What does it mean to be a director on a board of directors? And what is the board of directors at your credit union responsible for?
Unless you’ve had the opportunity to serve on a board of directors somewhere, either in a professional or volunteer setting, most of us probably don’t know much about what it’s like to be on a board, or what directors do.
What is a board of directors? What does it do?
A board of directors is a group of individuals, often elected to their roles, who represent the shareholders or stakeholders of the credit union. The board meets at regularly scheduled intervals to establish a broad set of rules and goals for its organization.
The board of directors is typically said to be responsible for the governance of a business or organization. Directors provide leadership, oversight, and accountability. The board works with senior executives, notably the chief executive officer, to ensure that the credit union’s missions are pursued, goals are met, and all legal requirements are followed.
What does the board of directors do at my credit union?
At a credit union, the board of directors hires and oversees the CEO, and works with senior executives to establish policies that provide the institution with effective management and sound business strategies.
Besides establishing and monitoring the credit union’s policies and plans, and making sure all legal and ethical standards are being met, the directors must also look inward and assess the board’s own performance and composition. A good board of directors will acknowledge areas of expertise and competencies that it lacks and identify candidates who could provide those things. In doing so, the board gains valuable diversity, as well as stability and continuity through succession.
What does it take to be a good director?
Strategic thinking and high ethical standards are both key characteristics of a good director. Equally important is the ability to work collaboratively and diplomatically with others, whether it be in an oversight role, or an ambassadorial role of advocacy and awareness.
What makes a board of directors more diverse?
While director positions have been predominantly held by white males, a growing number of board roles have gone to women and people of colour in recent years. Efforts continue to bring increased diversity to boards of directors through greater inclusion of these groups, as well as the inclusion of people with disabilities, people of different ethnicities, and people with different religious backgrounds.
However, there are other ways to bring diversity to boards. Good boards should strive to pursue new directors who represent a wide range of ages, competencies, philosophies, life and career experiences, and skills.
What are the benefits of board diversity?
A credit union’s board whose directors all share similar backgrounds and viewpoints is susceptible to group-think, and an absence of new ideas and direction. By embracing diversity, boards bring together people with a multitude of ideas, perspectives, experiences, beliefs, and skills. In most instances, this leads to a more elevated level of debate and discussion between directors, which in turn produces better and more attentive corporate governance. Additionally, it makes the board better prepared to deal with a rapidly changing and evolving world, where new technologies and ideas are constantly reshaping our daily existence.
Finally, board diversity sets a positive example for the employees and clients of the credit union, indicating a clear belief in the value of diversity, and showing people of different backgrounds what they might be able to achieve.