Jan 01 1993

Credit Union Boards and Credit Union Effectiveness

Report  
Number  
2

In this research study, Professor Hautaluoma and his co-authors define and measure the tasks, styles of operating, and other characteristics of credit union boards, and relate these attributes to measures of credit union effectiveness.

Jacob E. Hautaluoma
Colorado State University
Lloyd Jobe
Colorado State University
Bill Donkersgoed
Colorado State University
Taaj Suri
Colorado State University
Russell Cropanzano
Colorado State University
Report Number 2

Executive Summary

Professor Jacob Hautaluoma and his co-investigators surveyed more than 2,400 credit union CEOs, directors, and staff members. Using organizational psychology theory and research techniques, they probed questions about credit union boards including:

  • What board duties and activities are most important?
  • How should boards conduct their business?
  • Who should serve on boards?
  • What board development activities are useful?

What is this research about? 

The researchers define and measure the tasks, styles of operating, and other characteristics of credit union boards, and relate these attributes to measures of credit union effectiveness. Credit union effectiveness is measured across a number of dimensions, including service satisfaction, public image, growth, willingness to improve, staff morale, participatory management, comparison to competitors, and CAMEL ratings.

The researchers also examine how boards’ tasks, work styles, orientation toward board training, nominating process, democratic composition, and average age and tenure affect overall board effectiveness. Furthermore, the researchers separate the credit unions in their sample into different sets of credit unions with similar patterns of scores and analyze how they differ on the board and credit union effectiveness measures.

What are the credit union implications?

Credit union boards of directors differ from most corporate boards in two respects: credit union members elect their boards on a democratic one-person, one-vote basis, and board members serve without pay. These unusual board selection and compensation practices reflect the fundamental principles of that board,  active involvement of unpaid volunteers is the backbone of the credit union movement and that members have a stake in the operation of their credit union. Credit union directors' responsibilities extend from setting the general direction of the organization to effectively hiring, monitoring, and supporting management. Consequently, the actions of a credit union's board of directors are crucial to how effectively the credit union meets the needs of its members.

This report is sponsored by The Center for Credit Union Research at the University of Wisconsin - Madison.