Is your new director faking it till he makes it?
Recently I met a young man who has been on a board for only the last six months. When I pursued how he feels about his role, this being his first board position, he said, “I’m faking it ’till I make it.” At board meetings he says he’s been silent to this point while he gains a feel for what’s what. How many more months or years will it be before he contributes effectively? An orientation program would be a great help to him.
This begins a three-part series aimed at helping credit unions develop an orientation program to get new directors out of the dark as fast as is possible.
When I first became a CU director, I had a slight advantage over many new directors. I had worked a decade in the credit union business as a regulator and league employee. I saw many credit union boards in action.
New directors who come straight from your membership know very little about four important areas:
* Reading financial reports and understanding the issues.
* Board and director legal responsibilities.
* The role of the credit union in the national movement
* The history and operating “style” of your credit union.
When I became a CU director, I knew the first three of those, including the jargon of the movement. I only needed to learn how that particular board operated. That took a while observing and experimenting.
A Supreme Court case from over a hundred years ago established that new directors will be held to a lesser standard. Times have changed; will the courts give the same deference today? If so, how long before a new director is as accountable as her more tenured peers?
Does the environment today support having one or more untapped resources on your credit union board? No, I don’t think so, either. The world is more complex and changing more rapidly than any time in history. The old way of letting a new director attend board meetings and gradually learn it all, one meeting at a time, is neither adequate nor diligent.
Laws and regulations, and perhaps more importantly, the people and organizations that enforce them, expect much more from boards today. The effectiveness of boards depends on the effectiveness of the individual directors.
Since it is so important that we do something to bring each new board member up to speed quickly, it makes sense to create an organized orientation program that covers at least these three areas: how to read the financial statements and understand the ratios you monitor; the legal duties of boards and directors and how to quickly become an effective, participating director.
The learning curve could be from three to five years depending on the complexity of the decisions with which your board deals. The more people I talk to, the shorter this is getting to be. That’s a good trend, if it’s real. It is a specious trend if the expectations of the directors have been slighted, the bar lowered, to be able to say “I’m prepared” in a shorter period of time.
Members of credit unions probably don’t think much about this issue. Let’s put ourselves in their shoes for a minute. The members elect people from their ranks to represent them, to be “trustees” on their behalf. They expect a director to participate in the board meetings and influence decisions and directions to benefit them.
When a new director is silent for four or five months, or longer, while absorbing as much as possible, there is no argument that that person is less than fully involved, less than fully contributing, less than fully effective. You can do something about this in your own credit union.
New directors need exposure to each of these in a compact amount of time. A month is ideal. I know that’s expecting a lot. And, why shouldn’t we expect a lot? Let three months be an exception.
Shoot for not more than three months and let that be an exception. Orchestrate and schedule the process, gain commitment from the volunteers and staff involved, and organize the documentation. It can be done.
In this first part of a three-part series, we will take the first item on that list–the bylaws, because it all starts here. There would be no board and no director’s position without the bylaws.
Experience tells me that bylaws deserve more attention than they normally receive. When I became CEO of a credit union, I could not find the bylaws; we had to start from scratch. This is not an isolated occurrence. Even when bylaws are available, it is common that no one has read them in a long time. An annual review is a good idea.
This document absolutely belongs at the top of the orientation training list.
The members of a credit union hold all the power to make all the policies and business decisions until they establish a board of directors and outline the powers and duties of the board, through the bylaws.
Each director should have a copy of the bylaws from the beginning of their first term. As an alternative, provide access to an electronic file on the Web or Intranet.
Closely akin to the bylaws are the statutory duties of the board and directors, and that comes next in the orientation process.
Dan Clark is a governance and planning facilitator and coach operating out of Tallahassee, Florida. Reach him at dan<at>danclark.com and www.NewDirectorsBootCamp.com. (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com