Does Your Credit Union Have Governance Moxie?

Successful credit unions are always anchored by successful boards of directors. My travels afford me the opportunity to work with some of the most successful credit unions in our movement today. These credit unions stand out in so many ways: member impact, profitability, growth, efficiency, etc. But most importantly, these credit unions have what I like to call “Governance Moxie,” meaning their boards have the ability to meet challenging times with courage, know-how and skill.

This is what Governance Moxie looks like from my perspective:

Comfortable making tough decisions  Whether it’s a decision to approve a field of membership expansion or close a non-performing branch, moxie means not kicking the can down the road. The board reviews the data, reviews alternative scenarios, asks plenty of questions, and makes tough decisions based on the data. It understands that tough decisions are made out of necessity in order to grow, attain goals and survive. Credit unions operate in an environment of limited resources, hyper-competition, and an uncertain economic environment. Tough and fair decisions are reasonable, rational, and most appropriate for the circumstances. Desired outcomes are clearly known, and the board knows that indecision can be very expensive.

High accountability for board and management  Board members hold themselves accountable for past decisions and regularly self-assess their contributions and impact. They hold management accountable for vision, mission, culture, and financial performance. There is no micromanagement, and moxie means there are no “blind-eyes” to poor performance. The board and management each value their relationship, as it is one built on trust. They recognize that the board cannot govern well without the CEO’s collaborations, and the CEO cannot lead the organization to its full potential without the board’s support. They adhere to a high level of professional conduct and wouldn’t do anything to undermine their strong working relationship. 

Understand the credit union’s unique business model and risk structure  Ask these boards and they will clearly articulate how their credit union is unique and what makes their business model work. (Hint: It’s more than friendly service.) My community development credit union friends consistently score high in this area. They know specifically whom they serve, which products to offer to meet member’s unique needs, and they understand risk management and pricing. The results include stronger bottom lines (and growth), with significantly higher income to cover higher expense and provision expenses. Moxie means they have strong business plans; these boards can clearly articulate their business model and risk structure to examiners when asked.

Adaptable to change  It’s never easy, but successful boards consistently adapt to change. They live in the here and now, and find ways to adapt to increasing challenges and emerging market opportunities. They seek continuous education and learning for the board, committees and management. It’s hard to find very many, if any, “sacred cows” in these shops. Management isn’t governed by this is the way we have always done it. Rather, they are challenged to find effective solutions to remain relevant, and achieve vision and mission. Moxie means that the board’s ability to adapt and embrace change sets the tone for management and all staff, which leads to a culture of innovation and growth. It’s simple: most of the credit unions disappearing today could not adapt to, or embrace, change. Boards must have the courage to refocus the mission, when needed. Finally, moxie boards recognize that diversity is essential to success, and use board composition to increase understanding and meet changing community needs.

Thinks strategically more than tactically  They are big picture people and advocates for the vision and mission. Moxie means they are more concerned with impact and less concerned with the color of the credit union’s newsletter. Strong boards hire strong leaders who are entrusted with tactical success. Strategic thinking does not occur once a year – its part of their regular ongoing work, and they stay current with internal and external forces that drive change. Strategic issues are a regular part of the monthly board agenda.

The board carries the ultimate responsibility for governance and is accountable for the credit union’s actions. Governance Moxie is so much more than board attendance and accountability – it’s forward-focused, with courage and determination to meet challenges and opportunities head-on. It’s strong commitment to a meaningful vision and discipline for meeting mission objectives.

The bottom-line is that Governance Moxie equals impact.