The most critical relationship in a credit union is between the board and CEO.
One approach that a number of credit unions have used in this relationship is
the Policy Governance Model.
Several years ago State Employees Credit Union (MI) changed the way that the
management and the board communicated by adopting the Policy Governance Model
as developed by John Carver. In this governance model the Board communicates
policy to management and in turn receives regular monitoring reports.
SECU's board governance model calls for the Board to govern the credit union
through four basic policy groups or categories. The first is the ends policy.
This communicates in broad terms why the credit union exists and what it means
to accomplish for members. The second is a listing of executive limits, setting
limitations beyond which management may not go. The third maps the Board/Management
relationship. The fourth is a definition of how the Board governs itself. Naturally,
all these are interconnected and must be considered as a whole body of policies.
The third policy above - on the Board/Management relationship -- explains to
the CEO (who is the Board's only employee) that the Board makes the ends policy
but allows a reasonable interpretation thereof. The Board says that it will
accept reasonable interpretations but will also be the final arbiter of interpretations.
Accordingly, the Board is able to change policy rapidly and retains a very high
level of control of the credit union.
For the ends and limitations policies, the CEO is obliged to make regular reports
to the Board. Thus the Board is continually monitoring results not the means
by which these are achieved. For example, SECU's Board no longer goes on an
annual or semi-annual strategy planning session with management.
To hear more about State Employees Credit Union's policy governance and how
two other credit unions have implemented it please join us December 3rd, 2pm
eastern, for Callahan's latest webinar The Policy Governance Model. Click
here to learn more.