Responsible governance requires thoughtful attention to recruitment of quality board members. The Society of Corporate Secretaries and Governance Professionals, which is a non-profit organization involved in governance, ethics and compliance functions, supports professional development and education. I was privileged to present at their National Conference on the topic: “Pursuing and Recruiting Directors — How
Best to Do So?” Beverly L. O’Toole, General Counsel of Corporate Governance at Goldman Sachs Group, and I prepared a follow-up video for the Society’s website. A starting point for our conversation was the fundamental role of a governing board. The board validates strategy, selects the CEO, reviews the CEO’s performance, assures succession planning and financial resources of the organization, sets CEO and c-suite compensation and policies and is accountable to stakeholders for overall performance.
To fulfill these duties, boards must recruit members possessing ability and talent to meet the current needs and, importantly, the future needs of the organization, especially as described in the strategic plan. As a best practice, the board establishes criteria against which candidates can be measured. Criteria include the skills needed to oversee the strategic plan. Criteria can also include diversity of background, thought and experience, which adds to the richness of the board. A criteria-based approach avoids the focus on personalities — instead the board’s requirements are the guide. Intellectual curiosity is needed in a director to provide a broad and deep view of the environment in which the organization operates and to stimulate innovative thinking. Recruitment of quality board members is a continuous process. Since credit unions elect directors from membership, it is incumbent upon the board and management to search within the membership base for the needed skill set and qualities of prospective board members.
The board should assess its own performance annually, including having each member perform a self-evaluation. The board secretary can administer assessment surveys and collect results; at times outside advisors assist.
To ascertain that each board member is properly engaged, there may be formal evaluations; for example, peer evaluations can be part of the annual assessment. Alternatively, there might be an informal approach with a lead director, such as the board chair or governance committee chair canvassing the members. Often a conversation with the under-performing director can remedy the situation. Occasionally, a board member might not be sufficiently engaged and their replacement might be best for the organization. This can be a challenging process so it’s best to ensure that the directors you invite to serve are well qualified.
Effective governance requires that the board members collectively have the skills to oversee the organization currently and into the future. To succeed in this responsibility, credit union boards must continually engaged in identifying, pursuing and recruiting quality directors that are intellectually curious and have the needed skills according to the criteria that the board has established.