In the September 2015 issue of the Harvard Business Review, an article titled, "The Sorry State of Nonprofit Boards" posited that "nonprofit directors often fall short in terms of knowledge and experience, and their boards as a whole need more rigorous planning and procedures." This brought back memories of a past study revealing that just 15% of Fortune 500 directors received an annual education in good governance practices.
Specifically, the Harvard Business Review article revealed:
- 27% of directors say their fellow board members lack a strong understanding of the organization's mission and strategy.
- 32% of directors are not satisfied with the board's ability to evaluate the organization's performance.
- 69% of boards do not have a succession plan for the CEO.
- 90% of boards require directors to raise funds, often with a minimum to donate or raise.
Granted, the non-profit boards are chiefly charitable organizations and not structured as cooperatively-owned enterprises. Nevertheless, the fiduciary and governing responsibilities of board members are reasonably similar across organizations – adherence to mission, safe and sound operations, and continuity of leadership. What lessons can credit union boards learn from other non-profit boards? And, what can credit union boards demonstrate to the non-profit board community?
Understand your credit union's central strategies. While the fall of each year classically brings strategic planning sessions, it's continuously strategic execution season at your credit union. There's no need to recite your credit union's mission statement (though many directors can and have), but do you wholly understand the key strategic objectives of your credit union? Do you recognize the tangible methods that your credit union is utilizing in order to best serve its members? What are the foremost goals your credit union aspires toward over the next one to three years?
Understanding your central strategies helps you confirm that your credit union is focused toward delivering on its mission. For example, your central strategies might be: expand by two branches; increase products per member; and, deliver relevant technology for members' use. Those central statements allow directors to effortlessly understand the strategic direction and ensure that operations focus on core areas for strategic success. It's about knowing the direction you're headed.
Monitor the main drivers of your credit union's success. Since you know the central strategies of your credit union, how do you measure success? "What gets measured gets done," is a common piece of management advice and is key to strategic success. Once your central strategies are established, look to your CEO to define the most effective measures of success. Our examples above might produce measures like: timelines for branch build out; branch growth and profitability; products per member; and, percentage of members using online and mobile channels.
Once your main drivers of success are in place, ask your CEO for updates each quarter. Most important, look for incremental progress over time. Instant success will rarely occur each quarter, but steady progress is likely. "Strategic measures are big barges to move; that's why we set three year goals," says one credit union CEO. Observing regular improvement and proof of success helps you in your oversight role and it helps validate that your credit union is making headway for its members.
Plan for your CEO's successor. CEOs come and CEOs go, but your credit union remains. In the event of a planned or unexpected CEO departure, how would your board go about its search for a new CEO? What non-negotiables are required to be your credit union's CEO (often times, your CEO must be as distinguishing as your credit union and field of membership)? Does your credit union have an internal pool of candidates who might, one day, be considered for CEO?
As a board, task yourself with establishing a process to follow in the event of a CEO search. Instruct your CEO to identify high potential candidates and develop these credit union managers and executives with CEO-level projects and responsibilities (profit-and-loss, execution of new strategies, community leadership, etc.). Get to know your credit union's up-and-coming leaders and network with other credit union directors to learn ways they prepare for CEO succession.
Emphasize governance and representation for directors. As a governing official, your role is fiduciary, overseeing your CEO and his or her management of your members' resources. Good governance looks to members' funds as invested capital, seeking a sound return and continued funding for business growth and member service. Good governance seeks security, stability, and sustainability.
As an elected director, you're on the board for simple reasons – to represent your member-owners and to ensure the steadiness and success of their credit union. Your role is to be a voice for all members, not just your own views. Look to and learn of your members' needs often, asking your CEO to develop new strategies and tactics to move forward for your members. As your members' lives change, so must your credit union and your representation as the voice of your members.
Credit union boards can certainly learn lots from other non-profit board practices, but can be a model for others, too. The forecast is bright and sunny for credit unions – and their boards – as both parties look to build long-term partnerships with members and communities. Great boards guide great credit unions that provide great value for members now and soon-to-be.
Jeff Rendel is president of Rising Above Enterprises, which works with CUs on leadership, sales and strategy. He can be reached at
