Stuart R. Levine, Chairman and CEO, Stuart Levine & Associates LLC

Whether you are serving on the Board of a publicly traded company, a private company or a credit union Board, self-assessments are important in that they serve to increase the standards of accountability. Engaging in an evaluation process that is driven by an independent third party will establish a baseline that strengthens the Board in an inclusionary fashion and ensures a future that adheres to regulatory and compliance trends.

Strategic governance transformation is envisioned by the most forward-thinking entities. Creating a process that defines the criteria for Board culture and strong governance will lead to the engagement of all participants, whereby they feel ownership and can directly embrace the changes required. The goal is to plan and establish a disciplined set of governance priorities and practices that will help guide the Board, the Supervisory Committees and all committees in the coming years.

Fulfilling your fiduciary responsibilities as a Director includes participating in strategic planning and understanding member experience, growth and talent management. Improving communication and Director education around issues like cybersecurity are critical to the future. The creation of a CEO dashboard, including ESG goals, is fundamental to ensuring that the organization’s impact on each individual member is sacred and defines appropriate stewardship. Having Board materials and agendas that reflect the above topics with data that allows for enough time for Director conversations is critical. Care must be taken with Board materials and Board minutes as they become legal documents and part of the permanent record of the Board.

Joining and serving on a Board can align one’s passions and commitment to the community creating professional growth and business results. Understanding what you offer to a Board, as well as understanding fiduciary responsibilities (i.e., duty of care, duty of loyalty, duty of obedience and conflict of interest issues) is key. Learning what the professional expectations are for Board service, Director responsibilities and the commitment of time required are all part of Board preparation. Confidentiality, ethics and integrity set the tone at the top.

Issues and questions to consider are:

  • How do you effectively challenge and participate in Board conversations when you have a different point of view?
  • Do you have enough time to commit to serving on a Board?

Issues to address are:

  • Issues that boards as a whole must consider for Directors beyond personal qualities are expertise, experience, diversity, stakeholder representation and independence that will best serve the organization.
  • Board composition should align and reflect with those the organization serves. Diverse boards that reflect demographic changes define a new reality.

Board members must take care not to involve themselves in the day-to-day operations and management of the business. Well-designed Board and Committee agendas will ensure that Directors are properly informed, thoroughly engaged and thinking in a focused way. Their role is to oversee Management, leveraging a strong CEO dashboard. Boards, however, can get involved in operations in a crisis or transition. Directors can certainly take a role (in collaboration with the CEO) in mentoring key members of Management to provide guidance, respond to Management’s request for input and to build relationships and learning about the organization. It is the Director’s responsibility to ensure Management accountability.

Another area of focus should be ensuring that candid discussions are conducted with care and be thoughtful in how these messages are delivered and by whom. Typically, the Board Chair most frequently communicates with the CEO. The Board communicates through the CEO who in turn speaks with Management, and the Board communicates to stakeholders with the CEO.

Without an engaged and prepared Board culture, it’s tough to ensure the right strategies and issues are being brought to the forefront. Boards play a critical role in setting the tone for the organization’s overall inclusive culture. Collegiality, which includes an open environment of respectful confrontation and constructive conflict, is essential.

In summary, here are concluding thoughts on creating a more effective board:

  • Has your Board engaged in a responsible conversation regarding roles and responsibilities?
  • Does your Board have in place a recruitment plan based on defined criteria?
  • Have you engaged in an independent assessment of Director skills necessary for the future growth of the organization?
  • Does your Board monitor and address governance drivers and key trends like ESG and DE&I? If not, consider doing so. It will accrue to the advantage of your organization, your members and the community at large.

The fundamental truth is that now looking in the mirror, assessing the competency of your board and its ability to make future strategic decisions is critical.