what boards look for from ceos -...
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BFB Gallagher ‐What Boards Want From CEOs June 2017
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What Boards Look for From CEOsNAFCU Webinar
Insights from the Board and Supervisor ConferenceJune 1, 2017
Tom Telford, BFB Gallagher
Dr. Jim Rice, Gallagher Benefit Services
Welcome
• Industry changes
• Strategies for good governance
• Survey results
• Leadership benefits
• Q&A
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Executive retirement
Executive teams are being disrupted
Industry consolidation
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2012 2013 2014 2015 2016 2017 Feb
NCUA Approved Mergers
NCUA Approved Mergers
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Fiduciary duties / Liabilities
• Duty of obedience
• Duty of care
• Duty of loyalty
• Duty of extra care
• Civil liability
• Criminal liability
• Statutory liability
Board CEO Partnership for Enhanced Governance & Results
Jim Rice, PhD, FACHEManaging Director and Practice LeaderGovernance and Leadership Practice
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Ideas worth talking about
Insights into Great Board Work:Insights from the field
James A. RiceManaging Director, Governance and LeadershipGallagher IntegratedMinneapolis
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SMART Governance:
S…Stakeholder engagedM…Mission drivenA…Accountability expectedR…Resource mobilizedT…Transparency enabled
Governance Enables Stronger Credit Unions and Greater Member Impact
Governance is a structured process wherein a group of people (usually referred to as a governing body/board) make decisions about policy, plans and rules of collective action that wield power and resources intended to define, promote, protect and achieve the mission of an organization, system, or program.
Implementing this definition requires a focus on essential
practices
These practices occur in many types of financial and business organizations and markets.
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10 of the 36 Requests shared by Board Leaders
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Ongoing Assessment and Refinement
Board Role
Board Composition KSA Matrix
Size & Structure of Board
Excellent Committees
Board Information System
Great Meetings: Calendars Agendas
Board Job Descriptions
Terrific Orientation Process
Excellent Ongoing Education Program
Market Needs & Strategic Plans for Credit Union
Great Board Work Drives Good Organizational Results.Great Infrastructure Drives Great Board Work.
Five Key Imperatives to Consider in This Board Work
A Key CEO Role: Cultivate the Board’s Work
1 Recruiting Extraordinary Members
2 Orienting Board and Committee Members
3 Decision-making
In effective meetings
4 Assessing Board and CEO Performance
5 Enhancing Board Best Practices
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Five Key Imperatives To Consider As You Continuously Enhance Your Board Work.
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Credit Union Executive Responses 50 From 26 states: Illinois, New York, Florida, Minnesota, North Carolina, OhioMost have 6-11 Board Members
Oversee these assets:
Q4: Services and Community RelationsRate the degree you believe each of the following factors are a key opportunity for improvement for your board.
Scale: 1 = No opportunity; 3 = Some opportunity; 5 = Big opportunity
How to measure the quality and performance of a credit union
2.71
How to define member service needs 2.77
How to ensure your services respond to cultural and ethnic diversity
3.02
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Q5: Strategic PlanningRate the degree you believe each of the following factors are a key opportunity for improvement for your board.
Scale: 1 = No opportunity; 3 = Some opportunity; 5 = Big opportunity
The Board conducts strategic planning and uses the plan throughout the year
2.62
The Board stays informed of trends in credit unions and financial services
2.74
To what degree does your Board interact with other credit union board members in your state (where 1 = No interaction and 5 = Frequent interaction)
2.68
o On-going education in matters of governance -risk oversight, Director standards, CEO performance assessments, etc.
o Meeting like this are a BIG help I would encourage more of it.
o Continue to challenge their role, the agenda and the talent of the Board as it relates to today's world
o Attend national level conferences o Boards should be required to have more diversity,
both economically and areas of expertise.o Define a governance model beyond just policies
and past practices.o Not attend conferences solely based on location
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Q6: FinancesRate the degree you believe each of the following factors are a key opportunity for improvement for your board.
