Board Members Must Understand Their Duty
I have been on the board of the STCU Credit Union for 10 years and am 82 years old. We’ve gone through reorganization of management and the board. That was an education. Three years ago we hired a new CEO and our numbers and staff look great. I now have seven months left on the board.
According to all projections, financial institutions will face dramatic change over the next few years. The shifts will trigger some major adjustments. Older citizens most likely will not have mortgages, so it will be the middle aged and younger that will convey the economic clout, and minorities of all kinds are playing an increasingly dynamic role in society.
Board directors need to have a healthy discussion about the changing financial services market.
Former NCUA Board Member Gigi Hyland said, “Most organizations recognize that a variety of perspectives and professional skills are essential to fully comprehend – and compete in – increasingly complex financial, economic and political environments ... Understanding the changing needs of membership presents a challenge for credit union boards. Some boards want new talent to help them meet this challenge, but don't know how to get newcomers involved. Other boards are concerned that too many different perspectives will cause a failure to reach consensus on important, timely issues. Having people with different viewpoints on a board can make discussions more difficult, but it can also lead to better solutions. It's a lot easier to decide things when people agree. But that doesn't mean everyone is making the best decision.”
There's no refuting the worth of long-term board members. Their knowledge and apparent assurance to the credit union are valuable and much appreciated. But it's important to balance that with new outlooks and fresh energy.
Credit unions face continuously developing regulatory and strategic changes. Learning about emerging legal trends is a board responsibility. As of January 2011, the NCUA requires board members to have “at least a working familiarity with basic finance and accounting practices, including the ability to ask, as appropriate, substantive questions of management and auditors.”
Most do not have a reliable system for attracting the next generation of board members. When discussing succession issues, the debate tends to veer toward ageism; nothing could be further from the truth. Setting an age limit is not discriminatory, because board members are not paid. The cold hard fact is today's board members are aging, and the system is struggling to find future board members. Credit unions have to proactively build the appropriate board for their needs.