Boards and CEOs: Who’s Really in Charge?
“Which is more important for the long-term success of your credit union: the board or the CEO?” The question, often posed to credit union directors, usually makes them uneasy, because it doesn’t have a clear-cut answer.
The best CEO-board relations are symbiotic, with an informed and conscientious group of directors monitoring a capable and transparent CEO. In these situations, the question is an interesting intellectual exercise. The worst CEO-board relations are dysfunctional, with a micromanaging board, an incompetent CEO, power struggles, or one of a dozen other dark dynamics dominating the relationship. In these situations, the question underscores an existential threat to the credit union.
Boards and CEOs: Who’s Really in Charge? is part two in a Filene Research Institute governance series, following Power and Governance: Who Really Owns Credit Unions? The final report is Boards and Leadership: How Boards Can Add More Value. All three take aim at credit union governance, both the good and the bad, and prescribe real-world responses.
Researcher Robert Hoel draws on an exhaustive literature review of corporate governance and decades of firsthand experience to frame each chapter with helpful conclusions, recommendations for credit union leaders, and hypotheses that, while not proven, are excellent to use in credit union boardrooms as conversation points for improving governance. The research literature on the governance of corporations is extensive, and Hoel mines it well for specific insights to improve the governance of credit unions.
The short answer to the “who is more important” question is neither. Superior performance springs from boards and CEOs that magnify their responsibilities while respecting the role of the other. Nobody wants autocrats, and nobody wants rubber stamps. Taking this research to heart will prevent both.