ORLANDO–New members of a credit union board should be doing anything but sitting quietly and listening, according to one expert. In fact, they should be doing just the opposite.
Dr. Les Wallace, president of Signature Resources and a veteran of work with more than 300 different boards of directors, told new credit union board members during a breakout session at the CUES Directors Conference their jobs are critical as they are to be “intellectual disruptors.”
Wallace is a firm advocate for boards getting new members, but he stressed “new” board member doesn’t necessarily mean “young” member, although he also supports bringing younger members to the board.
“I am pleased we have young and more mature new board members,” he said. “This is something the credit union movement desperately needs to do. It has nothing to do with age, it has to do with range of age on the board to have perspective.”
What is the role of the new board member?
“You should be an intellectual disruptor. You should challenge assumptions,” said Wallace. “You should say, ‘That seems a little slow to me, can we go faster?’ Or, you should say, ‘That seems a little fast to me?’”
Wait About Four Minutes
How long should a new board member sit quietly and wait before speaking up? About “four minutes,” said Wallace, only half in jest.
“You are now a trustee of the members’ interests. You are not a volunteer; you are a trustee,’ he emphasized. “Begin with a learner’s mind, don’t begin with an opinionated mind. Learn and ask appreciative learning questions. From this meeting you need to be able to go back and say to the board, ‘Here are two or three things we need to discuss’—not two or three things you need to change.”
Wallace, who stressed the need for good board governance throughout his remarks, said there are four critical domains of governance: board talent, strategy, performance and risk, and governance process. Wallace urges boards dispense with Roberts’ Rules of Order and instead keep about 70% of meetings focused on longer-term strategy.
Job One
Job one for any board, said Wallace, is assuring a comprehensive orientation is in place for new board members. That orientation should be made up of a combination of on-site and off-site materials review, onsite introductions and briefings, and completion of several hours of governance education, he said.
The off-site review of materials should include approximately 16 hours of effort, he recommended, while on-site meetings and orientation in CU operations should require approximately eight hours. In addition, he said there should be governance-related reading over six months of about six hours.
“Be aggressive in what you need to know. Ask when you can sit down with the CFO, with the chief branding officer,” said Wallace, who advocates any PowerPoint a C-suite executive wants to give a board member be sent ahead of time so a discussion can occur instead.
Off-Site Materials
According to Wallace, the off-site materials review should include:
- History of the organization
- Mission, vision, values statements
- Summary of programs, products, services
- Marketing plan and newsletters, press clippings
- Financial performance for the past three years, including external audit findings
- Annual report
- Org change and bio sketch of key staff backgrounds
- Strategic plan
- Board bylaws
- One year of board minutes
- Board dashboards for tracking organizational performance
- Board policy and procedures
- Current board profile and professional background bio-sketches
- Board commitment and conflict of interest statements for signing
- Recent governance self-assessment results
- Board committee structure and charters
- Board calendar (Wallace says he wants an 18-month calendar from the boards he serves on in order to eliminate conflicts)
On-Site Orientations
Wallace said off-site orientations should include:
- Staff leadership welcome meeting and introduction
- Key programmatic one-on-one meetings
- Financial briefing from CFO and review of board financial dashboard
- HR briefing, including review of board “organizational climate” dashboard
- Member performance briefing of last 12 months; satisfaction and value survey results dashboard
- Community brand assessments and marketing briefing
- Board chair briefing, board composition philosophy and leadership succession
- Board committee assignment and committee charter
Committee Membership
“Every board member should serve on a committee,” said Wallace, before adding a caveat. “There should be no facilities committees. The board isn’t into carpet and drapes and furniture. One board member did that, and then resigned and went to work for the contractor. I told the CEO he may have a legal issue.”
Wallace, who recommended every board member read “Governance in the Digital Age” by Stafford and Schindlinger, suggested the following when it comes to ensuring a governance literary process be in place:
- Digest assigned articles and booklets
- Phone consultation with governance committee chair upon completion of reading and orientation
- Discuss annual calendar of relevant professional conferences, attendance expectations and learning commitments
- Complete self-certification in governance literacy by reading books/articles recommend by board
- Commit to credit union governance conference at least once every 18 months.
Fresh Value
The value of a new board member is in fresh eyes brought to both the CU and its performance, as well as bringing new ideas and perspectives and challenging assumptions, said Wallace.
“You represent change,” said Wallace. “Diverse experience adds to connect to our important mission.”
On multiple occasions Wallace noted the importance of using tact when a person is new to the board, including phrasing questions carefully or, if not wanting to ask a question directly, perhaps asking for a “clarification” in order to steer the conversation in a different direction.
“It is smart to be careful of whom you ask disruptive questions, said Wallace. “And you should have a ‘board buddy’ to talk to.”
Every board member, regardless of whether they are new to the board, must understand their fiduciary role, according to Wallace, and that includes understanding good business practices, being a responsible steward of assets, being member-centric, and ensuring ethical behavior.
Performance Questions
Wallace told the newer board members gathered they must always be asking performance-related questions, such as:
- Is the budget consistently met? Are there adequate explanations for variances?
- What is the growth vision?
- What about enterprise risk management?
- What is the vision for member growth?
- What is walletshare per member?
- Do member demographics align with the community?
“The biggest contribution is in just asking questions,” Wallace said.