“Directors are at once our greatest strength and at once ourgreatest weakness,” now-retired CUES CEO Fred Johnson told me in his exit interview. Unfortunately, itis uttered far too often and is far too true. Governance is acommon topic of conversation, but I'm not confident much is beingdone to improve it among credit unions boards.

Governance is a frequent subject at conferences, and some reallyexcellent speakers are acquired to discuss the topic. But like somany educational sessions, attendees go home and, as they say inNew Jersey, fuhgeddaboudit.

Assessments are essential for the modern board, yet manyboards won't use them. Some don't know how, some arecomfortable with the status quo and some just don't want the rockthe boat. If a credit union is scared to address the quality of theboard, a major problem exists. The anticipated results areapparent. Being able to feign ignorance doesn't resolve the root ofthe issue.

Credit unions must be careful to select the appropriate boardassessment tools for the institution's needs. This is about theability of the board to address the credit union's and members'needs. It's not about board politicking or hurting feelings.Everyone wants to be viewed as a nice person, but with boardresponsibilities and liabilities becoming increasingly defined,it's individual board member's assets on the line. If the so-calledgood directors don't step up to question the abilities of theboard, or individual board members, then those folks are not goodboard members either.

Assessments are understandably delicate matters. They should behandled with respect and dignity–privately in a one-on-oneenvironment as needed–or with the entire board as warranted.Preserving cooperation among the board members is crucial.

Every director should understand from the outset that the goalis strictly to improve the credit union for the members. The creditunion must ensure that the members are continuously educatingthemselves regarding strategic threats, such as economiccircumstances or regulations and how these issues could impact thecredit union. So long as the best-interest-of-the-member parameteris established and true, no one can legitimately argue againstit. 

Assessments are a means to an end, not an end. Goals must be setand measured to improve weaknesses. Start over again each year.

It should also be made clear as board members come on what theirresponsibilities are. Provide information beyond the dates andtimes of the board meetings. Inform them what's expected of them ifthey are to serve the credit union.  

The board recruitment process is also problematic in attractingqualified board members. If your nominating committee is out oftouch with the community, it isn't going to be very good at thejob. There are credit union board members that handpick theirsuccessors or new board members, which only helps ensure more ofthe same. Boards cannot arbitrarily determine a certain candidatemay not be 'our kind of people.' Not only does this mentalitystifle innovation, but it also can contribute to collusion.

Obviously, certain standards must be adhered to but one goalshould absolutely be diversity. Diversity in backgrounds, age,gender and ethnicity are important to the success of any businessbecause it provides different viewpoints. Credit union boards mustreflect their membership and the expertise necessary to run acredit union. Forty years ago, when many board members beganserving, a group of astronauts could run a credit union. There's nodoubt astronauts are brilliant but that does not qualify them tooversee today's credit union. Be true to your primary or originalfield of membership but also recognize the weaknesses therein andfortify them with less traditional board nominations. Localentrepreneur-members could provide great insights into running abusiness, while a high school teacher-turned-stay at home Mom canspeak to the financial issues of motherhood and what young adultsare thinking and doing. Strategically recruiting solid boardmembers will save future heartache.

Perhaps having the option to pay board members a reasonablestipend would help grab the attention of more and better candidatesfor the board. For those who invest the necessary time foroversight and continuous learning, it's certainly justified.Washington State, which is heavily banked, is exploring thepossibility. In reality, it's no different than sending boardmembers to an educational conference to Palm Springs or to PuertoRico. Directly paying stipends to keep up to date is just moretransparent.