The COVID-19 environmental disruption, the call to enhance and expand member digital services, #blacklivesmatter, and the retirement of board members comprise a profound confluence of opportunities. These opportunities should not become issues with the right actions. Two years ago, a significant percentage of board members (30-40%) declared they would retire in three to five years. In addition, many tenured board members assert that younger generations are not committed to volunteering their time.
These simultaneous transformative disruptions beg questions of each board: What resources are needed now? How does our board’s governance structure take care of our membership in this disruptive and transformative situation? What conversations are needed to understand the board’s obligation to add more strategic value?
Board members should also self-reflect: Am I the best resource for this board? How will I know? What is my unique value? How do I impede success? Am I willing to step aside? Do I live as a legend in my own mind?
The global situation and its impact on the industry create a transformative opportunity for the future of credit unions. The call to action involves assessing and updating your board recruitment mindset and process to add dynamically engaged and relevant board members who add strategic value to the organization. The historical source for board member recruitment is no longer viable. This new reality offers an opportunity to move away from the unseen, unspoken, and unheard biases that result in homogeneity when selecting board members.
Boards can move beyond talking about diversity and on to effective action in these ways:
- Make an explicit commitment to search for diverse competencies, perspectives, and thought.
- Challenge boardroom language of bias.
- Move from episodic recruiting to ongoing strategic and intentional recruitment.
- Embrace constant readiness to recruit versus waiting until three months before the need.
Professional Board Searches
Boards can boldly professionalize their search processes to captivate the best candidates in these ways:
- Determine the skill gap.
- Seek multiple perspectives.
- Professionalize interview skills.
- Ask the right questions.
- Advertise to compel responses from diverse and qualified candidates.
Common gaps in board skill assessments include strategic insight regarding the following:
- Big data
- Strategic growth
- Human capital
- Balance sheet and investment strategies
Attracting the Best
Attracting the most qualified candidates happens through social media with geographical targeting, upbeat language, and automated friendly responses via an applicant tracking system. Assume you will receive dozens of interested candidates, necessitating a system to effectively curate them.
Be ready to share information about your organization and board. Initially, introductory-level information is appropriate; expect to share more at the final selection stage.
The missing link in a successful board search is eliminating entrenched practices. Be futuristic in your vision of what members need, and commit to diversity, equity, and inclusion in your actions. Step up practices to professionalize the search and be surprised and delighted at the quality of choices.
The opportunity is to shift the focus to being more practical and pragmatic and to implement a practice that accelerates strategic dialogue and boosts board/CEO alignment
Few board responsibilities have more potential for positive organizational impact than evaluating CEO performance. When done well, this process can generate ongoing powerful and meaningful conversations between directors and the chief executive and align them all in the same strategic direction.
In the Filene Institute report, “Tracking the Relationship Between Governance and Performance,” researchers concluded, “Of all the measured relationships, the only governance practice that yielded a strong positive correlation with actual ROA performance was whether boards felt they had an effective CEO evaluation in place.”
At the same time, many boards are uncomfortable conducting these performance reviews, and many CEOs are unhappy about the way they are done. There is typically minimal dialogue between the two parties and no clear direction to guide the CEO’s performance going forward. Both sides tend to see this process as a necessary—but not necessarily useful—exercise.
At the end of the day, the board-CEO relationship does not need another archaic construct or arduous process putting unnecessary strain on the conversation. The opportunity is to shift the focus to make these evaluations more practical and pragmatic and to implement a practice that accelerates strategic dialogue. The nine hallmarks of a strategically designed and utilized CEO performance evaluation include:
1. Reinforcing Strategic Priorities
First and foremost, the CEO performance evaluation should be viewed as a tool or an action item that further facilitates the manifestation of the strategic plan and its priorities. The process of identifying the characteristics and skill sets the CEO needs to lead the credit union stimulates rich conversations among directors. It provides a framework to align directors and the CEO behind these attributes and to guide discussions throughout the year.
2. Taking a Longer View of What Matters Most
Identifying those measurable key characteristics and solidifying the performance evaluation method should be designed to reach “evergreen” status. You don’t want to spend a lot of time and effort developing a survey and process that is relevant for this year but needs to be completely overhauled next year. This requires an upfront investment of time and commitment of energy by both the board and CEO to ensure the input and output rise to the level of significance to thrust alignment into the future.
