An all too frequent complaint from my credit union clients revolves around their board of directors. They’ve either been on the board too long, are out of touch with the credit union industry, or lack the skills needed to guide an organization in this millennium–all valid concerns (if indeed they are an accurate assessment of the people serving as board members).
The reality is that credit unions face serious risks when their executives lack confidence in their board of directors (and vice versa). Issues that need to be addressed can get delayed or even ignored because executives don’t think the board can handle them. They treat these board members with kid gloves, feeding them information in small doses to keep them from going into information overload.
Frankly, this is just NOT acceptable!
It is not acceptable for credit union board members to inhibit the organization’s progress because they lack the skills needed for their role.
One critical (but all too often missing) skill that is desperately needed among today’s board members is the ability to review and process messy information (not just spreadsheets and financial statements). There is a mountain of relevant information that board members need to be reading on a regular basis, just to stay even with industry developments.
But one of the problems I have observed is that many board members think that what they already know (and learned many years ago in most cases) enough to make sound decisions about how to position their business for success in the current world. It is not enough (and it never has been).
There are certain skills tomorrow’s board members need that yesterday’s didn’t. Okay, maybe these skills were always needed but are more important now.
The NCUA actually outlines the basic skills required of the board of directors of a federal credit union. To be honest, I think they miss the mark by not requiring more than basic financial skills to guide a financial institution.
Here is my short list of what every credit union board member must bring to the table today:
- Capacity to process vast amounts of information…This is a rapidly changing industry that often requires split-second decisions. Those decisions cannot be made effectively if the board is not well-versed in its credit union’s operations or the industry overall. Board members should be reading at least one relevant business-focused article, blog post or other source of information weekly (and not just those about credit unions).
- Ability to discuss, debate, deliberate and decide with less than perfect information…There is only one certainty in today’s business world–things will continue to change. Responding to the increased rate of change and the increasing unfamiliarity of the changes that occur demands approaching situations with an open mind and a willingness to engage in rigorous review of options, often with limited information.
- Willingness to see things from different perspectives…Doing what you’ve always done and expecting a different result is the definition of insanity. Board members must be willing to stop relying on the way they’ve always done things, to step out of their comfort zones, and to view things from other points of view, including other people, other businesses, other industries, and so forth.
- Awareness that game changers seldom come from within the industry…If you study the game changing innovations that alter the future of industries you quickly learn that most of these are driven by a business or individual not currently involved in the industry that they revolutionize. Think about how Apple’s iTunes changed the music industry or how Amazon’s Kindle changed the book publishing industry.
- A commitment to always seek knowledge… Nothing limits the impact of a board member than not expanding their knowledge-base throughout their tenure on the board. It is critical that they strive to understand what things that are happening within the broader financial services industry and business in general mean and how they might impact the success of the credit union; Always seeking knowledge is necessary commitment to guide the credit union in the right direction.
Action Advice: Approaching this topic with your board of directors could be awkward. Bring in a third party expert to facilitate the discussion and provide follow-up coaching and mentoring for your board members. Commit to building the capacity of your board by recruiting people with the skills needed to help your credit union thrive in today’s challenging marketplace and developing the skills of those currently on the board on an ongoing basis.