RANCHO CUCAMONGA, Calif. -- The findings from a new board management study reveals that the vast majority of credit unions are facing at least some difficulties in their efforts to develop and maintain a high-performing board of directors.

The California and Nevada Credit Union League's Applied Research Institute, along with the league's Research and Information Department, released the new 365-page study, Board Management: In Search of High-performance Boards, April 4.

CUNA & Affiliates was commissioned to survey 1,000 credit union CEOs from across the country in credit union board management. The report analyzes this survey data and provides strategic considerations to help identify opportunities for improving board management effectiveness.

The survey asked CEOs to rate how their boards handled 11 industry challenges, using four categories: superior, high, average and challenged. On the whole, about half rated their boards average, with small credit unions reporting far more difficulties than large institutions.

The four challenges in which boards were rated the least effective included attracting younger board members, individual board member performance evaluations, maintaining formal education and training requirements, and removing ineffective board members.

Case studies highlight the report, including several credit unions that have successfully recruited young board members.

Wayne Tew, CEO of $625 million Clark County Credit Union, took up the touchy issue with his board of retired members who decrease their participation in the community in favor of leisure time activities.

"About six years ago when we saw a lot of board members facing retirement, we brought a consultant to a planning retreat to discuss it," Tew said in the report.

"Not to downplay the role retired people can play, but they often lose their focus on, and their involvement in, the community as they travel more. And when they leave the workforce, they no longer have the same contacts and resources, and there's less of an opportunity for proactive influence on the credit union."

Tew said although there was some expected resistance, eventually his Las Vegas-based board agreed that volunteers should consider retiring from the board when they retire from the workforce, unless they intend to maintain very strong community involvement. However, he also stressed that as CEO, his influence was limited.

"I wouldn't have even raised the issue if I didn't have the history with the board that I do," he said.

Clark County's board has seven members whose ages range from 38 to 64. There are three women and four men, with an average age of 49, which Tew said is still older than his average member but younger than other credit unions. The audit committee is used as training ground for the board and has a younger average age of 44.

Tew said his credit union's high profile in the Las Vegas-area, combined with existing board members talking up their volunteer positions, has helped attract younger board members, who tend to be more engaged in technology and financial trends. Conversely, younger volunteers often require training to make up for a lack of life experience.

Dan McCue, president of the single-sponsor $125 million Coca-Cola Corporate Family Credit Union, reported he seeks younger board members to more accurately reflect his young membership. Coca-Cola's CU board is predominately made up of 40-somethings, with a few second-termers that came on board while in their 30s. McCue said he uses young volunteers as sounding boards for new ideas.

"The Zopa peer-to-peer lending product connects with them, where the older ones say they'd never trust it," he said in the report.

McCue also strives to put together a diverse group of ages, ethnicities and areas of expertise for his Atlanta-based institution.

"Since technology changes at Coke affect the way we do business, we have representation from information technology on our board who can tell us about what's coming down the pipeline," he said.

Because credit union employees are sponsor employees, the credit union is able to tap into Coke's organizational development structure and use volunteer openings as a tool for professional development.

"From a development standpoint, it's an opportunity for recognition, something that may position them to advance to another role in their profession, which is important," McCue said. "Where boomers might believe it's their duty to volunteer, younger ones look at it as another success measure. Either way, the credit union benefits."

McCue cautioned, however, that age is only one part of the successful board equation. Individual experience, personality, connections and ethnicity are every bit as important as age when recruiting volunteers.

Eric Bruen, CEO of $19 million Desert Valleys FCU, said when his Ridgecrest, Calif.-based credit union opened membership up to a neighboring community that was quite different from the cooperative's original small-town populace, it quickly turned into an us-versus-them struggle on the board.

The solution was requiring that the board consist of equal representation from both towns--three from each, with a seventh board member from either community.

The board is diverse in age and background, with a 50-year span in age difference. The board is exclusively Caucasian, which reflects the credit union's membership, but Bruen said the group is searching for a volunteer to represent the area's growing Hispanic population.

The study is available to league members to download on its Members Only site (http://members.ccul.org). For more information on becoming an ARI member, contact league industry analyst Daniel Penrod at danielp@ccul.org or (800) 472-1702, ext. 3414.

--heathercutimes@gmail.com

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Study Reveals Most Credit Unions Struggle with Board Performance

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