What Credit Union Boards Can Learn
You might ask, what do governance, leadership and Chile have to do with credit union boards getting it right? One thing I know to be true is the deep belief that credit union board members have in fulfilling the mission of protecting the members they serve. But I would like to propose that there needs to be increased education, accountability and better governance practices employed to ensure the soundness and security of their credit unions. Board members' passion and commitment can be channeled into better decision making and outcomes for the credit unions they serve.
It seems like the entire world witnessed the incredible rescue mission of the Chilean miners. The outcome for all citizens of the world was exhilaration. It was a testimony to the potential achieved through collaboration of mission-driven people. There are many stories that will be told in the future, but in the near term, we who are concerned about credit union members can study this event and glean lessons from this effort on many fronts, including strategic planning, brand reputation, crisis management execution and collaboration.
In a past lifetime, I served as the global CEO of Dale Carnegie & Associates. In that capacity, I traveled over 300,000 miles a year. One of the countries that impressed me was the country of Chile. Their population had the resolve to privatize public pensions, which helped strengthen their economic engine. In short, it was clear to me that this country had leadership at its core.
An ingredient that we respect in the credit union movement became apparent even at the beginning of the Chilean mining accident and that is collaboration. The governmental officials and people in the private sector reached out throughout the world for intellect and engineering support, recognizing the mission of ensuring the safety of the miners trumped any provincial national thinking. Had Chile closed the door, pretending to have all the answers, I'm not sure that the outcome would have been as positive.
The lesson from this for credit union boards is to continue to pursue the mission of collaboration. That means dedicating yourself and reaching out for continuous learning from experts and ensuring that you and your board have the right collective skills, experience and culture to make the best decisions to ensure the best outcomes for your credit union and its members.
Collaboration in the mining rescue included NASA specialists working on the design of a 22-inch- wide Phoenix 2 rescue capsule, drills and workers from Canada, a 13-ton drilling tool from the United States and a drilling consultant from Australia. This coordinated and aligned group all worked for the common goal of saving the lives of the 33 miners.
CEOs of credit unions need the same focus every day to make risk decisions with their credit union's capital and assets.
It is a serious responsibility to be charged with saving someone's life. Equally, it is a serious responsibility to protect a member's family assets and home. And CEOs need the support of their boards to understand these important strategies and to recognize the difficulty in executing them every day in this challenging environment.
Chilean President Sebastian Pi?era and Mining Minister Laurence Golborne reached out to families to show concern for their dire situation. Similarly, as board members, do we review data that ensures a full understanding of members' needs and values during this financial crisis? How should this impact the decisions that are made regarding your credit union's strategies to increase member value?
Because examiners don't often meet directly with credit union boards, the new and upcoming NCUA regulations may feel distant and lacking any relationship to board members directly. If board members, in general, don't feel any pressure to be held accountable for their decision making, will individual board members step up their game?
Board support is critical for executing smart and forward-thinking strategies for credit unions. Hard decisions will have to be made at many credit unions-including planning and discussions on mergers and acquisitions. A director's duty of care relates to the responsibility to become informed in making decisions and overseeing the management of the organization. This means paying attention, attending meetings and being engaged. It means asking the right questions and acting diligently in order to become and remained informed. It means continuing to bring relevant information to the attention of the board based on the director's knowledge and experience as well as ensuring that the board possesses the qualifications to govern the institution.
During the next five years of regulatory commotion, constricted credit margins, changes in consumer demands, consolidation of credit unions as well as the knowledge that 38% of CEOs will be retiring, the need for critical focus on strategy, risk management and continuing education is clear. Continuing education as a board member will help your credit union to emerge as a leader. As the NCUA continues to review its governance recommendations for boards, we need to be open to learning together, recognizing the stakes of not getting it right for our credit unions and the members we serve.
Stuart R. Levine is the chairman/CEO
of Stuart Levine & Associates. ?