A Fully Effective Board

For boards to be truly effective, board members must possess skills relevant to both formal principles-based responsibilities and informal culture-based responsibilities.

Board Responsibilities

A board, as a governing body, has certain responsibilities defined by law, industry rules and regulations, and institutional policy (e.g., bylaws). These responsibilities commonly include:

  • Ensuring the effectiveness of governance

  • Facilitating the exercise of members' rights and equitable treatment

  • Ensuring the appropriate utilization of member capital

  • Ensuring stakeholder “participation” in governance

  • Ensuring effective disclosure and transparency

  • Engaging in strategic guidance, monitoring, and accountability.

With regard to the last bullet point, there are common tasks and activities that align with board responsibilities, including:

    • Strategic planning

    • Evaluating board and CEO effectiveness

    • Managing CEO compensation/oversight

    • Establishing and maintaining board procedures

    • Reading and understanding board information

    • Establishing and maintaining organizational policies

... among others.

The responsibilities and tasks above have been adapted from the Organisation for Economic Cooperation and Development's Principles for Effective Government, which are seen as "best practice" governance principles applicable to government and corporate entities alike.

Credit unions looking to develop an effective board would be wise to align its governance framework and board member competencies to these kinds of principles. However, boards should not stop there when developing an informed framework. Why? Because beyond the responsibilities aligned with best practice governance principles, boards also have responsibilities related to board culture.

The Challenge of Unique Culture

Culture evolves over many years, and is often based on observed behavioral traditions – a circumstance that ultimately results in a responsibility context unique to the institution, and is too often undocumented in any way. While cultural influences on governance should be unique, they should not remain undocumented.

As board culture is unique to individual board; there is no common list of culture-based responsibilities that boards can draw from to create cultural documentation. Boards must discover their own cultural governance construct, and then document accordingly, to include documenting the kinds of skills board members should possess in order to work well in the culture.

A Fully Effective Board

A fully effective board is composed of board members who possess the skills that allow them fulfill both principle-based and cultural-based responsibilities. To that end, have your board embark on an effort of cultural exploration. Work together to uncover the traditions that bind board member engagement and interaction. No doubt you will find that to work well in the culture requires a set of specific, unique skills.

And here is the benefit of your exploration. Once those cultural skill requirements are documented and affirmed, board members can work to further develop both principles-based skills and cultural skills – a path to a fully effective board. But the bigger payoff is the ability to develop prospective, future board members, arming them with the skills they'll need maintain your distinguishing culture.