CEO Opinion: Modernizing Your Credit Union Board

November 7, 2023

The personalities gathered around your boardroom’s table are the pulse of your credit union — a living, breathing representation of your membership, according to Mina Worthington, President and CEO of Solarity Credit Union in Yakima, Washington.

A highly functioning board culture, with adept decision-making capabilities, has the power to uplift and enrich your organization for the betterment of your entire membership. The success with which the board operates sets the tone for everything at your credit union. If they are restrictive and micromanaging, that filters down, and the same is true if they are unengaged and hands-off. A CEO needs and wants a well-functioning, engaged board with tremendous trust in one another and a healthy respect for the CEO.

Credit union board members usually fit a specific mold, stay for the long haul, and often share similar backgrounds. While that might have sufficed in previous years, it now threatens to stall progress and stifle fresh viewpoints.

Over the past several years, there has been a lot of momentum around shaking up these legacy boardrooms and making them more diverse. A diverse board introduces a wide range of viewpoints, paving the way for well-informed decisions. However, recognizing the need for diversity won’t cut it — fundamental transformation comes from daring actions.

Diversity goes beyond ethnicity and gender. It spans socio-economic backgrounds, ages, and thinking styles. Yet, broadening perspectives by displacing your current board members can be challenging for a CEO. There is comfort and predictability in understanding your board’s approach to issues and their thought patterns. Also, the CEO is not responsible for nominating new board members and may not have much influence in the matter.

Fostering diversity within your board requires planning, intention, and purpose – and the board must spearhead it. The CEO must remain patient and supportive throughout the process. 

Defining an engaged board

While revamping a board might seem like a weighty endeavor, it’s an essential step toward realizing the transformational benefits of an involved board. My take on how a well-functioning, engaged board operates in a healthy boardroom might surprise you.

As a fly on the wall, you might find an assortment of seemingly unrelated questions, side-bar conversations, and personal anecdotes of individual experiences simultaneously occurring. You would hear reminders to stay “board level” and maneuver away from distracting rabbit holes. This stems from the presence of trust within the culture, which gives individuals the confidence to ask questions and share openly.

Interest in the topic at hand naturally triggers dialogue, sometimes leading to tangents, yet the conversation can be steered back to center. When boards have this comfort of trust and belonging, behaviors that you might otherwise think are unprofessional will emerge, and it is gloriously productive in its messiness.

On the flip side, when an unengaged board member comes to your meeting unprepared to converse and engage, he or she will generally stay silent except to second a motion. A board that consistently greenlights every CEO-proposed initiative without raising concerns or fostering discussions is falling short of its responsibilities. Then there is the issue of a board that excessively delves into operational details, yet no one intervenes to steer the conversation back on track. I have seen it all.

Perhaps your organization has grown in both size and complexity, such that a hands-off or micro-managing approach to governance no longer serves the organization. Many larger credit unions have, at some point, found themselves in this situation.

If the CEO has an excellent reputation with the current board, there is little motivation for the CEO to encourage the growth of said board, either through upping the current board members’ skills or helping to bring in “new blood” to the board. I submit that CEOs should wish to “up the game” of their boards of directors so that they become better CEOs and in turn, their members benefit from more vibrant and progressive credit unions.

Creating meaningful change

So then, how do CEOs get their boards on board with meaningful governance change? First and foremost, a culture of trust must exist. Without a high degree of comfort, your board will not have the vulnerability and self-awareness to admit that change is needed, and you cannot help them implement meaningful governance change. To truly embrace varied viewpoints and drive constant innovation, leaders must consider the steps required to navigate this transformation successfully. The goal is to propel the organization toward a more vibrant and future-focused trajectory.

At its core, a board member’s role is steering the organization toward the improved well-being of its members by overseeing the CEO, crafting a vetting process for new board members, and shaping the governance structure. Your board chairperson should lead the charge in delving into deeper discussions with the broader board. They should investigate whether the board tends to fall into groupthink patterns or if there are healthy opportunities for individualistic thinking. How diverse are the perspectives? Does robust debate take place? How much time does the board dedicate to thought-provoking strategic talks? When board members identify these gaps through self-assessment, it fuels increased buy-in and commitment, fostering the drive for change.

Individually, board members should scrutinize their combined strengths, meeting content, and strategic discussions to compare the current and desired future board states. This assessment helps reveal the gaps between them. Start by assessing whether all the necessary technical expertise exists on the board. For instance, is there someone well-versed in cybersecurity or emerging technologies? Then, evaluate individual competencies to pinpoint missing skill sets. Is a growth mindset present? Are we a resourceful board? Once identified, you can determine the best approach to close those gaps, whether through training or introducing new members. Bottom line, the board members must be the agents of change.

Settling into a new governance structure

Leaders must recognize the time and effort needed for the board to embrace a fresh governance approach.

In our credit union’s case, we engaged external parties to facilitate and document board discussions, paving the way for management to craft an action plan. We implemented term limits for all board members — no one was “grandfathered” into an unlimited term — and we expanded competency requirements. Each board member selected a development path that includes continuing education. We asked board members who wish to serve in leadership positions to go through additional leadership development.

Ongoing, our Board Governance Committee convenes monthly to delve into the current state of the board’s governance practices. They cover various subjects stemming from the board’s interactions and decide what the entire board should explore and brainstorm for the credit union’s benefit. They also encourage our management team to provide them with insights and knowledge, enhancing their capacity for meaningful discussions and posing challenging questions. A more profound board translates to a more profound CEO — that’s the synergy we’ve fostered.

Ultimately, board governance change requires the board to desire one’s own personal and professional development. In a room where people are motivated and inspired to be their best, those who wish to “cash it in” will become uncomfortable and feel out of place. A strong board culture with good governance practices will attract and retain those who thrive within it, while those who do not will often peacefully move along.

Posted in Thought Leadership, Top Headlines.