SAN DIEGO–Credit unions and their boards have begun to take the question of board governance much more seriously, as it can be a defining factor in whether a CU prospers, stagnates or even ends up filing its final 5300. But what makes for good governance practices, what is happening in credit unions right now, and what should they be doing in 2026 and beyond?
Two people who are immersed in the issue are offering their insights.
Board governance is the system of rules, practices, and processes that guides a board of directors in directing and controlling an organization, is one of the core areas of expertise offered by DDJ Myers, the leadership consulting and executive search firm that says it helps CUs with talent management, governance, cultural change, and optimizing both human capital and financial performance.
Deedee Myers, CEO of DDJ Myers, and Peter Myers, senior vice president, spoke with the CU Daily during the CUES Directors Conference about what they are doing in terms of board governance, where some are excelling and coming up short, and what can be done when a board doesn’t know that it doesn’t know.
Below is the insights shared during the discussion:
The CU Daily: What is it you are doing in your work with boards now, and what are you seeing?
Peter Myers: There is a need for boards to become more strategic, but a lot of times they just don’t know what that means or how to get more strategic. I would even argue a lot of executives, even if they are in the C-suite of a credit union north of a billion dollars–it doesn’t make them a strategic executive.
One of the things we’re working with boards on is how to check the box of these strategic variables. So, for example, what is the most relevant KPI in your organization’s economic engine. They will be like, ‘Well, it’s member service.’ It’s not. To be clear, the opportunity is for board members to get more specific about that means: is it net interest margin? Is it operational efficiency? Is it active asset growth? And what’s the complementary metric?
We work with boards to help them understand, ‘How does our strategy produce those metrics in an elevated position?’ That’s a huge learning for them and they will love it, but it’s a skill gap
The CU Daily: If that is a primary learning it means there is a huge void. Does that void exist due to just a lack of awareness, or it something more?
Peter Myers: The bottom quartile of performing organizations boards don’t know that they’re in the bottom quartile of performance
Deedee Myers: What we’re also seeing is most boards accept what the CEO says is what we’re going to measure our success on. They just take it and it’s a rubber stamp. They’re not asking the critical questions or trying to understand how things are developed and what could go wrong, what could go right. So, it is it is a gap. I’m not saying they’re misinformed, but they’re not knowledgeable and they’re not asking the right questions. I also think it’s because they don’t know that’s their role.
So, going back to the basics–what makes a good board member, what makes good board, even going back to the position descriptions. Do the position description say that they’re responsible for these things. They don’t know. A lot of board members don’t know. They’ve never seen a position description for their role.
The CU Daily: This seems to be a Catch-22. How does a reach out for help if it doesn’t know it needs to reach out?
Peter Myers: What I wonder is, and this is kind of a chicken or an egg question, are they in the bottom quartile performance because of the board or is it because of the CEO? Then the question I have is, ‘What is what is your organizational governance response pattern to an underperforming organization? In practice, and I don’t want to say most, but in practice, too often it’s nothing, because they actually just don’t know.
Soe boards will say, ‘Our CEO, he or she is so great, we don’t want to lose them.’ But they’re in the bottom 10%. I think the question or the opportunity is for boards to find the external information and see where their competitive positioning, go to conferences (like the CUES Directors conference) and ask others, ‘What are your KPIs? How do you stack up?’
We are working on a tool…so that people can like get this kind of information and a dashboard, but a bit more at their fingertips because there is this opportunity with a lot of boards.
Deedee Myers: We have also made a commitment to write about it, to speak about it and, hopefully, people will get to conferences. We’re starting to master class series for boards that maybe can’t get to conferences can actually listen to on their own and maybe get CE credits.
The CU Daily: What can be done, if anything, for those boards that are not getting the message around governance and performance and more?
Peter Myers: One of the things we have been pushing on harder lately, and it’s a little bit of a gray area of governance, and that is where the board is responsible for the CEO and CEO succession plan, but if the CEO is not doing anything to develop his or her directs, his or her potential future successors, is that a board responsibility?
A classic point: last week on chatting with CEOs and CFOs of $10 billion and $20 billion organizations. There’s a $20-billion organization where they don’t know what the executive succession plan is for the CEO. This is not an under-a-billion-dollars shop problem. I uncomfortably as like a reaction and I said, ‘I’m sorry for my laugh, because it’s just like you’re experiencing the same thing as a billion-dollar shop where, well, we’re losing our CEO, our CEO is retiring, so let’s just merge.’ They don’t maybe say that in their (NCUA merger) disclosure forms, but that is the reality.
So, I think there’s a board responsibility to ensure that there is a stable of candidates to succeed the CEO for the planned and unplanned departures.
The CU Daily: Given that the vast majority of credit unions are under $1 billion in assets—in fact, most are below $100 million—where boards can be more involved in tactics than longer-term strategy, what advice do you have for them?
Peter Myers: It’s a little bit of a loaded question. I think they there’s no silver bullet; there is no one thing to help them get better. They’ve got to get better at their particular model. The recommendation is not necessarily to compete in the same market in the same ways, but to be really specific about who their target and legacy markets are, (to know) the differences and similarities in their consumer needs, and then serve them as best they.
There are north of $5-billion shops that don’t have all the checking and savings and loan products out there. It’s possible for some organizations to also do that on a smaller scale and in a targeted kind of way, But I don’t have the magic answer. I would say they just have to get sharper at whatever they do.
The CU Daily: Given that there is no silver bullet, where do you recommend a board or a credit union start?
Peter Myers: So much focus on CEO succession is about candidate replacement as opposed to the approach that they can take multi-years in the future to go, ‘Well, what is what is a high-performing CEO for our organization and how do we measure that and how do we hold them accountable and also reward the CEO to do well?’
That is a huge opportunity for even larger organizations. There are large organizations out there where they’re still doing paper CEO evaluations. The CEO gets simply a score and no context, no developmental feedback. Boards have smart people. They have observational skills. They can see you’re doing well over here; you’re not doing well over here. They need to enhance that construct and that kind of feedback . That is what we do.https://clicks.thecredituniondaily.com/form/IFB-67c1df50dbce13-48353883
That’s a starting point because what it focuses boards inevitably to do is if I’m looking at you for 2025 performance, inevitably my mind goes to 2026, 2027, and I start articulating that developmental content in a way that then goes strategy, operations, talent, governance. It touches on all those topics, so it stimulates that conversation that otherwise wouldn’t have occurred.
The CU Daily: In two weeks, federal credit unions face a deadline for having succession plans in place. Where do you believe things stand?
Peter Myers: I’m a little under the gun right now myself, as we are helping them write some of those documents.
I think a lot of organizations are going to put a regulator satisfier in place–box checked. I think that it’s stimulating a conversation about operational continuity that wasn’t happening before. The way I’m talking about it with a lot of boards and executives is, ‘Sorry, C-suite, but as fancy and smart as you are as a C-whatever, you might not be as important to the operational continuity of the organization as one of your directs.’ They have institutional knowledge and daily management of things that we don’t have a documented process for, or we don’t know who that person’s successor is and we’re not focusing on that. That’s where the boards and CEOs are saying, ‘You need to write that down, what’s happening there.”
Deedee Myers: I’m seeing the regulator being satisfied but also seeing several in the $1-$12 billion range actually doing it from a strategic business continuity perspective. So, it’s not one or two pages. The ones we’re seeing, that we’re helping with, are actually quite robust, 10 to 12 pages. They have what to do years before, what to do that year, who’s involved, what’s the role of the committee, who are the people that are in line, what what do they need to develop–a whole bunch of stuff. It’s quite impressive.
