Good Governance: Transitions of Power

The recent transition of power in our country got me thinking about transitions of power in credit unions—both at the board and CEO levels. I think as a community, we give the most thought to CEO transitions, and this is definitely smart. The CEOs of many credit unions have been around for years, even decades. These CEOs have shepherded their credit unions through incredible growth, sometimes from managing receipts in a shoebox to managing billions of dollars in assets.

The change that CEOs have experienced in their credit unions over these years, even if their growth has not been quite that phenomenal, is substantial—just as significant as the change that the credit union community has seen. And it’s important to step back and take the time to think about the future before the critical transition of power needs to take place from one CEO to another.

It’s important, as a long-tenured CEO prepares to depart, to re-evaluate the credit union’s future direction, even the future direction of the board. What you needed and wanted from your CEO 10, 20 or even 30 years ago is, by definition, different than what you will likely want and need today. And clarity is key. Be honest. If you’re a risk-averse board, hiring a progressive CEO could be a non-starter. You’ll be clashing before your first board meeting.

Chair-to-Chair Transitions

Board-level transitions of power are just as important as CEO transitions. The transition from one chair to the next is far too often overlooked from a strategic point of view. Perhaps it is because it happens with greater frequency, but we take for granted that every member of our board will know how to take the gavel in hand when it’s her or his turn, and that’s simply not true. Not every board member is cut out to be the chair, just like not every board member would make a great treasurer, for example. (I know that I wouldn’t make a good treasurer!) And sometimes, certain individuals would be best suited for specific moments in time. A board member who has experience with mergers and acquisitions, for example, would be terrific if organic growth falls last among your strategic priorities.

We’ve also seen some credit unions place their officers on a moving conveyor belt, rotating individuals through the four positions every year or even two. This also doesn’t support a healthy transition of power. By the end of year one, like in most jobs, the officer is just learning the position and putting solidly into place the relationships that they need to govern. By the end of year two, things are just beginning to click, and then the rotation begins, and the process starts all over again. Consider a four-year term to allow for a healthier transition of power, on-the-job learning and a few years of smooth sailing.

Reflection on Your Organization and Its Direction

Finally, take these important transitions—each of them—to pause and learn more about your credit union and what you want it to be in the future. Reflecting on your vision, mission and strategy when a new CEO transitions into the credit union or revisiting the board’s governance structure, policies and procedures after a three-to-four-year period is prudent. This is not to say that we don’t support a consistent, rigorous schedule of self-reflection and even self-assessment—we do. But in particular, transitions of power—both within our country and within our credit unions remind us, as the nation’s new favorite poet reminds us:

“And yes, we are far from polished
far from pristine
but that doesn't mean we are
striving to form a union that is perfect
We are striving to forge a union with purpose…”
Amanda Gorman

Jennie Boden serves as president of consulting services for CUES Supplier member and strategic provider Quantum Governance, Herndon, Virginia. Boden has 30 years of experience in the national nonprofit sector and served as the chief staff officer for two nonprofits before coming to Quantum Governance. Quantum Governance provides credit unions, corporations, nonprofits, associations and governmental entities with strategic, cost-effective governance, ethics and management consulting, facilitation, and evaluation. With more than 50% of Quantum Governance’s clients representing credit unions, the organization fields more engagements in the credit union community than in any other. The firm is a unique L3C organization that integrates the best elements of both the for- and non-profit communities into one practice. It is a low-profit, limited-liability service organization dedicated to the public good and one of the very first such legal hybrid organizations in the United States.