I’m very much what you see is what you get. I feel the need to forewarn bosses that I will always be honest with them, and occasionally more honest than I should be for self-preservation. I’m respectful about it and always do it for the right reasons, but there you have it.
I can’t abide phonies, laughable mission and vision statements, people who try too hard to look smart and credit union “volunteers” that aren’t.
I’ve written several times in favor of paying credit union board members. I believe it could help recruit board members, as well as provide the proverbial stick and carrot for some who need it so credit unions can justify removing underperforming board members.
However, running to Capitol Hill with the message that credit unions are run by volunteer boards of directors is disingenuous. Sure, most are, but that’s never been the message because “most” doesn’t deliver as strong an impact. In fact, until recently I didn’t know some credit unions paid their directors, and some of those better than many full-time jobs.
I was quite disenchanted with this discovery. I’ve been covering the credit union community for 14 years and had no idea some volunteer directors are paid, in my own home state even. And paid well! Heck, some credit union executives were caught unaware.
It’s all about disclosure. I recognize that these credit unions made the appropriate disclosures as required by the IRS. I’m referring to credit unions as a whole. Those who kept this dirty little secret lost some credibility in my mind that day.
And, the financials at some of the credit unions have not yielded the results to demonstrate the value of what they’re paying for. Check out our page 1 story on some of the credit unions that pay board members and the accompanying graphics on pages 22 and 23. It’s a mixed bag, which can be explained in part by different goals individual credit unions have and investments the credit unions are making, but negative ROA is not aligned with any credit unions’ plan.
So some will say (because I’ve already heard it), “Cooke, this proves paying board members doesn’t make them or the credit union successful.” I never said that paying board members alone was a silver bullet to resolve credit unions’ issues with uninterested, unqualified board members. It also takes a setting of expectations and evaluation and goal setting and follow-up. And if the credit union is not financially successful to the standards set by a knowledgeable board, the board must act to direct management toward improvement or termination. Board members take on very serious risk, and just because some insurance protection is available, are not absolved of their duty. Succumbing to complacency due to moral hazard is not oversight.
Some board members will argue that they should be paid because others are. That is no reason to be paid for a position either. A true reason for compensating board members, if a credit union decides to, is the real value they bring to the table. The responsibilities of credit union directors warrant compensation. Just because one serves as a director does not mean that director warrants it.
Targeting compensation to expertise could make sense. For example, an accountant or attorney might earn several hundred dollars an hour for a service. One hour a month equals $150. Obviously, there’s more work to it than that, but compensating credit union board members isn’t about getting rich. A small business owner might earn $100 per hour. One hour board meeting equals $100. The compensation equivalent for a stay-at-home parent (priceless, I know), $75, and so on. It’s a logical starting point that can be pegged to real data. Now if that stay-at-home parent is a licensed accountant, up it goes, but if a board member regularly shows up unprepared and doesn’t participate in a meaningful way, you dock them. The idea is less about the money and more about being able to set and regulate expectations. If they don’t perform, you fire them.
Credit union members should be able to vote for board members from among the membership, but they also have full lives and may need assistance weeding out those who are truly not qualified. Otherwise board elections just become a popularity contest, and while the prom king and queen may make a cute couple, it doesn’t paint a pretty picture for the credit union.
Sarah Snell Cooke
Publisher/Editor in Chief