A visitor sitting in on a typical credit union boardmeeting is likely to see 61-year-old white males who have servedfor more than a decade and are planning to continue their servicefor many years to come.

It may be the standard makeup of most boards, but it's not thedream scenario if credit unions want to remain competitive,according to a new white paper from the CUNA Community Credit UnionCommittee. 

The 30-page paper, “Effective Credit Union Board SuccessionPlanning: New Demands Shine Spotlight on Standard Practices,”examines the current demographics of community credit union boardmembers, the issues that arise from these findings and strategies for successful board succession and retention.The white paper was prepared by George Hofheimer, chief researchofficer at the Filene Research Institute.

Credit unions with less than $25 million in assets are slightlymore likely than those with more than $500 million to have women ontheir boards. Whites represent 89% of board members,African-Americans 6%, Hispanics 3% and Asian/Pacific Islander1.5%.

“Many credit unions face serious problems if board successionplans are not effectively put into place and changes are made toattract new board members,” Todd Spiczenski, vice president of theCUNA Center for Professional Development. The white paper alsoprovides suggestions that credit unions can use to reverse thetrends in board demographics.

Institutional knowledge is vital to board stability and success,but it can come at the expense of board vibrancy, member staminaand both exposure to and a willingness to consider new ideas, theresearch showed. Existing boards have more than twice thepercentage of members from the 70-plus age segment as they do fromthe under 40 segment.

While there has been some growth in the number of females oncredit union boards, with male board members currently outnumberingfemales by three to one there is still ample room for improvement,according to the paper. 

The research also noted that credit union boards havehistorically skewed white, and there has been little change in thisarea, even as the larger population becomes increasingly diverse.Even though these numbers may be moving in the right direction,they are doing so at a slow pace, the white paper pointed out.

Beyond having more diverse boards, the CUNA committee researchfound that credit unions have struggled to attract board memberswith substantial senior level management experience. They havetraditionally chosen candidates based on their willingness andability to learn, serve the membership and be a team player, orbecause they had previous experience in the not-for-profit orcommunity realm.

When picking new credit union board members, one Filene surveycited in the research found that 81% felt that understanding memberneeds was the most important skill for a board member to have, withgovernance expertise viewed as a key priority by 51% of boardmembers.

However, there appears to be a shift in priorities. About 40% ofthe respondents in the Filene survey said a lack of legal, compliance and risk management expertise on their boardsleft their credit unions highly dependent upon their CEO tointerpret credit union performance and highly vulnerable to beingmisled.

The research also showed that there was strong disagreementbetween CEO and board members on this subject. Eighty-eight percentof CEO respondents said their boards lacked sufficient financialservices expertise, while only 22% of board members did. When boardmembers were queried in follow-up interviews, this number jumped to50%, according to the Filene survey. 

One factor that may inhibit having more diverse boards isrecruitment practices that are heavily skewed towards existingconnections. Filene found that of those credit unions that stillhad strong ties to their original sponsor company, which is definedas having at least 75% of their board members coming from thesponsor company, the majority (72%) felt they were able to achievesufficient diversity without looking elsewhere. 

A number of the survey respondents felt that even if a board wasable to come up with who they considered an ideal candidate, theyhad a hard time finding a prospect that possessed appropriatecredentials and was willing to serve on the board.

To take steps toward better board succession planning, the papersuggested credit unions focus on and identify board diversity goalsand develop an evergreen list of potential board candidates ratherthan waiting until there is a need for one.

Credit unions might also consider widening their searches beyondacquaintances and colleges of the existing board, according to thepaper. To aide in this effort, a strong CEO and board relationshipis critical to ensure that the next board member can continue thatstrong involvement.