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09/04/2009

Thing 4 of 30: strengthen the board of directors

By Tim McAlpine

September is 30 things I would implement or consider implementing at my credit union if I was a credit union leader.

Thing 4: strengthen the board of directors

Here's what I would do to reinvigorate the democratic process at my fictitious credit union:

Institute maximum term lengths. In most countries, a leader can only serve for maximum of eight years. Go beyond that and the idea well runs dry. I believe the same goes for credit unions. It's may be noble to serve for 30 or 40 years, but unless your directors are bringing new and insightful ideas to the table decade after decade, it likely isn't serving your credit union's best interest to have life-long board terms. I was a volunteer with my local chamber of commerce for six years. I started as a director, was elected to the executive, served as president for two years, was the past president for one and then they booted me to the street. And it was time!
Require broad age representation. Only 6% of credit union board members are younger than 40! In my fictitious credit union, the board would be made up of members in their 30s, 40s, 50s, 60s and 70s. The credit union rules would stipulate the number of seats in each decade! There should be more than grey hair at the table. Nothing against grey hair—in fact, my mom has a lovely head of it. And she's smarter than me in many ways, but at the ripe old age of 40, I think I know a thing or two that she and her fellow Boomers might have missed. It is no coincidence that the median age of a credit union member is 10 years older than the median age of the population—simply look at the demographics of the board to see the correlation. Check out Filene's MAP to Success project for ideas on how to get younger people involved.
Pay the directors. It is common in Canada to pay the credit union's board of directors whereas in the US, board members are unpaid volunteers. At my ficticious credit union, the board members will be paid. To thrive over the next 100 years, credit unions need to reinvent themselves. To do this, credit unions will need to attract board members with a high level of varied expertise. Not only will modest compensation attract board members from all age groups, it will also hold all board members accountable to bring value and dedicate the time to properly steer the ship. Ginny Brady, a board member and blogger from New York's UFirst Credit Union examined this topic in detail on the CUES Skybox.
Use social media to elect the board and to connect the board to the members. Vancity produced podcasts for all of its board nominees. United Communities created YouTube videos to introduce members to board nominees. Fantastic ideas. I would go a step further and broadcast the annual general meeting live online with Ustream. I'd also set up a Get Satisfaction forum to solicit ideas and feedback from the membership throughout the year. And, I would follow in the foot steps of Ginny and launch a blog for the board and require all members of the board to contribute.

I warned you that some of my 30 things might be controversial!

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Comments

1) William Azaroff @ Sep 04, 2009
http://www.azaroff.com/blog

Thanks Tim, enjoying the series!

2) Jeffry Pilcher @ Sep 04, 2009
http://www.thefinancialbrand.com

I'm not sure U.S. credit unions can legally compensate directors and retain their not-for-profit status.

http://definitions.uslegal.com/c/corporations-non-profit/

3) Tim McAlpine @ Sep 04, 2009

@Jeffry - hmm, good point. My Canadian fact-checking department (me) had not considered the full extent of my ramblings. I guess that will require my fictitious credit union to be located in Canada.

Seriously though, some credit unions are already paying directors in other ways. By issuing an actual paycheck, the credit union industry would limit these types of situations:

http://www.cutimes.com/news/2009/5/Pages/TV-Segment-Hits-New-Jersey-CU-Travel-Fees-.aspx

4) Credit Union Warrior @ Sep 05, 2009
http://creditunionwarrior.blogspot.com

Making a bigger deal out of the democratic process would certainly be a good thing for credit unions. I have mixed feelings about term limits. I wonder if a stronger democratic process (not unlike what Vancity does) would fix lifetime appointments to the board by itself? Judging by the the amazingly long tenures we have witnessed in the United States Congress, it may not be. My take is that Board members need to be positive contributors, continually bringing, and encouraging, new ideas to the table. If they are still huge contributors after serving for 30 years, what's the harm in keeping him/her on? Age to me isn't as important as performance.

Really enjoying this series. Thanks for this.

5) Jim Jerving @ Sep 05, 2009
http://www.jimjerving.com

Tim, good post. I've been a board member of a U.S. credit union for the past seven years. One of the problems we've had is finding board candidates. One thing I would like to see--require--credit union trade associations employees serve on credit union boards or work at credit unions to get real world experience. I agree we do need diversity on the boards.

6) William Azaroff @ Sep 06, 2009
http://www.azaroff.com/blog

We have term limits at Vancity. Is that just us? I had assumed that was a standard BC CU thing...

7) Tim McAlpine @ Sep 06, 2009

@William - Term limits are not standard in BC or anywhere else. I have heard of some credit union directors being on the board for more than 60 years! I think Vancity is the model credit union for board governance. You have heated elections with many vying for the available seats, you have term limits, you are using social media to let the membership get to know the nominees, you have a broad range of ages and skill sets and you have male and female representation. Sounds like the ideal situation to me!

8) William Azaroff @ Sep 13, 2009
http://www.azaroff.com/blog

@Tim. That's very interesting, I had no idea how we compared.

This series is such a gift to us all! Many thanks!

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