Credit unions exert a lot of energy evaluating and recruiting board members, fully aware the caliber of those volunteers can heavily influence the future of the organization.
But choosing quality people is just half the battle toward fielding a strong and successful board, according to a recent NYSE Governance Services and RHR International survey of 300 directors in a variety of industries.
You must also foster a series of meaningful intangibles that can create synergy.
Those factors include, among others:
“The way board members operate together, not who they are, is what differentiates a great board from an average one,” says Dr. Paul Winum, RHR’s global practice leader for Board and CEO Services and the study’s principal author.
The most significant contributing factor to board effectiveness is the quality of dialogue and debate, according to 88% of survey respondents, followed by the ability to ask tough questions of management (77%).
On the flip side, directors highlighted a lack of candor (77%) and a lack of mutual respect and collaborative culture as the chief factors likely to undermine a board’s effectiveness.
A successful board is “engaged, communicative, collaborative, candid, knowledgeable, [and] takes its responsibilities seriously,” one director states.
Many credit unions have embraced the concept of “intentional diversity”—actively soliciting and recruiting directors who will provide different perspectives than current members. Defining characteristics include age, race, gender, work experience, and even place of residence.
Taking a proactive approach to board diversity is a necessary building block of a great board, say 86% of survey respondents.
“Board diversity is simply smart business,” says Mike Myatt, a leadership adviser to Fortune 500 boards and CEOs, because it reduces “group-think” and reflects the marketplace, among other reasons.
On a national level, credit union boards have some work to do on this front. Nearly half (46%) of directors are over age 60 while only 6% are under age 40, according to the Filene Research Institute report, “Effective Credit Union Board Succession Planning.”
Plus, male board members outnumber their female counterparts by a 3-to-1 margin, and 89% of credit union directors are white.
Read more about these survey results and their implications for credit union boards in the October issue of Credit Union Directors Newsletter, which provides strategic insights for policy makers. Subscribers can choose to receive the print edition or PDF version.