Volunteer and Young Board Members Need Development
There are many factors that result in an effective board: a defined recruitment process for candidates, accountability, diversity of both backgrounds and ideas, a varied range of expertise, accountability, chemistry between individual board members as well as with the CEO and staff, a sound strategic plan, knowledge and experience among others. The list is long and daunting, especially for new and inexperienced board members. Yet many organizations are increasingly interested in bringing on relatively inexperienced directors—in part due to a trend toward having younger board members but also to gain new perspectives.
The focus on younger, less experienced board members may be due, in part, to the need for missing talent, skills or expertise. In particular, boards say they lack expertise in technology, which is why it may be important to note that of new directors under 50, 34 percent have a background in technology or telecommunications.
Having the right level of technical literacy is currently one of the top trends for governance, as many boards find themselves struggling to keep up with the pace of innovation, especially in the financial services sphere.
Hit the ground running
First-time board directors have their work cut out for them. Doubly so if they lack industry-specific knowledge or CEO-level experience. Companies are running into the challenge of getting these board members to hit the ground running. Credit unions need to identify knowledge gaps in their board and pinpoint areas where their board could use additional training or governance support.
Is board development needed? Questions credit unions need to ask themselves:
Would board members benefit from additional training?
Board members are often required to have a broad knowledge of the credit union industry and the minutia by which a credit union operates. This includes examining the credit union’s balance sheet, understanding how certain activities may present risk, evaluating how those activities generate revenue and much more. Expectations on board members are growing, yet not all volunteer board members come prepared with the prerequisite skills. Boards are now expected to have a comprehensive knowledge of topics, such as cybersecurity, marketing and unfolding trends.
How are board members keeping updated on regulations that impact the credit union?
Directors should have a thorough understanding of credit union rules and regulations, as well as their credit union’s bylaws. What is the process by which board members receive new information or are updated about changes? Is there a clear handbook regarding regulations?
Does the credit union have a board policy manual?
A board manual can have a major impact on the effectiveness of a board, especially when it comes to helping new directors understand their responsibilities, how conflicts of interests are defined, how policies are changed and how vacancies are filled. The content and structure of these manuals differ from organization to organization, but a board manual can be a powerful orientation and training tool.
How is the credit union defining the board’s role versus the CEO’s role?
Some boards have trouble defining their role in relation to that of the CEO’s. Should a board be in charge of strategy entirely on its own and the CEO tasked with execution? Should the CEO and their team create the strategy and the board provide direction and approval? Since these two examples are on the more extreme ends of the spectrum, most organizations strive for a middle ground — a collaborative approach. However, defining what should and must be left to the CEO, and what a board should focus on, will increase a board’s effectiveness.
What tools are used for leadership training and updating board policies? Does the credit union have any tools for managing board training and policy? If not, what factors are preventing the credit union from obtaining these tools? There are a number of powerful software and online products available to make board management much simpler.
Boards are typically filled with talented, experienced and knowledgeable individuals, but in order to work effectively, board members still need support and development. Credit unions should consider if they are communicating clearly with their board and if they have the proper resources to keep directors informed.
Consider a dedicated governance software solution
Instead of reinventing the wheel, credit unions should consider free or affordable resources that aid in building and training their boards. The National Credit Union Administration (NCUA) offers a video series that covers a number of topics applicable to board members, including mergers, succession planning and understanding financial statements.
For credit unions looking for more in-depth and sophisticated tools, there is also dedicated software, such as CU Solution Group’s governance solutions.