Following the global financial crisis, directors are increasingly concerned with how to effectively navigate the new environment. Being held under greater scrutiny by the public, members and the NCUA, it has become even more important that directors demonstrate a commitment to ethical behavior and ensure transparency.
The tone at the top still remains the epicenter of any organization. Leadership and character serve as the sustainability of member value around the boardroom table. Taking the time to reaffirm what values and beliefs are held by your credit union are principal foundation issues.
Compliance and oversight should be reviewed on a regular basis with reports from the person responsible for this area. Do you have any 800 number hotline reports that rise above the mundane or serious member complaints that come in on a regular basis? It’s important to note how the officer responds to these concerns and how they are investigated.
Sandy Warner, former chairman of J.P. Morgan, once said that in understanding reputational risk, ask yourself how you would feel about a transaction you were about to approve if it appeared on the front page of the Wall Street Journal for your family to read.
It’s important to understand the CEO and their well-defined beliefs, and how these beliefs are translated throughout the organization. The tone in the middle comes from the tone at the top.
Small things matter. I will never forget interviewing a potential employee for a large media company on a private helicopter. She proceeded to empty a drawer full of snacks into her briefcase. I knew at that point that nothing good was going to come from this interview. Her compelling actions defined her leadership capacity very quickly. Despite my recommendations, the company hired her, only to experience problems down the road.
People make choices every day in leadership positions. Sometimes legal and ethical don’t entirely match up. Are ethics the basis of your judgment or are they put into your decision and rejected because they are not convenient? Do board members have the fortitude to differ from consensus and tell the truth? Having the courage to say in a collegial, but challenging and mature way, that “the baby is ugly.” can bring important dialogue, that is not sugar coated, to the table.
Having breakfast or lunch with the auditor to read their eyes and open up a conversation is a good way to ensure the integrity of the chief financial officer’s office. Meeting with the chief financial officer or their lieutenants once a year to affirm the integrity and transparency of the credit union is additionally helpful.
Stuart R. Levine is chairman/CEO of Stuart Levine & Associates
Contact 516-465-0800 or stuartlevine.com