4 minutes
Great directors are enthusiastic, into education, and keep an eye on the big picture.
Sponsored by Kaufman & Canoles
Credit unions have several defining characteristics that set them apart from other financial institutions. Not-for-profit status allows credit unions to focus on the needs of members, and not third-party or institutional stockholders. CUs’ community focus, be that a geographic or a shared community of interests, allows them to intimately know the needs of members.
A critical component of CUs is the way boards and committees incorporate committed volunteers to guide the organization. In this brief article, we explore qualities that comprise an exceptional CU board member, based on what we have seen at our many credit union clients.
Great Board Members are Enthusiastic
One of the most important qualities a volunteer can bring to a board is enthusiasm for the credit union and its role. Let’s face it. Few credit union board meetings would qualify as engrossing dramas or spine-tingling entertainment (at least, when things are going right!). A board member who brings their own measure of passion to the task is far more likely to be effective and engaged. One quality we have seen in almost all highly successful board members is zeal—zeal for the community-oriented, not-for-profit mission of the credit union.
Enthusiasm, by the way, does not mean allowing yourself to dominate the agenda or the conversation. Great Board members listen—really listen—to their colleagues (and not just wait to talk). It’s amazing how well collective decision-making works at the board level, but only if the board functions as an integrated entity.
Great Board Members are Excited About Education
Not every board member comes to the role with an intuitive grasp of the ins and outs of financial statements and regulations. Board members have a statutory duty to educate themselves on the core issues affecting the credit union world so they can provide effective oversight. This should not be seen as a chore, but as an opportunity to expand into new fields of endeavor. Almost all credit unions support volunteer education efforts; many symposiums and seminars provide excellent networking opportunities. Take advantage!
Great Board Members Keep an Eye on the Big Picture
In our view, perhaps the most important characteristic of a successful board member is the ability to focus on the big picture and not get bogged down in minutia that can and should be dealt with at the management level.
Section 113 of the federal credit union Act says that the board of directors “shall have the general direction and control of the affairs of the federal credit union.” If the board chooses to exercise its full authority, it can manage every instance of the operations of the credit union. However, that is the way to madness and—maybe worse—to utterly ineffective governance.
Many traps lie in wait for board members who seek to micromanage the affairs of the CU. The most effective boards we have seen are those that select a highly-competent CEO or president, and trust that person to oversee day-to-day operations. Conversely, some of the least effective boards—one might say “dysfunctional” boards—are those who expend precious board member time second-guessing management.
Some of the telling miscues we have seen resulting from board micromanagement include second-guessing such management decisions as routine personnel issues. Management must manage; executive officers must have the ability to delegate personnel decisions to human resource managers or others who have the time and ability to become fully-proficient in their roles. When a board allows itself to become enmeshed in personnel matters, it undermines the confidence of CU employees.
Employees, even the best-meaning employees, can become unmanageable if they believe disciplinary, assignment, scheduling and other decisions can be appealed to the board of directors. Letting the board dabble in HR also runs the risk of taking a position or making a statement not fully in accord with employment laws or the CU’s overarching philosophy. It is fair to say that the old human resources mantra, “No good deed goes unpunished,” is fully-applicable almost every time a board attempts to influence the operation of employee relations.
Board micromanagement also generates discord among members of the board. Everyone on the board may have the best of intentions. But in every instance, the more the board involves itself with minutiae, the more likely it is that personal preferences will differ about relatively inconsequential matters.
Don’t get us wrong. Major systemic issues or even major disciplinary matters may properly be the subject of board contemplation and action. But as a matter of routine practice, the board must learn to trust its selected management and focus on big-picture issues.
Dustin H. DeVore is chair of the Kaufman & Canoles lender representation practice group as well as chair of the firm’s credit union team. He works closely with credit unions on regulatory and lending issues. John M. Bredehoft is a member of the firm’s employment law practice group and an active participant in the firm’s credit union initiative. He is a member of Kaufman & Canoles’ COVID-19 Task Force and has advised scores of clients on legal compliance, risk reduction and employee management strategies in the time of pandemic. Kaufman & Canoles, P.C., is based in Norfolk, Virginia.
