What Boards Look for From CEOs

Transcription

1 What Boards Look for From CEOs NAFCU Webinar Insights from the Board and Supervisor Conference June 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 NAFCU Webinar 1

2 Executive retirement Executive teams are being disrupted Industry consolidation 300 NCUA Approved Mergers Feb NCUA Approved Mergers NAFCU Webinar 2

3 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, FACHE Managing Director and Practice Leader Governance and Leadership Practice NAFCU Webinar 3

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5 Insights into Great Board Work: Insights from the field Ideas worth talking about James A. Rice Managing Director, Governance and Leadership Gallagher Integrated Minneapolis 9 SMART Governance: S Stakeholder engaged M Mission driven A Accountability expected R Resource mobilized T 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. 10 NAFCU Webinar 5

6 11 10 of the 36 Requests shared by Board Leaders 12 NAFCU Webinar 6

7 A Key CEO Role: Cultivate the Board s Work Great Board Work Drives Good Organizational Results. Great Infrastructure Drives Great Board Work. Board Information System Excellent Committees Size & Structure of Board Board Role Board Composition KSA Matrix Market Needs & Strategic Plans for Credit Union Great Meetings: Calendars Agendas Board Job Descriptions Terrific Orientation Process Excellent Ongoing Education Program Ongoing Assessment and Refinement Five Key Imperatives to Consider in This Board Work 13 1 Recruiting Extraordinary Members Five Key Imperatives To Consider As You Continuously Enhance Your Board Work. 2 Orienting Board and Committee Members 3 Decisionmaking In effective meetings 4 Assessing Board and CEO Performance 5 Enhancing Board Best Practices 14 NAFCU Webinar 7

8 Credit Union Executive Responses 50 From 26 states: Illinois, New York, Florida, Minnesota, North Carolina, Ohio Most have 6-11 Board Members Oversee these assets: 15 Q4: Services and Community Relations Rate 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 NAFCU Webinar 8

9 Q5: Strategic Planning Rate 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 The Board stays informed of trends in credit unions and financial services To what degree does your Board interact with other credit union board members in your state (where 1 = No interaction and 5 = Frequent interaction) 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 17 Q6: Finances Rate 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 NAFCU Webinar 9

10 Q7: General Role and Board Work Rate 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 Board How to define a meaningful role for the Supervisory Committee How to use committees or task forces How to recruit board members that have the competencies the credit union needs How to do board leader continuity and succession planning How to conduct an annual board member self-assessment How to provide ongoing educational programs throughout the year How to organize meetings to better use board member time and talents NAFCU Webinar 10

11 21 Q8: Board Management Relations Rate 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 NAFCU Webinar 11

12 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. 23 Q10: Where do you currently go to access education, information, and resources? 1. State league 2. League 3. NACD, Firms that deal in the financial world like MasterCard/Visa, Cornerstone, etc. 24 NAFCU Webinar 12

13 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 Recruiting Extraordinary Members: Ideas worth talking about 26 NAFCU Webinar 13

14 1 Recruiting Extraordinary Members Competency based mapping of needs and Job Descriptions Transparency and promotion of ideal profiles Explore term limit strategies Maintain data base of candidates Cultivate membership in committees and councils Orienting Board and Committee Members Ideas worth talking about 28 NAFCU Webinar 14

15 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 Decision Making in Effective Meetings Ideas worth talking about 30 NAFCU Webinar 15

16 3 Decisionmaking 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 Assessing CEO and Board Performance Ideas worth talking about 32 NAFCU Webinar 16

17 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 Enhancing Board Best Practices Ideas worth talking about 34 NAFCU Webinar 17

18 5 Enhancing Board Best Practices Rely on annual board self assessments Develop a Governance Enhancement Plan Develop expanded board meeting information management Member reporting enhancements Commit to professionalizing governance NAFCU Webinar 18

19 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 38 NAFCU Webinar 19

20 Board compensation 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. Source: Should Credit Unions Pay Their Directors? Filene, 2015 Save the Date! Next webinar: Asset Management Thursday, June 29, 2:00 pm 3:00 pm ET Register online at BFB Gallagher is the NAFCU Services Preferred Partner for Executive Benefits and Compensation Consulting. More educational resources are available at NAFCU Webinar 20

21 Thank you! Tom Telford, Principal BFB Gallagher Jim Rice, Managing Director Integrated Healthcare Strategies NAFCU Webinar 21