By Ron Schmidt
Have you ever walked out of a board meeting thinking, “Oh my I can’t take it any longer. Either I quit or something has to change”?
Do you question why you continue to put up with the “same old, same old” that not only doesn’t seek new ideas, but doesn’t tolerate them either?
Most of us have been there at some point in time and either things get better on their own, or we quit. Well what if things don’t get better and you don’t want to quit, you actually want to change the picture? Would you know how to do it? The current board president of a very successful credit union recently shared how she was fed up but didn’t give in. She changed things. This is her story.
The Conflict
Sharon (not her real name) told me the story about how she became the president of her credit union. Her predecessor ran the credit union like his personal empire and he didn’t want anyone making waves in the empire. The board was made up of mostly men who had been there forever. They not only felt ownership in the credit union, they acted like they were the only owners. At board meetings there was little discussion of matters and even less awareness of the financial status. Not only was the paternalistic environment ripe for fraud, but the credit union was drifting with little growth, low profitability, and even less concern from the leadership. Branches felt abandoned, employees didn’t feel like they belonged.
A Bigger Picture
Before we get to the heart of our story, let’s take a look at the wider landscape. As reported in the New York Times, Helena Morrissey, chief executive of Newton Investment Management in London, founded the 30% Club to increase women’s representation on corporate boards to 30%. She insisted that “the group is not promoting a women’s initiative but a business issue.” She cited research from McKinsey, Catalyst, and Credit Suisse as evidence that “more diverse boards provide better shareholder returns, because homogeneous boards often provide little fresh thinking about customers, risks or outcomes.”
But boards resist change. As evidence, the fight Whole Foods is putting up to block a 3% shareholder attempt to nominate directors. As stated in the New York Times, “large, institutional investors are a passive lot…and all too hesitant to speak up.” As reported, this passivity helps keep corporate executives pampered and boardrooms “pale, male and stale.” As reported in the Wall Street Journal, only 1.4% of CEOs at finance and insurance firms in the S&P 500 are women.
The Resolution
In our story Sharon needed to change the culture of the board, she wanted a board that would be receptive to the ideas required for growth. Her challenge was that she was really an “outsider” to the board, having been a past chairman of the supervisory committee but not part of the inner circle. She investigated and asked questions, such as “Why we do things like we have always done them?”
She began talking with the board and showing slide presentations that addressed what was happening and asking why employees were complacent. She brought to the table a familiarity with the folks who ran the branches and as she opened the eyes of her peers to the issues, she began gaining credibility.
Sharon offered ideas to increase engagement and communication at every level of the organization with the goal of increasing profitability. And without overly thinking about the hurt feelings that might have occurred, she took the bull by the horns and moved forward.
In the process, board members talked with each other about the need to change the culture. Without kicking anyone out the door, she opened the eyes of everyone to the need for change. But to say that the process didn’t offend anyone would be a fabrication. Hard choices had to be made and obstacles overcome.
Four board members and the executive departed, but the results spoke for themselves. Today the credit union has stability and transparent communication, and it out performs its peers in growth, profitability and capital. A little change can do a lot of good.
Ron Schmidt, CPA, is co-author of “How Am I Treasting You? Living With Civility and Dignity,” and is with CBS Certified Public Accountants in Solon, Ohio. He can be reached at rschmidt@cbscpasllc.com, or 440-542-1536, ext. 28.