Five Signs Your Credit Union is Ready for a Board Governance Assessment
A well-functioning board of directors is critical to the success of any credit union. However, even the most effective boards can benefit from a periodic governance assessment. The right assessment provides an opportunity to evaluate the board's performance, identify areas for improvement, and ensure that the board is operating at its full potential. Here are five signs that your credit union's board may be ready for a governance assessment:
High Board Turnover or Impending Term Outs: A significant change in board composition, such as a large number of members reaching their term limits or a high voluntary turnover rate, can disrupt the board's continuity and create institutional knowledge gaps. A governance assessment can help to ensure that new board members are effectively onboarded, integrated, and that the board's overall performance is maintained throughout transition periods.
New CEO or Leadership Changes: A recent or upcoming change in leadership, such as the appointment of a new CEO, can also be a time of transition for a credit union. A governance assessment helps ensure that the board is effectively supporting the new leadership team and that the board's governance structures are aligned with the credit union's new strategic direction. If you’re anticipating a change in leadership, it's essential that the Board and committees have effective working relationships with potential succession candidates.
Lack of Alignment During Strategic Planning: The strategic planning process can be a source of tension and conflict within a board. If your board is experiencing difficulty reaching consensus on strategic goals, a governance assessment can help to identify the underlying causes of this tension and facilitate more effective communication and collaboration. It’s essential that your governance structures are aligned with the credit union's strategic direction.
Difficulty Recruiting New Board Members: If your credit union is struggling to attract and recruit qualified board members, a governance assessment can help to identify the reasons for this difficulty and develop strategies for improvement. Defining the skills needed and creating a proactive board recruitment strategy with clear roles and responsibilities is critical to ensuring your board has the expertise to meet future member needs and evolve with the changing landscape.
Need for Industry Education: The financial industry is constantly evolving and it's essential that board members stay up-to-date on the latest trends and developments. A governance assessment can help to identify any knowledge gaps and provide recommendations for training and development - allowing the board to operate at its full potential.
These signs may indicate potential issues with board continuity, collaboration, and performance. If any of these signs are present in your credit union, it may be time to consider a board governance assessment. By taking a proactive approach to governance, you can help to ensure that your board is operating at its best and that your credit union is well-positioned for success.