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MADISON, Wis. – A new Filene Research Study found credit unions have a long way to go with achieving diversity at the board level. The majority of credit union directors are white, male and over 50-years old. “Quality of governance is top of mind for any business especially with the major governance failures in early 2000,” said Filene Director of Research George Hofheimer. “Credit union boards are different because they are comprised of volunteers who represent the membership. But the makeup of credit union boards often fails to reflect the changing demographics of the membership. The divergence of opinions on the value of boards is extremely volatile, making research a valuable tool in understanding differing opinions.” Recruitment and Selection Practices of Credit Union Boards Researcher William A. Brown of Arizona State University finds that there are few strategies in place to ensure credit union board member diversity. Some 93% of boards use term limits with the most common term being three years, however 85% indicate no limit on the number of consecutive terms served. In addition, over 75% of respondents felt it took one to two years of board service for a member to become fully effective. Findings also indicate that most board position elections are uncontested and according to a majority of CEOs the board tends to re-nominate any incumbent who wants to serve another term -even if the director has not contributed much during the previous term and board members who provide insufficient time and effort are also generally retained as board members. In general, despite the nation’s changing demographics credit union board members are white (89%), male (75%) and over 50 years old (75%). Survey respondents identified the most commonly used recruitment and selection methods as networking and word of mouth; relying on an existing volunteer network; and using a nominating committee often dominated by existing board members. According to Brown, such processes may ultimately result in board candidates who reflect the same views and attitudes of existing directors. Steps credit unions can take to maximize the effectiveness of the board recruitment and selection process include the following: * Consider adopting a more comprehensive recruitment system * Develop a profile of board member competencies * Consider board term limits * Expand the election system to allow for more open participation by members * Examine best practices in recruiting and selecting board members Brown collected surveys from 672 executives and 379 board member representing 713 credit unions from across the U.S. Credit unions participating in the survey are representative of all assets sizes, types and locations. According to Hofheimer, plans are underway for more research into the subject. “The principles of effective governance are fairly well known, what we will continue to ask going forward is how credit unions benchmark and what are their best practices,” said Hofheimer. For more information on Filene studies call (608) 231-8550 or visit online at www.filene.org. Here is a look at more research findings:

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