Setting Credit Union Board Expectations to Increase Effectiveness

As a CEO or board director of a credit union or community bank, you have a personal stake in improving the effectiveness of your board. Enhancing decision-making, strategic planning, and governance practices within your board can directly contribute to the success of your bank in serving customers and making a positive impact on the community you serve.

The most successful boards of community banks and credit unions recognise that strong board performance is a critical ingredient in their ability to achieve a positive impact within their communities.

The members of your credit union or bank’s board will certainly want to achieve the greatest impact possible during their board terms. The path to increasing effectiveness isn’t always so clear, especially for new board members or board members with little nonprofit experience.

Each board member’s unique characteristics, skills, and experience play a strong role in your board’s effectiveness, as well as board dynamics and the mechanics of running effective board meetings. As credit union boards tackle key challenges facing the industry, it’s never been more important for boards to focus diligently on their missions to ensure sustainability.

Setting clear board expectations right from the start is the key to increasing effectiveness.

What Are the Characteristics of an Effective Credit Union Board Member?

Your board members serve as brand ambassadors and advocates for your credit union or community bank’s mission. For that reason, it’s crucial to closely examine the character qualities of board member candidates.

These are some of the characteristics to look for as you draw from your community in recruiting new board members:

• Passion for your mission
• Charity-minded
• Professionals that understand the role of nonprofits within the community
• Community organisation minded
• Good delegators
• Team players
• Professionalism
• Strong leadership skills – “born leaders”

The recruitment and nominating process is a good time to highlight how each individual’s characteristics and skills will benefit your board and how they’ll contribute to board dynamics.

Board member terms generally have term limits. As your board works together toward the goal of improving its effectiveness, it’s important to maximise the time that each board member has as a part of your board. That’s why it’s so vital to establish an informative board orientation process and to set the expectation for them to participate actively in board discussions from their very first board meeting.

When you develop your orientation process, be sure to include the topic of working as a team. Boards that rely heavily on one person to do the bulk of the work are not as effective as nonprofit boards that share the work by dividing responsibilities.

The most effective credit union boards work to incorporate a team mentality as part of their board culture. You can’t expect that to happen on its own. Your board will become more effective when you emphasise the importance of each board member fulfilling their individual responsibilities and their collective responsibilities. The goal here is full board engagement during board meetings.

Setting Expectations for Your Credit Union Board

Your mission is unique and different from every other organisation. Don’t set your board expectations based on any other board but make them distinctive to you. Having said that, the following bullet points will give you some general ideas of board expectations to focus on:

• Compliance and legal standards for credit unions
• The importance of regular board meeting attendance
• Being willing to serve on a committee or leading one
• Using their personal and professional contacts to benefit the organisation
• Coming to board meetings fully prepared to participate actively
• Being willing to offer dissenting opinions in a collegial manner

Regardless of whether your board members have much experience in governance or not, your board expectations should require each board member to work on improving their leadership abilities in the area of board governance. Everyone comes to the board with their own unique perspectives and capabilities. Each one has something to learn from everyone else in the group.

Download the Board Effectiveness Checklist to identify areas of improvement and apply best practices for a more effective, productive and successful board.

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Three Important Steps to Increase Your Board’s Effectiveness

Increasing your board’s effectiveness is simply a matter of making it a priority. The path to credit unions board effectiveness entails the right time, the right tools, and choosing the right focus areas for education and training.

1. Incorporate the goal of increasing board effectiveness into your annual strategic planning process

Don’t be surprised if it’s difficult to get full buy-in from the board. Many of them may not see increasing effectiveness as a major priority. Sometimes, it’s just a matter of choosing your time wisely. Your annual strategic planning meeting is nearly always the best time to broach the issue with your board.

2. Use the right digital tools to support board effectiveness

BoardEffect’s mission is to improve the efficiency and effectiveness of volunteer boards. The BoardEffect board solution gives your board all the right tools to ensure board effectiveness. It fully supports your annual cycle, board development cycle, and your board meeting cycle. BoardEffect’s system includes an online survey tool that’s perfect for performing annual board self-evaluations. Also, it offers a secure platform for restoring board orientation materials, board handbooks, meeting minutes, board training materials, board reports, compliance documents, and other important board documents.

3. Choosing the right areas for board education and training

You can streamline the process for increasing board effectiveness when you choose the right areas for board member education and training. These can be categorised into the following four areas:

• Financial Acumen: This category focuses on enhancing directors’ understanding of financial management, risk assessment, and regulatory compliance within the credit union industry. It includes training on financial statements analysis, loan portfolio management, interest rate risk, and other relevant financial topics.
• Governance and Compliance: This category emphasises board directors’ understanding of governance best practices, board responsibilities, and regulatory compliance. It covers topics such as fiduciary duties, board member roles and responsibilities, code of conduct, and legal compliance requirements specific to credit unions.
• Strategic Planning and Innovation: This category aims to develop directors’ skills in strategic thinking, long-term planning, and fostering innovation within the credit union. It includes training on market analysis, competitive positioning, technology trends, product and service development, and strategic decision-making.
• Member and Community Engagement: This category focuses on directors’ understanding of member needs, community outreach, and the social impact of the credit union. It encompasses training on member service excellence, community development initiatives, financial literacy programs, and building strong relationships with members and stakeholders.

“The best leaders are always learning, always growing. They are never satisfied with the status quo. They seek out new ideas and perspectives, challenge their assumptions, and embrace the discomfort that comes with change. They are not afraid to fail, because they know that failure is an essential part of the learning process. And they are committed to building a culture of learning and continuous improvement within their organisations.” – Dan Cardinali, President and CEO of Independent Sector

These are some of the topics within those categories that you can incorporate into your goals for your strategic planning for the year:

• Parliamentary procedure
• Meeting protocols for in-person and remote meetings
• Developing mission and vision statements
• Being effective ambassadors and advocates
• Policies and bylaws
• Strategic planning
• Understanding financial statements
• Understanding the auditing process
• Understanding board member legal responsibilities and fiduciary duties
• The importance of committee work

As a rule, people that agree to become volunteer board members tend to be incredibly busy people – it’s essential to maximise the time that you spend together. Make it a high priority to put in the time to plan your board meetings carefully, facilitate them well, and document your efforts. Rely on a board management system like BoardEffect to help your board members operate at peak effectiveness, individually, and as a group.

If you would like to learn more about how BoardEffect can support your board, we’d love to speak with you! Request a demo and let us share how we help more than 14,000 boards in 48 countries. 

BoardEffect, a Diligent solution, leads in providing innovative boardroom technology to nonprofit organisations. Serving mission-driven organisations, we empower boards with tools to drive positive change. Our secure board management software streamlines operations, enhances governance practices, and enables confident decision-making. With BoardEffect, mission-driven organisations unlock potential, accelerate mission delivery, and make lasting impact in their communities.