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Having a trust-based relationship between the board and executive leaders is essential, along with a clear understanding of executive and board roles.
“There must be a culture of mutual respect so when ideas are challenged in a discussion they listen to one another,” Renderos says. “It’s not a defensive conversation; it’s a ‘tell me more’ discussion.”
Robert Jones, Ed.D., a Suncoast volunteer for five years, joined the board in 2020. He says having open, knowledgeable conversations about financial topics allows the board to focus on each decision’s member impact. As a higher education administrator and CFO, Jones has seen financial conversations go awry at other community organizations when a “bean counter” approach dominates a conversation.
“We’ve all been in a meeting where a financial person gets a little esoteric,” Jones says.
Instead, he advises CFOs to follow Renderos’ example in using the “common sense test” to make sure the information they present prepares the board to ask hard questions about whether a proposed approach is right for members.
“Every question brings insight,” he says. “It’s critical that we provide the best rate of return for members’ deposits and the best financial products at the best price. That comes through the efficiency of good management. It takes the right environment to have that freedom, time, and latitude to bring critical information forward and see where the conversation goes.”
Some directors skim the monthly board packet while others read every word. Consistency helps both types of directors quickly pick up on what matters most at $316 million asset Orlando Credit Union, says President/CEO Suzanne Weinstein. She notes that 22 years of sharing financial information with directors confirms that people are comfortable with routine.
“We’re consistent with the reporting of our numbers, which really helps our seven-member board learn about the institution,” she says. “Consistent reporting allows board members to say, ‘I understand the numbers so I recognize the trends or changes,’ and then talk about the economic factors behind them.”
Shifts in the economic environment or the competitive marketplace create new and different risks. In response, Weinstein or the board may add or remove items on the online financial reporting dashboard that gives directors a snapshot of performance in critical areas.
The examiner’s supervisory focus may change each year, which may prompt management to expand a portion of the dashboard reporting.
“Credit unions include standard financial information that the board is required to review, including regulatory ratios,” Weinstein says. “But a portion of the dashboard may be customized based on the credit union’s strategic initiatives or other factors.”
When the board is well-versed in financial information, she says strategic planning sessions become more productive.
This prompts directors to consider strategic issues as part of ongoing financial discussions.
“Our board packets share the strategic initiatives, the milestones along the way, and the percentage of the initiative that’s been completed so far,” she says.
Likewise, Weinstein ties progress on strategic initiatives to other financial indicators, such as linking loan losses to local unemployment rates, to show how the economy impacts members.
Directors are often challenged by the sheer amount of financial and digital expertise they are expected to possess, especially in cybersecurity.
“It can be difficult to keep your governing body on the forefront of what’s happening in every area of an organization, especially when credit unions have increased rules and regulations from multiple agencies that are increasing every day,” she says.
Johnson reminds credit unions that engaging directors at a deeper level is the goal of “so what” conversations.
Credit union leaders should be unafraid to change the information they share and how they promote better board discussions.
“I’ve had leaders tell me they changed their meeting structure, cut the document package for the board by 80%, or started using quizzes and articles to prompt discussion,” Johnson says. As a result, they relate that “all of a sudden I’m hearing more voices from my board, and the energy is so different.”
The goal is an invigorated board that can recognize and respond to both opportunities and threats.
“The more we position ourselves to be agile, to adapt, and to open our thinking to new possibilities,” he says, “the more your board will be prepared for the exciting times ahead.”
This article appeared in the Fall 2022 issue of Credit Union Magazine. Subscribe here.
Board members at $3 billion asset Elevations Credit Union in Boulder, Colo., attend financial-focused conferences, attend presentations by the chief financial officer (CFO) and consultants, and participate in management meetings on financial risks, such as asset/liability committee reviews, to prepare to participate in Elevations’ financial governance.
President/CEO Gerry Agnes says the result is “deeply engaged board members” who are well equipped to assess financial performance, risk, and capabilities. It’s a process Elevations repeats continually as directors reach their 12-year maximum term limit.
“We deploy these tactics for each new board member and constantly re-present the information so our board members are individually and collectively aware of our financial condition and future capabilities,” he says.
Elevations executives deliver an extensive financial review on the board’s web portal one week before every board meeting. Those reports include:
Offering this information in “a regular cadence” before the meeting allows the board to engage in collaborative online discussions and address questions before the meeting begins, says Board Chair Don Cheyne.
“The board has regular opportunities to share feedback on the nature and types of reporting provided,” he says. “This has led to improvements in both reporting and meeting content, resulting in better board engagement.”
It also creates time for in-depth, focused presentations from management. “The questions raised online often provide a platform to start more engaging discussions and can also highlight areas where more explanation or detail is necessary,” Cheyne says.