<p>LANSING, Mich. – The CEO wonders, “What does the board want?” The board ponders, “What guidelines does the CEO need?” Management at State Employees Credit Union is trying to answer these questions by adopting policies pinning down specific expectations. The approach is based on John Carver’s policy governance model, an approach that has been outlined in books, articles and lectures by Carver. It may sound a little esoteric, but SECU CEO Steve Winninger says it’s actually very practical and down-to-earth. “Carver has come up with a theory that boards can actually have greater control over organizations if they govern by policy,” Winninger says. “Every policy starts with a very broad statement. Anything else the board wishes to say or to control with that policy is covered in subsequent statements. “For example, the most global limitation the board has given me as a CEO is, `The CEO shall not cause or allow any practice, activity or decision or organizational circumstance which is either unlawful, imprudent or in violation of commonly accepted business ethics or practices.’ ” Once the board has stated that, Winninger observes, they’ve actually said a lot. “ I think CEOs all over the country would agree the board would implicitly expect that from them. But my board has said it to me,” he notes. Restrictive? Not really, Winninger suggests. He believes when the board in effect declares the CEO should not allow certain things to happen, the CEO can move beyond that to operate within pretty wide boundaries. The latest policy adopted by the board covers Treatment of Members as Consumers. The policy prohibits: Using application forms requiring information for which there is no clear need. Failing to give members a clear understanding of what may or may not be expected from a service. Failing to inform members about the policy, and failing to provide them a way to be heard if they believe there is a problem. Failing to establish fees which recover costs, provide a fair return, and wherever possible give members an alternative to direct payment of fees. Failing to protect members from the harmful effects of smoking while in a credit union building. Failing to protect members from solicitation or distribution of literature not related to SECU. Failing to establish a policy prohibiting members from carrying concealed weapons on SECU premises. “What I like about it is now I know exactly what the board expects of me, and I can carry that expectation forward as I delegate through the management team and staff,” Winninger says. So far, the process has been a quiet one in the sense there hasn’t been much reaction from staff or members. No forms have needed to be redesigned, for example, to eliminate unnecessary requests for information. However, Winninger points out the policy provides a basis for constantly reviewing forms. Perhaps the regulators required something yesterday that is not demanded today. But if regulations or simply prudent business practice require certain information, it can stay. “I’m old enough to remember years ago it was not uncommon for lenders to ask women questions about family planning,” Winninger observes. “How long did the woman plan to work? Did she expect to have a family? That would be unnecessarily intrusive today.” As for the ban on concealed weapons, Winninger points out Michigan recently liberalized state law. Previously an applicant for a concealed weapon permit was required to demonstrate a need to carry a weapon. Now an application is automatically approved unless authorities can prove someone should not have a permit because, for example, they have been convicted of a felony. The board was concerned more and more people would be walking around with weapons. The new law specifies weapons cannot be carried into places such as hospitals, schools, courthouses and certain other public places. But the list does not include financial institutions. So the board decided to adopt the ban. Winninger says he knows several other credit unions that are using the policy governance model. Yes, it’s an “intellectually robust” approach, he acknowledges. “It takes a lot of understanding. But there are some distinct advantages to using this model. Boards get a lot more control over their organizations than they ever had before,” Winninger says. “From the staff side, the organization gets a lot more focused because the boundaries are clearly set, the targets are clearly articulated. When that clears up, it eliminates a lot of guesswork. CEOs are forever wrestling with the question of whether something has to go to the board or do they have the necessary authority to act.” -</p> <p>[email protected]</p>

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