3. Encouraging Continued Growth
The challenges and opportunities before your credit union are ever-changing, so the CEO will need to develop new skills and knowledge to keep pace. An effective evaluation process not only acknowledges but encourages the need for growth. The recognition that some capabilities will be a work in progress over several years gives the CEO permission to not be perfect and instead embrace a growth mindset and seek out developmental opportunities. This is in contrast to implying that a five out of five (or whatever scale you’re using) across the board is the expectation. Putting it another way, if your high-performing CEO receives an abundance of fives out of five, his or her first thought is likely, “Well, that feedback is not helpful.”
4. Talking Through the Basis for Evaluation
We recommend that the board plans a frank discussion of survey results before delivering the evaluation to the CEO. The objective is to uncover and get the alignment opportunities squared away so the board can speak with a unified voice once the evaluation is formally, and even informally, delivered.
For example, if most directors strongly agree that the CEO demonstrates a specific characteristic, but one or two board members strongly or even slightly disagree, that disparity presents an opportunity for at least one person to learn something. It may be that directors on one side of the issue or the other have information that is not universally known but should be shared. More than once we have witnessed a director acting on incomplete information, which shows up as a negative scoring on the CEO’s performance evaluation. Even in this occurrence, at least one person learns something. Again, the goal is reaching board alignment on the CEO’s past performance, providing a framework to guide his or her future performance.
Along the same lines, the board’s submission of the formal evaluation to the CEO should be followed up with a conversation in which the executive can ask clarifying questions. The directors and the chief executive can discuss at this meeting which characteristics are working very well and further understand any areas where there’s a significant difference between the board’s performance ratings and the CEO’s self-evaluation.
5. Incorporating a Management Component
The CEO could adapt the evaluation instrument for use with his or her executive team to gain additional performance feedback. We don’t see this happen often, but it can be an illuminating exercise if the managers and executives involved in this process believe that the CEO is open to and looking forward to honest feedback, learning and growing, and doing the right thing as a leader. Without a super duper foundation of trust already in place, this process will likely not produce useful input. It could do more harm than good if not proctored correctly.
6. Supporting Succession Planning and Executive Recruitment
In the five-year roadmap of best practices we recommend for the years leading up to the CEO’s planned retirement, the development of a robust evaluation methodology can help ease the transition for the next chief executive. Having a strategy-focused, high quality evaluation process is also a big selling point for high-caliber candidates as a sign that the board is committed to being in an ongoing partnership and accountability conversation (risk vs. rewards).
When boards don’t have an effective process in place during a change in leadership, that gap places an extra burden on the new CEO. Incoming executives have so much to do already that the need to co-develop a new evaluation system with the board (or likely do it on their own) may feel like throwing a bag of bricks to a person treading water. To say the least, it’s not helpful.
7. Revealing and Supporting Directors’ Perspectives
One of the most surprising elements of a comprehensive evaluation process is that when directors are assessing the CEO’s characteristics, they ultimately learn that their assessment is actually a reflection of themselves. Each director’s submitted opinion reflects what was retained in his or her mind or colored by his or her perspectives.
In our practice, we’ve witnessed a CEO doing X, the board witnessing X, and then six months later a director then negatively dings the CEO for not doing X. It just was forgotten. It happens. Conversely, if a single director’s evaluation calibration holds a lower or extremely high bar for success, that’s likely a reflection of the director as a person. You’ve heard it before, “I never give someone a five out of five as a matter of principle.” The point being, make sure that everyone is on the same page about the methodology. This is an important process, and directors should be conscious of how and why their opinions have been formed.
8. Acknowledging That ‘Learning’ and ‘Action’ Are the Operative Words
Learning only occurs when a relatively permanent shift takes hold and produces new actions. Providing examples of historic and desired future learnings and actions allow CEOs to understand what to do with the historic evaluation and cognitively situate themselves in the future. This may sound like, “The general themes of the CEO’s performance and requests for future action include the following… .”
9. Facilitating a Stronger Board-CEO Partnership
In short, an effective evaluation methodology is not a once-a-year assignment but an organizing system to guide ongoing interactions between the board and chief executive. A well-designed and executed evaluation process guides the coordination of elements throughout the year, both for the board and the CEO. Applying a strategic level of intentionality paves a smoother path for improved performance across the credit union and for serving the members–which, of course, is what the work of the board and CEO is all about.
