Several attorneys, consultants and executives from outside the credit union industry reported that diverse boards of directors who bring a wide variety of skills and experience to their roles are most beneficial to organizations – and urged credit unions to use more care when choosing and training their board members.

Sean-Michael Green, a non-practicing lawyer and associate vice president for graduate enrollment and marketing at the University of New Haven in New Haven, Conn., stressed that boards should focus on recruiting the talent they need. Green has served on several non-profit boards himself.

“I've seen boards where 90% of the members were attorneys,” Green explained. “No one should need that many lawyers. Most boards benefit from experts in finance, law, marketing, HR and other niche fields. The board needs to assess its strengths and seek people who will fill their competency gaps.”

Nancy Falls, founder of The Concinnity Company, a Nashville, Tenn.-based corporate governance consulting firm, agreed that board members should come from diverse backgrounds and said credit unions might consider creating a board skill matrix in order to easily identify missing skill sets, as well as create a strategy for filling them.

“Many people think non-profit boards are mostly like their cousins on the for-profit side,” she said. “And while there are similarities, there are also enough differences that should make non-profits very deliberate in their choice of board members.”

Emily Robertson, a Minneapolis, Minn.-based attorney who works solely with non-profit organizations, also believes in a need for diversity in skill sets and backgrounds, but argued that non-profit boards, including credit union boards, need to be clear on why they require a diverse set of members.

She said as an example, just because she has served on a non-profit or credit union board and has a legal background, an organization should not treat her as its counsel if she were to become a board member.

“Lawyers on a board can help other board members understand legal issues and help the credit union hire the legal counsel it might need,” she said. “But my responsibilities as a board member and my responsibilities as the credit union's attorney might not be the same, and it would be inappropriate for the credit union or another non-profit to hire me as its attorney.”

Once a credit union decides to recruit board members based on their skill sets, their next challenge is to ensure it communicates its expectations about board duties and roles to incoming board members, experts said.

Hardy Smith, a former NASCAR executive and non-profit governance consultant, pointed to surveys that show board members frequently report a lack of communication with the organizations they were recruited to run.

“Board members not only don't feel like they're being informed, they don't think they're getting adequate information, or the timeliness of the information isn't coming the way they think it ought to come,” Smith wrote in a white paper titled, “Why Don't Board Members Do What They're Supposed to Do?” “Surveyed board members say they are often the last to know about critical information or not being told before an issue hits the news media.”

Smith urged credit unions to review the manner in which executives communicate with board members, and consider whether the method they are using is best for all board members.

“People receive and process information in different ways,” Smith said. “Ask if you know your board members well enough to understand what communications approach works best for each individual.”

Communication is most important at the beginning, Smith added, noting that survey respondents reported their organizations did not convey enough expectations.

Cliff Rosenthal, former CEO of the National Federation of Community Development Credit Unions, also emphasized this point. During his tenure as CEO, the National Federation often consulted with community development credit unions on how to improve their boards; the organization even offered a school for CDCU staff and board member training.

Credit unions should tell prospective board members up front about the time commitment involved to learn how to be a board member as well as attend meetings, he said. He added that credit unions should attempt to share previous meeting minutes with new board members, and be candid with recruits about any hard times or difficult decisions the organization's board confronted in the past.

In addition, while it might be alluring to land a high profile individual for your board, Rosenthal warned those people are often already over-committed in their careers and personal lives.

“Years ago, I remember a powerful community leader who was just going to 'delegate' a staff member to represent her at board meetings. That was not acceptable,” Rosenthal wrote in an email on the topic.

Falls said people often underestimate the work of non-profit boards – many of them believe non-profit board positions go to people who can donate or raise a lot of money and don't understand the true roles they play in setting their organizations' agendas.

Falls, whose book “Corporate Concinnity in the Boardroom” was published this year by Greenleaf Press, said credit unions need to clear about board member expectations.

“Say up front that we expect you to attend X number of board meetings per year, and to read the board packets and to ask questions when you don't understand something,” she said, adding that ideally, expectations should be communicated to new board members during a meeting with the board chairman and organization's top executive.

Green and other experts also stressed that it's important for board chairs and CEOs to know what motivates board members. He mentioned that he's familiar with the debate surrounding whether or not it's appropriate to pay non-profit board members, but that it feels overblown.

“When you look at how much work goes into being on a board, I don't think many people are motivated to join boards for money,” he said. “So it's important to figure out what motivates board members.”

Recognition motivates some, Green said. Some serve as board members for the satisfaction of seeing the organization grow and meet its goals, and some remain on a board to be a part of something that assists their community.

Green added that credit unions should also ensure board members interact with employees of the credit union in ways other than through its Internet banking channel, at its annual board meeting or in a branch.

“You want the board members to have a full idea of what the credit union is and of the work you are doing,” Green said. “You want them to see things that make them proud of the credit union's work.”

Falls agreed, stating, “You want your board members to feel connected to the organization outside just the board room. The strongest board members are enthusiastic and excited and will talk about your organization to others.”

Linda Levy, CEO of the $44 million, 8,500-member Lower East Side People's Federal Credit Union, said the New York City-based cooperative's nine-member board was chosen with an eye toward ensuring the diverse community served by the credit union was well represented.

For example, Levy explained the credit union recruited its two most recent board members from communities to which the credit union plans to expand its services this year.

“We wanted to make sure we understood the best approach for reaching out to those communities,” she said.

She added that while she understands the wisdom behind choosing board members with a diverse set of skills, the credit union does not currently have a lawyer on its board. It does, however, have a registered accountant with experience in non-profit finance.

She explained that she and the board chair, Deyanira Del Rio, met with new board members individually to answer their questions and make sure they understood what the organization required from them before they attended their first meeting.

Levy added the cooperative expects board members to attend meetings as well as attend credit union events throughout the year, such as its free tax preparation and financial management classes.

Instant Insights /

Diversity Key to a Strong Credit Union Board

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