The research literature on the governance of corporations is extensive, and Researcher Robert Hoel mines it well for specific insights...
Oct 06 2015
Entrenched or Energetic? Improving Credit Union Board Renewal
Some of the most basic formal board renewal processes remain disturbingly rare in the credit union system. Sixty percent of credit unions do not perform any type of board evaluation. Twenty-five percent have no process for removing underperforming directors. And perhaps the greatest gap of all lies with the credit union boards that are not aware of where their duties lie. The purpose of this report is to examine credit union board renewal. What are credit union boards doing to ensure that they have the right directors at all times, and how well are these processes working?
Due to the lack of regulatory guidance on board renewal, credit unions are left to their own devices to develop, implement, and maintain appropriate board renewal processes. Many of the same concerns raised 10 years ago continue to linger. Many credit unions still do not recruit based on specific skills. Most boards doubt that they are sufficiently representative of credit union members. Perhaps most concerning is the reality that some credit union boards are dangerously unaware of their core duties. The overarching message of our findings is that formal processes yield results. A formal board evaluation plus a formal process for removing underperforming directors and a director term limit is highly effective. Moreover, one-on-one director interviews are good, but adding a confidential survey and peer evaluation is even better.
Using survey data, we evaluate:
- Board selection
- Board diversity
- Board duties
- Board composition
It’s important to prioritize strategy and oversight. Even with technology’s growing influence and credit unions racing to keep up with industry trends, the core mission to serve members will never change. The knowledge developed and expressed in the boardroom is where member value begins.
Filene thanks its generous supporters for making this important research possible.
Report Number 373