Apply It to Your Boardroom
- What do you like about your board’s current CEO evaluation process?
- What does your CEO like about your board’s current CEO evaluation process?
- Which of the nine hallmarks outlined in this article might help your board do a better job of strategically evaluating your CEO?
How you can add consistent value by using critical thinking
Speech is the primary mode of communication in the boardroom. It is extremely important for board members to be able to articulate their thoughts and opinions in a thoughtful and articulate manner. So, would it surprise you if I said that a big component of boardroom communication is knowing when to be silent?
The process of thinking before speaking impacts the quality of the board’s discussion. If we speak without thinking about the concepts and principles of the subject, we may produce an impression that we want to derail the conversation, consciously or unconsciously. When we study and assess what we think about the subject, the quality of our conversation will be focused, relevant and result in more informed board decisions.
Prepare for the Board Meeting: Internalize First
The board packet provides updates to strategic initiatives, financial status and other essential items. Board members should receive this at least a week in advance of each meeting. The care (or lack thereof) with which each board member reviews the board packet and prepares for the meeting can add to or detract from the quality of relationships within the board, the outcome of the board meeting and, ultimately, the performance of the organization.
Valued board members understand they must evaluate their thinking. There are two pieces to consider about thinking. First, a person must think in an educated manner. To do this, board members should research and attempt to understand the topics they will be discussing. Second, the person must be skilled in evaluating his or her thinking. Board members should reflect on and understand their thoughts or opinions on the concepts to be discussed. Prior to the board meeting, directors should spend adequate time educating themselves on the topics they are uncertain about and begin to form an opinion, but also consider alternate points of view.
Someone with a critical thinking mindset examines the facts they know, educates themselves when gaps in their understanding appear, and attempts an unbiased analysis of the information, all in a rational, clear-headed manner.
The reason this is so important is because the board is responsible for making decisions that affect the future of the organization. Responsible board members will understand their obligation to carefully study and think critically for the sake of the best results.
When each board member commits to this preparation and introspection, it leads to more successful board meetings, better decision-making and stronger outcomes for the organization.
Further, when board members evaluate their embedded thinking patterns with an open mind, they can move from a fixed and entrenched mindset to a developing and generative mindset.
Provide Value: Reflect and Question
The value of the board as an entity directly correlates with the value contributed by each board member. Board governance that permits one or two board members to provide less value than needed is shortchanging the membership. To that end, each board member must engage in activities that require active thinking regarding the concepts and principles related to the board’s discussions. All board members are encouraged to engage in learning activities on their own or within the group to enhance their quality of critical thinking.
When we are too committed to our preconceived opinions and thoughts on a matter, we rob ourselves of the chance for reflective and speculative conversations and, ultimately, to add vast benefits for our membership. If we are not regularly engaging in the reflective and speculative components of critical thinking, we are, in essence, robbing our members.
Practice Critical Thinking: 7 Behaviors to Stretch Your Mindset
Are you a critical thinker? What are your critical thinking practices? If you are not sure, consider this list.
A critical thinker on the board:
- raises meaningful questions and articulates them with clarity and preciseness;
- accesses, then assesses relevant information;
- articulates abstract ideas to connect the dots;
- communicates well-reasoned and grounded suggestions and conclusions;
- continues to test those conclusions against standards, new information and important criteria;
- recognizes and challenges their assumptions in complex situations; and
- engages with others in an open dialogue to find solutions.
It is important to know that critical thinking can be learned; it is self-directed and requires self-discipline, uncompromising standards, and conscious and deliberate practice and application. Critical thinking blended with effective communication, relevant expertise and vital commitment to the purpose of the board produces a constructive partnership amongst board members as well as between the board and CEO.
Deedee Myers, PhD, MSC, PCC, CHIC, is CEO of CUES strategic provider DDJ Myers, Phoenix. If your board wants to improve its critical thinking as part of higher quality governance, reach out to DDJ Myers Ltd. at 800.574.8877. Myers referred to these resources in putting together this article: Paul, Richard and Elder, Linda: Critical Thinking, 2008; Reid, Thomas: Essays on the Intellectual Powers of Man, 1785; and Trower, Cathy: The Practitioners Guide to Governance as Leadership, 2013.