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.
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.