First Published by CUInsight.com
Long-serving board members have a perspective from their service through many years, and perhaps decades, to an organization to which they volunteered with passion and commitment. I listen in awe to stories told by long-tenured board members of how their credit union started in the kitchen with $200 in the till. The stories of resilience and courage touch the depth of my heart.
Many boards are in conversations about board renewal and board recruitment, with 35% of boards facing the loss of at least three board members in the next three to four years. On the table in many board rooms is the question of whether to have, or not, term limits and how a term-limit decision best serves the membership. The nexus of the term-limit conversation is often in the same context of whether the board is entrenched or high performing and sometimes if a board member is perceived as serving beyond their current capacity to add value.
An entrenched board has long-standing board members who are elected over and over again. The value of an entrenched board is that the long-serving directors have institutional knowledge, and many continue to add value to the organization. However, the following questions may uncover unhealthy symptoms of being or becoming an entrenched board.
- What is the balance between long-tenured board members and a fresh perspective that comes with new board members, regardless of age? Some boards have a consummate storyteller who serves as the historian and reminds everyone about how and why the credit union was founded. Pay attention to how much conversation focuses on the rearview mirror versus strategic forward thinking.
- What is the appropriate length of service for a board member? A board member adds value when they are engaged, prepared, and continuously learning. When you hear language such as “been there, done that” or “that will never happen,” it is time to move over and make space for a fresh perspective and growth mind-set.
- What would be the difference in value to the members with new perspectives in the boardroom? In the Harvard Business Journal, Anderson and Chun (2014) shared research findings on how for-profit companies that replaced three to four board members every three years outperformed their peers. Would the membership experience increase value with a board that rotates three or four board members every three years while losing institutional knowledge? What is the best balance, and how will you know?
- How many board members proactively add strategic value to the boardroom? When asked, most CEOs share that they consistently rely on two board members who are fully engaged but wish all board members were proactive.
- What happens when a board member receives feedback on being unengaged? Our board assessment research indicates there is a lack of awareness of contribution and value considered entrenched Within a relevant and constructive framework, assessment feedback often materially improves engagement, which is observable through renewed commitment, strategically oriented questions, and enhanced contribution. Notable is a renewed positive energy in the boardroom.
- How important is board composition? The degree of board efficacy correlates to board composition and governance. Keep pace with market needs and the representation of member demographics.
Tips for entrenched boards that want to advance to be higher performing:
- Constructive disagreement, deliberate dialogue, and the freedom to use your voice to disagree are healthy. Listen to reports and information shared and deliberate with strategic and clarifying questions. Use your voice to constructively disagree and oppose ideas. A board with the capacity and competency for healthy arbitration serves as strategic partner with the CEO.
- Is your CEO high performing? How do you know? A heavily entrenched board tends to leave a lower-performing CEO in the role far too long. The performance evaluation process is either nonexistent or perfunctory, without attention to the quality of the process and outcome. A high-performing CEO wants to be paid well above the midpoint and work toward incentives tied to strategic goals.
- Challenge group thinking! How conditioned are you to quickly move into agreement? Ask tough questions not just for the sake of being tough. Ask a tough question to challenge thinking and uncover new opportunities. You may agree with the branch expansion or growth strategy, but a speculative question might be valuable in the decision process.
- Create your independent learning plan and share it with the board. Advocate for continuous learning and request feedback regarding your value and contribution.
- Use intentional focus to guide the board meetings and decision process. Entrenched boards give significant energy to personal relationships and social functions. Personal connection is important, but watch out for the fine line between casualness and objectivity.
- Refresh your board agenda. More time should be spent looking forward than digging into operational details for which your CEO is responsible.
- What is the role of the board in strategic planning? What are the decision drivers for the board to approve strategies? Exert caution if you are in a rubber stamp approval mode.
The pendulum is moving in the boardroom, with increased complexity and risks to the organization and the requirement for leaders with rigorous practices, relevant expertise and experience, education, and organizational knowledge. Step into the conversation today and ask:
How are we best serving the membership?
How will we know?
Where are our blind spots?
How can we better serve as a board?
A simple and robust self-assessment of how your board is performing and where a wake-up call would be useful might be the next best thing for your board.