It's Time For CUs To Walk The Walk On Annual Meetings
When it comes to annual meetings, credit unions need to walk the talk, not just talk the walk.
Whether premeditated or not, far too many credit unions are undermining the "member controlled" aspect of their organizational structure and may be shooting themselves in the public relations foot as a result.
Every credit union annual meeting is an opportunity to demonstrate what member-owned, democratically controlled really means. It tangibly differentiates a credit union in the marketplace and reinforces with existing members that the institution belongs to them. Unfortunately, some credit unions are either unthinkingly neglectful or way too cost conscious for their own good.
Many otherwise well-run credit unions have allowed their annual meetings to be reduced to an ill-advised mockery of member control. Although proper legal notice and other letter-of-the-law actions are conscientiously being met, credit union annual meetings are too often held at inconvenient times, located at unsuitable venues, and are attended by barely enough members to constitute a legal quorum. More often than not, only board members and staff attend these functions. A couple of dozen insiders are de facto calling all of the shots rather than the full membership making the decisions for their member-owned financial institution. This is a disappointing state of affairs for that venerable American cooperative financial institution-the credit union.
This low-cost, low-participation annual meeting may seem smart in terms of promoting efficiency and saving money, but in the long run it is penny wise and pound-foolish. Although well intentioned, these minimalist annual meetings are a public relations time bomb waiting to explode. Depending upon how it is handled, a credit union's annual meeting affects the perception of thousands of members and scores of community leaders for good or ill. The value of "member-owned, democratically controlled" should not be measured only in dollars and cents.
A visit to just about any credit union trade association website has "member-owned, democratically controlled" or some variation of the phrase prominently featured. Elected officials and members of the media regularly visit these sites and rely heavily on the credibility of the content. Credit union lobbyists "boiler plate" the phrase in their legislative testimony. Credit union public relations and marketing specialists use the terminology almost daily in their press releases and advertising.
Perhaps it is time for a reality check. Are credit union leaders truly providing members with democratic control of their institution? If not, these credit union leaders are telling a huge exaggeration of the truth to exactly the wrong people. The investigative media and formerly supportive legislators will invoke righteous retribution if they believe that they have been hoodwinked by credit union spin-doctors. Their indignant wrath could reach Old Testament proportions wiping out the good-guy image that credit unions have cultivated for decades in the halls of Congress and state legislatures. The damaged perception of credit unions could take years to repair.
There is a simple remedy and sure redemption for any credit union that has let its members' democratic control slip. This is a problem that they can easily fix themselves. The rules for federal credit union bylaws and most state bylaws provide each credit union with lots of flexibility concerning how the annual meeting and board elections are implemented. The best way to put the member control back into annual meetings is to spend the time and money to place a mail ballot in the hands of every single member. Also, try to recruit at least two qualified candidates for each open position. Credit unions should also have well-respected, arms-length third-party audit firms engaged to tally their board election ballots. To do otherwise places the credit union's reputation needlessly at risk.
Ironically, the National Credit Union Administration's regulations concerning membership votes for credit union conversion to a mutual savings bank charter create a model for credit union annual meetings. This NCUA guidance sets very high standards. In NCUA Chairman JoAnn Johnson's official statement she says, among other things, that, "We also believe that requiring the vote to be by secret ballot and conducted by an independent entity will enhance the integrity of the voting process and give comfort to members that their votes are being treated confidentially." What's good for the goose is good for the gander.
The larger the credit union, the more compelling is the case for a full membership mail ballot for board elections. From a public perception point of view, it is infinitely better to have the process engage the full membership rather than having a couple of dozen potentially self-serving insiders decide who sits on the board of directors representing thousands of members. Give the members a real choice and reinforce the important belief that the credit union belongs to them. Allow them the dignity to make a significant decision and not just act as a rubber stamp. Who wants to do business with a dictatorship anyway, no matter how benevolent?
Credit union public relations specialists and lobbyists can explain in more detail the value of ensuring that there is concrete and uncontestable truth to the credit union industry's allegation that credit unions are member-owned and democratically controlled. Don't let a false sense of economy or outright negligence undermine the public relations power that the credit union's annual meeting has historically provided. Walk the talk or lose the credit union's bragging rights.
A 30-year credit union industry veteran, Marvin Umholtz is CEO of Umholtz Strategic Planning & Consulting Services, and has also He can be reached at marvin.umholtz