much complacency.

Now, don’t get me wrong. Harmony on a board of directors is a good thing, to be fostered and cultivated. But if there are only unanimous votes, too much harmony, too much kumbaya … that’s a red flag for me. It usually means there isn’t enough thought going into the discussions and material at hand.

The Importance of Strategic Planning for Small Credit Unions

The Good, the Mediocre, & the Stopped

by Tim Harrington and Kevin Smith (originally published as an article in CUToday.info.)

There’s a common belief in credit union land that you have to be over $500 million in assets to survive, some even say $1 billion. We say, “That’s a bunch of hooey!” Small credit unions can survive. But to do so, you must specialize. When your entire credit union is the size of a big bank’s individual branches, you can’t take them head on. So what do you do? Specialize and Thrive!

To do this, small credit unions must place greater importance on their strategic planning efforts. It would be a tremendous benefit to them and to the credit union movement. There are 4234 credit unions in the U.S. under $100 million in assets. That’s out of 5785 total credit unions (as of this posting) or 73% of all credit unions. That’s a lot. (“No kidding,” you say).

The Connection Between Board Diversity & the CEO

by Kevin Smith

The topic of board diversity has been bubbling about the credit union industry for quite a few years now, and with good reason. A healthy, diverse board can have a dramatically positive impact on an organization’s performance. But I recently ran across a new angle to this argument worth considering. There is a recent study that suggests the level of board diversity at the CEOs previous position affects performance at your organization. In other words, if you have a newer CEO, who came from another organization, the diversity of his/her previous board will impact current performance. The more diverse the previous board was, the better the performance. The less diverse … the more likely the CEO is to leave the job within three years.

Governance Outside of the Bowls

Board Members – What do You Know? And how do You Know You Know? ‘Ya know?

(Better Title: Governance Outside the Bowls)

Tim Harrington and Kevin Smith, TEAM Resources

Yeah, yeah, we all know (or should) … the board of directors has fiduciary duty in the operations of the credit union:

From the federal regulations:

(a) General direction and control of a Federal credit union. The board of directors is responsible for the general direction and control of the affairs of each Federal credit union. While a Federal credit union board of directors may delegate the execution of operational functions to Federal credit union personnel, the ultimate responsibility of each Federal credit union’s board of directors for that Federal credit union’s direction and control is non-delegable.

(3) In discharging board or committee duties a director who does not have knowledge that makes reliance unwarranted is entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, prepared or presented by any of the persons specified in paragraph (d).*

[*These are only excerpts that serve my purpose right now. You should know the full text.]

(Source: http://www.ecfr.gov/cgi-bin/text-idx?SID=013383e49e8441a7f1826edcb8acf395&mc=true&node=se12.7.701_14&rgn=div8 )

The board has oversight of the credit union. And the board has to know what’s going on inside the credit union in order to have proper oversight. So where are you getting your information? What do you read that tells you what’s going on? Surely you’re not hanging around in the CEO’s or the CFO’s office watching thrilling data stream across the computer screen. You get information in your packet once a month, right? (Electronically by now, I hope.)

Board governance includes oversight.

And you read these packets. Which means you know. But how do you know, you know?

Layers of policy create the area where the CEO has the authority to execute the strategic plan.

I know. I’m being obtuse. Let’s cut to the chase.

Credit union directors should have a range of feedback/reporting systems in place to ensure proper fiduciary oversight of the credit union. Your information should come from a variety of sources and should line up to paint a consistent picture. At TEAM Resources we call this “governance outside of the bowls.”

Board Communication and the Staff

by Tim Harrington and Kevin Smith, TEAM Resources 

A credit union board chair recently contacted us with some questions regarding board communications. One issue had to do with the board’s communications with the staff. Now ordinarily, this is the kind of discussion that we try to shut down immediately with a simple cliché of “all communications to the staff should come from the CEO.” It’s a cliché that’s easy to trot out because it holds up pretty well under almost all conditions, sun, rain, snow, wind…. But it got us to thinking about where that cliché would begin to break down, because they all do at some point, right? (Thanks. We knew you agreed with us.)

So, the rule of thumb (let’s see how many cliché’s we can get in here) is that the board has one employee, the CEO. And the board speaks with one voice, communicating with the CEO. Individual directors do not give any direction to the CEO, officially or unofficially. The board operates as a unit, within the boardroom, deciding its strategy and communicating that when finalized to its one employee with a unified voice. The CEO then directs the leadership and staff of the credit union with their marching orders.

Board Communication with Staff

Take Responsibility for Your Financial Literacy

Take Responsibility for Your Financial Literacy

(This post is also available in the March 2017 edition of the CUNA Directors’ Newsletter.)

Regulators hold volunteers accountable for understanding key measures and ratios that indicate a CU’s health.

Picture this scenario: 

It’s time for the annual exit interview with credit union regulators. You’ve been told they finished your regulatory exam and have requested the entire board’s presence. If this development hasn’t already alerted you to an issue, the six regulators awaiting you in the board room does.

You look around the board room and see anxiety in the CEO’s face, urgency in the regulators’ faces, and a bit of confusion and concern in your fellow directors’ faces.

Houston, we have a problem: Your credit union is losing money. Your net worth ratio is taking a plunge, and you’re losing assets. “And,” they say, “it’s your fault.”

A Book Review: Transformational Governance: How Boards Achieve Extraordinary Change. By Beth Gazley & Katha Kissman

Guest Post by Kevin Smith, Publisher, TEAM Resources

“If you truly want to understand something, try to change it.” Kurt Lewin, often referred to as the father of modern Social Psychology.

If you’re anything like me (and I assume that you are), then you have too many books piling up literally and virtually, too many articles saved, too many emails with links to information that you’re supposed to keep up with these days. Sometimes I feel like I’m drowning in it. So I shouldn’t have been surprised when I stumbled across Transformational Governance: How Boards Achieve Extraordinary Change by Beth Gazley and Katha Kissman a full year and a half after it came out. But I’m sure glad that I found it. (Full disclosure: I hired Katha Kissman to speak at a CUNA Volunteer event several
years ago. She’s cool, yo.)