Ask senior executives and board members what their greatest challenges are and the responses continue to range from recruitment to board education, and that doesn't seem to be changing anytime soon.
Looking ahead, some say recruitment efforts may be even tougher given an NCUA rule establishing financial literacy standards for new credit union board directors. Within three months of their election of appointment, new credit union board directors will be required to have a working knowledge of basic finance, accounting, balance sheets and income statements. Correspondingly, they will be held accountable for asking the right questions of management.
Filene Research Institute's Ben Rogers said a survey found that many boards seem to be adopting a wait-and-see attitude rather than emphasizing more rigorous recruiting practices like evergreen lists.
"Several interviewees stressed that it is hard to remove underperforming directors-even when their terms are up-for fear of hurt feelings." And this is one of the biggest challenges in CU governance, he added, he inability to move beyond the personal to performance.
According to board consultant Yvonne Evers, moving forward, it is important to have a succession plan in place for board leadership.
"You may have a great executive committee now, but who's going to chair that board in the next three years?" said Evers. "Are you grooming anyone? Many credit unions don't have that process in place and they should."
She added that too often people hear "succession plan" and associate it with pushing longtime directors out, which couldn't be further from the truth.
"Aging credit union directors are not a liability as long as they are engaged and committed," said Evers. "All credit unions first need to determine what are those areas of expertise that are critical to have on the board. Then, evaluate current board members and see where is the expertise currently and what are you missing. The future leadership of the credit union board is not something that can continue to be put on the back burner. It has to start now."
She added that to help recruitment efforts credit unions may want to shine a spotlight on the board, clearly stating its responsibilities and the benefits of board membership on an ongoing basis, not just when looking to fill a vacancy or during the annual meeting.
"Most people aren't aware of what the board does or that they can even be a part of it," said Evers. "Build that awareness and then maybe implement an internship of sorts or a director-in-training program where potential candidates can sit in on meetings to have a better idea of what's involved."
Whether it's requiring each director to bring at least one candidate to the board's attention every year or adding associate directors to introduce a younger group of professionals to the boardroom, recruitment essentially needs to start at the board level.