Among his many responsibilities, Ken Kidder has an especially important role as board chairman of $3.3 billion asset Visions Federal Credit Union in Endicott, N.Y.: to replace himself with someone better.
This task hasn’t always been part of the chairman’s job description. But when the former IBM Endicott/Owego Employees Federal Credit Union expanded with a community charter to serve communities throughout New York, New Jersey, and Pennsylvania, it became increasingly important to obtain the right mix of skills on the board and ensure that directors reflected the credit union’s membership.
That wasn’t always the case.
When Kidder joined the board 12 years ago, most of its directors were former IBM employees—even though the number of members who worked for IBM had declined from more than 15,000 to less than 1,000.
“They came from the same culture and attacked problems and issues the same way,” he says.
That circumstance doesn’t bode well for a credit union’s long-term success, says Ben Rogers, research director for the Filene Research Institute. He says a lack of divergent board viewpoints and skills can lead to “big opportunity costs,” such as the inability to grow, a focus on the wrong strategic issues, and failure to guide the executive team.SIDEBAR:
Such opportunity costs “can sink a credit union slowly,” says Rogers. “Just like the executive management team needs to have different capabilities, so does the board. I don’t mean every board needs to have one accountant, one lawyer, and one small-business executive. But credit union leaders should ask, ‘What, strategically, does our credit union need, what viewpoints do we need, and who in our community and field of membership can bring those viewpoints to the board?’ ”
Too many credit unions recruit board talent only when they have an opening, says Michael Daigneault, CEO and co-founder of Quantum Governance L3C. “That’s way too late. Credit unions must recruit all the time because board turnover is always a possibility. The question is whether you have a process in place to make those transitions more effective.”
That’s why Visions Federal directors are leading the charge to bring new blood on the board by implementing term limits, leveraging board committees as a training ground for new directors, and reaching out to community leaders.
“All of our board members believe it’s their job to replace themselves with better people,” says Visions Federal CEO Ty Muse. “They’re not just trying to become more diverse, they’re trying to diversify with people who are better than they are. That’s a critical reason why the board is so successful.”
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