Scale: 1 = No opportunity; 3 = Some opportunity; 5 = Big opportunity
Board is active in securing resources to support the vitality of our credit union mission
2.24
Board is comfortable reading financial reports 2.19
Board has access to meaningful financial performance standards
1.94
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Q7: General Role and Board WorkRate the degree you believe each of the following factors are a key opportunity for improvement for your board.
Scale: 1 = No opportunity; 3 = Some opportunity; 5 = Big opportunity
How to define a meaningful role for the Board2.70
How to define a meaningful role for the Supervisory Committee2.62
How to use committees or task forces2.74
How to recruit board members that have the competencies the credit union needs
3.68
How to do board leader continuity and succession planning3.65
How to conduct an annual board member self-assessment3.28
How to provide ongoing educational programs throughout the year
2.43
How to organize meetings to better use board member time and talents
2.89
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Q8: Board–Management RelationsRate the degree you believe each of the following factors are a key opportunity for improvement for your board.
How to enhance the Board-Management relationship 3.04
Board’s focus on leadership and governance, and not management 2.86
Board’s oversight of a CEO performance and compensation
2.71
How to develop a CEO succession plan 2.75
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Q9. Please indicate one or two actions you believe would be the most valuable to enhance the effectiveness of your Credit Union.
o Real FOM expansion opportunities through NCUA MBL cap increased
o Board recruitment and succession planning
o Defined roles
o Self assessment of board
o Consider Term limits of max 20 years and require a break before returning to the board
o Better strategic planning to include a younger and true representation of our members and the communities we serve
o More affordable training for new board members
o Enhance the board’s external focus. Install governance system.
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Q10: Where do you currently go to access education, information, and resources?
1. State league2. League3. NACD, Firms that deal in the
financial world like MasterCard/Visa, Cornerstone, etc.
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Q11: Which learning methods do you believe board members would value?
NAFCU has been the best resource that I have found for conference so far in comparing all of our various associations.
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Ideas worth talking about
1. Recruiting Extraordinary Members:
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1 Recruiting Extraordinary Members
Competency based mapping of needs and Job Descriptions Transparency and promotion of ideal profiles Explore term limit strategiesMaintain data base of candidates Cultivate membership in committees and “councils”
2. Orienting Board and Committee Members
Ideas worth talking about
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2 Orienting Board and Committee Members
Enhance Orientation Program for board and committee members Develop Annual Board Education Plan Enhance staff briefings in regular meetings and annual retreat Expand use of reading materials and speakers on hot trends, products and practices Enhance interactions with other credit unions
3. Decision Making in Effective Meetings
Ideas worth talking about
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3 Decision-making
In effective meetings
Develop Master Calendar of Meeting Themes Refine structure and style of meetings Upgrade information and knowledge management systems by performance metrics Explore Board Portals Enhance transparency of reporting
4. Assessing CEO and Board Performance
Ideas worth talking about
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4 Assessing Board and CEO Performance
Adopt culture and philosophy of continuous improvement Start with board and committees Review and update CEO Performance Profile Establish Board Succession Plan Establish CEO succession and development plan
5. Enhancing Board Best Practices
Ideas worth talking about
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5 Enhancing Board Best Practices
Rely on annual board self‐assessments Develop a “Governance Enhancement Plan” Develop expanded board meeting information managementMember reporting enhancements Commit to professionalizing governance
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Leadership benefits
• Executive medical reimbursement plan
• Executive individual disability coverage
• Executive long term care insurance
• Medical supplement and Medicare Part D prescription drug plan
• Cancer / critical illness insurance
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Board compensation
Source: Should Credit Unions Pay Their Directors? Filene, 2015
At least 14 states allow for board compensation, but not all credit unions participate.
At the time of the Filene study, about 20% of the eligible credit unions had paid boards.
Save the Date!
Next webinar: Asset Management
Thursday, June 29, 2:00 pm–3:00 pm ET
Register online at www.nafcu.org/BFB
BFB Gallagher is the NAFCU Services Preferred Partner for Executive Benefits and Compensation Consulting. More educational resources are available at www.nafcu.org/BFB.
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Thank you!
Tom Telford, PrincipalBFB [email protected]
Jim Rice, Managing DirectorIntegrated Healthcare [email protected]