The Organisation for Economic Cooperation and Development (OECD) has defined three universal governance goals. These goals include: economic efficiency; sustainable growth; financial stability. Achieving these goals requires a sound, well-structured governance framework which formalizes and institutionalizes governance goals and the means to achieve these goals. Without a proper framework, governance efforts will be inconsistent and are more likely to fail, contributing to a higher risk of institutional inefficiency, instability, and/or volatility. 

About Our Governance Solution

Our credit union governance solution, a credit union-friendly adaptation of the G20/OECD Principles of Corporate Governance, is a best practice-based governance framework. This framework increases the likelihood that your credit union will achieve the universal goals of governance. Here are the key process steps and outcomes:

Framework Onboarding

In this phase, we work with members of the governance chain to develop baseline knowledge of the framework, including key framework parts, part functionality, and critical governance responsibilities. Typically delivered via a one-day session, onboarding sets the stage for the work to be done and ensures that the end goals and utility of the framework are clearly understood. At the end of this phase, you'll have board members, committee members, and management team members knowledgeable about all aspects of the framework and ready to support framework development/customization.

Current State Discovery

In this phase, we work with a subset of the members of the governance chain (we recommend an ad hoc development committee) to build knowledge about current governance structures and functions. This involves gathering all existing governance documents such as bylaws, committees and mandates, policies related to governance activities, processes/procedures, etc. In many cases, credit unions also have undocumented governance practices and activities. If this is true for you, our work with the committee will also involve documenting undocumented practices. At the end of this phase, you'll have captured, collected, and organized everything that guides (or should guide) current governance practices.

Compliance Assessment/Gap Identification

A key component of the credit union governance framework is the principles layer. Governance principles are the “rules and laws” of governance, and every governance policy, procedure, or practice should be rooted in these “laws.” There are five principles in the framework, and in this phase, we work with the committee to determine which current state governance policies, procedures, or practices have strong connections to the principles and at what level of quality. At the end of this phase, you'll be aware of the degree to which existing policies, procedures, or practices comply with the principles and the existing gaps (i.e., where current practices fall short). 

Framework Customization

In this phase we work to reform existing governance policies, procedures, and practices so that they strongly link to governance principles. We also create the policies, procedures, or practices required by the principles but that do not exist in the current state. We then work to identify the specific tasks and activities the set of policies, procedures, and practices require and end the phase by specifying how, when, and by whom governance activities will be completed. At the end of this phase, you'll have a complete, customized framework containing the following:

1. A set of universal governance goals and principles.

2. Credit union-specific governance policies, procedures, or practices.

3. Clearly articulated governance-specific tasks/activities and the party(s) responsible for their oversight.

Adoption and Implementation

In this phase, we work with the committee to present the fully customized framework to the board of directors. This includes encouraging the board to ask questions and make recommendations for amendment. If the board recommends changes, we will work with the committee to incorporate the board's guidance. Once settled, the board will formally approve the framework to include a specific effective date. At the end of this phase, you'll have a fully reviewed, best-practice, and approved framework to guide all credit union governance efforts. 

Implementation Support and Assessment

In this final phase, we will work with the board and/or the committee to address challenges arising as the framework is implemented. Furthermore, at the end of the first full calendar year of active use, we will facilitate the first assessment of framework compliance. The assessment results will tell you whether the credit union and its individual governing parts (including board members) fulfilled the framework's outcomes and responsibilities. At the end of this phase, you will have learned how to address framework conflicts as they arise, learned how to conduct a framework assessment, and will have, as a result of the completion of the assessment, knowledge of where governance policies and procedures, and leaders in the governance chain, can improve.

Frequently Asked Questions