Longer Board Meetings? Will Someone Second The Motion?

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Can you imagine your credit union's board voting to make its meetings last even longer? What about decentralizing the decision-making process so that committees make the important calls that used to be reserved for the board?

One group that has taken both of those steps says it's happy with the decision it made. Some 18 months ago, the National Association of Credit Union Supervisors (NASCUS) and the NASCUS Credit Union Council (which is made up of state-chartered credit unions) adopted a model best known as Knowledge-Based Governance. It's a model that has been utilized by numerous non-profit organizations that have volunteer directors who are frequently asked to cast a vote on complex matters, even though the director may not have much knowledge on it.

Such a move requires courage or humility on the part of a board (and especially a chairman), two traits often in short supply. But Doug Duerr, president of NASCUS, said its board, which is made up of state regulators, had the foresight to recognize that it doesn't always recognize all that it should. In short, it delegated authority.

"We've really began to push downward the decision-making process to people who are knowledgeable about individual topics," said Duerr. "What we're trying to do is make the shift so that the board of directors can focus on the long-term, strategic issues that affect the membership a year or two from now, and less time on the issues of the moment."

NASCUS was guided in its governance transition by an organizational consulting firm, Trenton, N.J.-based Tecker Group, which also lists NAFCU among its clients. "They began by initially helping the board of directors explore what kind of shift would occur," explained Duerr. "We adopted a plan and then began to shift responsibilities."

Duerr acknowledged the transition isn't without complications. "In our traditional, top-tier, top-down governance structure, all decisions gravitate up to the board of directors," he noted. "Committees identify topics and then make recommendations. The board then makes a decision, but without the benefit of the hours of meetings the committee had on the topic. A board will often ask questions that have already been discussed."

To illustrate, Duerr uses the example of an organization deciding it wants to change the type of locks it has on a building. A task force might narrow the choices to Quik-Set vs. Schlage. After considerable investigation, the task force decides Quik-Set is the best option. Duerr noted that in a typical governance model, when that recommendation goes to the board, at least one of the members is likely to ask, "But have you considered Schlage?," and then launch into an extended board discussion that repeats what the task force has already done.

Under the Knowledge-Based Governance model, the board delegates that decision to the task force and only becomes involved if the task force has a big picture question, such as does the organization plan to move to a larger building with more doors during the next 10 years.

To whom the board delegates authority is up to the board. Duerr said it can be delegated to a committee or task force, or in the case of a credit union, to the professional staff.

Duerr said the quarterly NASCUS and NASCUC Council meetings do run longer as a result, often to four or five hours in length. "But where in the past the board of directors would be making dozens of little decisions, now they have more time to be focused on longer-term issues."

The transition is one reason that Jeri Lattimore, the regulator from North Carolina, was reappointed to a second term as NASCUS chair even though traditionally NASCUS chairs have served for one term. Lori Rush, president of Universal 1 Credit Union in Dayton, Ohio, is Council chair.

"The chairs have to work harder and nurture committees," explained Duerr. "And the committees have to come back to the board when they need direction."

Despite the work and the overall resistance to change, especially by boards, Duerr believes the model NASCUS has adopted is a model other credit unions and associations should emulate. "I think what you're going to find is other credit unions and associations going in this direction," he predicted. "It is a much more reasoned approach to governance. It does require and understanding and acceptance by all levels of the organization that this change is occurring. There will be opportunities for resistance and there will be times it feels cumbersome. The leadership has to feel comfortable in doing this. It's not for the faint of heart."

And how will you know if your board of directors in fact has such heart problems? Rather than delegating authority, it simply changes the locks on the boardroom without telling anyone.

Frank J. Diekmann is editor of The Credit Union Journal. He can be reached at 561-832-2929, or at fdiekmann cujournal.com.

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