Board Governance - CUNA · Boards are able to address this with a comprehensive plan to assess and enhance a company’s current program A board’s culture and succession planning

Board GovernanceJune 17, 2019

2 ǀ 6/20/2019 © 2019 PSCU. All rights reserved worldwide. Confidential – do not copy or distribute without permission.

Overview▪Responsibilities of an effective

credit union board

▪Recruiting and succession planning

▪Role of the board chair and committee leaders

▪Establishing a successful board culture


Responsibilities

▪CEO performance management and compensation

▪Guiding strategy, investments, and operational priorities, etc.

▪Assuring compliance with regulations, etc.

Driving the agenda of each board meeting


Talent

▪Diversity of thought

▪Technical and financial skills

▪Outside resources

▪Best practices

Building a board with the skills needed to compete in the 2020s


Assessing Your Succession Planning Process

Required Skills

Outside Influences

Managing Gaps

Diversity

Culture

Does each Board member

understand the strategic & regulatory shifts affecting the organization in near term?

What skills & competencies does the Board need to best oversee the organization’s challenges?

Does the Board represent

diverse membership?

Does the Board have an

effective & ongoing evaluation process to assess the full Board & individual directors?

Are there action plans & timelines in place to manage & close identified gaps?

Performance Management

Has the Board assessed its culture & is this a key consideration in recruiting & selecting new directors?


Board Succession Planning Process

Determine Position Needs

Identify Skills & Competencies

Plan for Retirements & Timing

Select PotentialInternal Successors

Assess Candidates

Select & Onboard New

Directors

Create & Execute Development

Plans

Evaluate Succession Plan

▪ Succession planning is an

ongoing process & should

be evaluated frequently

▪ Recruit directors with a focus

on essential skills & competencies

▪ Onboarding & training is as important as recruiting process for a successful term

Board Succession Process

Key Takeaways


Board Composition MatrixDirector AChair/CEO

Director B

Director C

DirectorD

DirectorE

DirectorF

DirectorG

DirectorH

DirectorI

GAPS/ Average

FUNCTIONAL EXPERTISE

Recent Large Company CEO • • • •

Recent Large Company CFO

Led Major Business Unit • • • • • • • •

M&A Transactions • • • • •

Data & Analytics •

Technology • • • •

Qualified Financial Expert •

Regulatory/Compliance •

Financial Services/Cards • • • • •

INDUSTRY EXPERIENCE

Insurance • •

Asset Management

Consumer/B2C Digital • •

BOARD SERVICE

Other Industry Boards 0 0 3 1 3 0 2 3 0

Gender M F F M F M M F M 55% M

Age 56 51 59 60 60 61 63 67 68 60.5

Board Tenure 6.5 0.3 4.9 4.9 9.9 3.9 9.9 20.9 11.9 8.1

Significant Gap (0-1)Knowledge Covered (2-3) Considerable Strength (4+)


Structure

A good board chair sets the agenda, ensures all directors are contributing meaningfully and are heard, etc.

The role of the board chair and committee leaders


Effective Board Framework

Strategic Alignment

Culture

People & Composition

Key Elements of Board Leadership

▪ Strive for strategic alignment of the Board’s

goals & those of the organization

▪ Identify desired state, diversity targets, etc.

for optimal composition; with the right people

▪ Identify behaviors, dynamics & environment that

support the Board’s desired culture

▪ Establish structure, supporting committees, agenda & meetings as well as interim

information flow in a documented process

Structure & Process


Culture

▪Expectation that opinions, debate and dissent are crucial

▪Clear objectives for each timeslot on the agenda

▪ “Open” and “closed” sessions with unscripted time

Establishing a culture of open communication


Assessing Board CultureIdentifying leadership behaviors demonstrated by the most effective directors

Source: Russell Reynolds Associates Board Culture & Behaviors Survey

Prepared & Engaged

Current & Open

Builds Trust & Respect

Investor Savvy

Independent & Avoids Groupthink

Asks the Right Questions

Sound Business Judgment

Constructively Challenges

Character & Courage

Foundational BehaviorsBase behaviors exhibited by the most effective directors

Differentiating BehaviorsDistinguishing behaviors exhibited by the most effective directors


Key Takeaways

▪ The role of the Board continues to elevate given the evolution of payments, technology and fraud

▪ Boards are able to address this with a comprehensive plan to assess and enhance a company’s current program

▪ A board’s culture and succession planning critical in supporting a company’s strategic plan; must be embedded in culture

Board governance & its oversight role critical to organizations


Questions?


Appendix


The Board of Directors Guiding Principles▪ Outward vision rather than an internal

preoccupation

▪ Strategic leadership more than administrative detail

▪ Clear distinction of Board and CEO roles

▪ Collective rather than individual decisions

▪ The future rather than the past or present

▪ Proactively rather than reactively


Board Governance - CUNA · Boards are able to address this with a comprehensive plan to assess and enhance a company’s current program A board’s culture and succession planning

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