In the conclusion of his governance series for the Filene Research Institute, Bob Hoel— professor emeritus of business at Colorado State University— pairs dozens of academic studies with dozens of years as a credit union board member and industry observer. The result is informed advice for rejuvenating credit union governance.
What is the research about?
This is the final installment of a three-part Filene governance series. All three reports take aim at credit union governance, both the good and the bad, and prescribe real-world responses. Researcher Robert Hoel draws on a thorough literature review and decades of firsthand experience to frame each chapter with helpful conclusions, recommendations for credit union leaders, and hypotheses that, while not proven, are excellent to use in credit union boardrooms as conversation points for improving governance. The research literature on the governance of corporations is extensive, and Hoel mines it well for specific insights to improve the governance of credit unions.
What are the credit union implications?
This final installation of governance research gets to the heart of improving credit union boards. Perfection is elusive, but boards should deeply consider the ideas printed in the full report. Among them:
- Credit union and corporate governance is so similar that credit unions should follow most of the best practices compiled, and examined in this report, by the Business Roundtable. Doing so would represent a significant jump in engagement for most credit union boards.
- Boards must seek out and embrace the tension inherent in ceding power to a CEO while staying sufficiently informed of industry trends. Without in-depth independent knowledge, they cannot appropriately govern the institution.
- Boards should not fixate on traditional metrics like return on assets (ROA) or CAMEL ratings, though they certainly should watch them. Instead, they should seek out, or build, meaningful membership metrics that ensure individual members receive a positive total return on their credit union capital.
- Credit unions are most vulnerable during changes in leadership. The board should discuss and review succession planning at least annually, even when things are running smoothly.
This is just a sampling of the guidance, read the report below to find out more.