Adopting a Growth Mindset for Your Credit Union Board

The concept of “governance” refers to structures and processes that are designed to ensure accountability, transparency, responsiveness, rule of law, stability, equity, inclusiveness, empowerment and broad-based participation. A “volunteer” is a person who works for an organization without being compensated. The volunteer board structure is the foundation of the credit union.

Moving forward, both present and future credit union board members must have a “growth mindset” and be ready to interpret confrontation, prompt change and analyze outcomes. As the financial world is constantly evolving, boards also need to be evolving in financial outlook and approach to not only remain relevant, but more importantly to positively influence their team, membership and community.

Let’s examine governance:

• Accountability is the foundation of good governance and is defined as a performance of tasks by an individual or individuals, subject to oversight for justification. Evaluation is key in ensuring accountability and effectiveness, and demonstrates an understanding of performance.
• Transparency and accountability are central to the concept of good governance; the revelation of information and intelligibility processes enable board members to scrutinize proceedings.
• Responsiveness by looking at what the concept can contribute to the operation of credit unions and the work on credit union governance, which relies on technical strength and capacities of the providers.
• Rule of law and good governance requires the legal framework that is enforced periodically by external auditors. The impartial enforcement of laws and regulations comes with an independent and incorruptible method; this manner shields boards of guards against any wrong.
• Stability focuses on future financial and technology structures to the institution viable for years to come.
• Equity is the difference between the value of the assets and the value of the liabilities of something owned or to be owned. (Typically, the board’s credit committee oversees this process).
• Inclusiveness offers access to useful and affordable financial products and services to meet members’ needs.
• Empowerment is to ensure the credit union member’s sustainability and helps the member stay a step ahead in life and business, and assists in financial decisions both present and future.
• Broad-based participation means that each credit union member can vote on policy and financial participation developments at annual meetings. Credit union members can volunteer their time on various committees and also sit on the board.

We must recognize that technology and the continuous broad changes in the credit union industry require progressive thinking to embrace business in new ways. The role of the volunteer board member is not just to connect existing resources, but to build strong relationships that will help with credit union performance. The volunteer board member should introduce new mechanisms to accelerate and improve the performance of the institution, and to provide fellow board members with innovative ideas and new approaches.

Credit unions must move away from a standard volunteer board to a board resembling one of a growth mindset that focuses almost exclusively on attracting and retaining talented individuals. If too many resources are devoted to employees with a stock of knowledge, it is likely that employees with limited knowledge but great learning potential will be overlooked (and eventually lost). The volunteer with a growth mindset will understand that individual and organizational capabilities can be cultivated and developed to improve performance and expand in new directions. The focus should be on talent development, creating work environments and practices that enable employees to develop new skills and to learn by working with others, and problem-solving and experimentation regardless of work classification.

The volunteer board member must be cognizant of the governance structures and processes that make up the main policy of the organization. The greatest threat to success is avoiding failure on any governance compliance. According to the think tank OCEG’s founder and chairman, Scott L. Mitchell, “Governance, risk management and compliance (GRC) are three related tasks that help assure an organization reliably achieves objectives, addresses uncertainty and acts with integrity.” GRC refers to a capability that assists an organization with achieving its objectives, being responsible and implementing its functions. The directors have a fiduciary responsibility and should fully understand their fiduciary roles within the credit union. Examiners will review all aspects of the credit union’s operations, including the board’s answerable performance. If a volunteer receives a stipend, this can get problematic; you may have inadvertently been converted to an employee. This could get complicated, as “compensating board members may take away immunity from lawsuits,” according to the National Council of Nonprofits.

Lastly, credit unions should provide an orientation for those who want to volunteer to be on the board, which should include a detailed review of the duties and responsibilities for the credit union director of the board.

Norman Halls is former Chairman of the Board for Arrha CU and Director for Norhals Group, LLC. He can be reached at halls@norhalsgroup.com.