Credit Union Implements Board Term Limits to Increase Member Engagement
Through a methodical and deliberate process, management and the board came up with a process that addressed concerns and prepared the credit union for the future.
April 14, 2011
Many credit unions and their boards have discussed the difficult subjects of board term limits and recruiting new volunteers.
Now Unitus Community Credit Union has addressed these issues head on in an effort to increase member engagement. Through a methodical and deliberate process, management and the board addressed concerns and ensured the credit union’s ethos would be preserved into the future.
Its 74th annual business meeting in March was the first meeting after the rule change and the credit union welcomed two new volunteers to the board—Jim Lewis and Scott Thompson were elected, with Pete Reinecker and Barbara Leonard making way.
Unitus CEO Pat Smith explained that the decision to implement term limits took time.
“We first began about four years ago with a simple Succession Planning chart to determine everyone’s plans with respect to their volunteer service for Unitus,” she said. “After a couple of years, we realized that we had no hard plans and that dates continued to be either ambiguous or were being updated to a new date each year.”
The process began when the chair raised the topic with the board, and then asked the governance committee to research the pros/cons of term limits and the different elements associated with implementing limits for a board member. After 18 months of research, review, and discussion, the committee presented the various options and selected the ones it felt most appropriate for Unitus.
According to Smith, an engaged membership is one of the major benefits of term limits.
“It provides the membership with the opportunity to get more engaged from a governance perspective as there is a finite service time for existing board members,” said Smith.
According to Smith, engagement is one of the foundational differences between credit unions and banks. In a recent article, she wrote “if persons understand that any member’s vote is worth that of any other and that board elections are for member representatives, then those persons have come a long way to realizing what our credit union is all about.”
Other benefits of term limits include preparation for future board turnover and new ideas. Furthermore, having a process in place takes away the stigma for board turnover.
There are concerns though. Many volunteers are very passionate and committed to their credit unions and want to serve. This can bring stability and continuity to the operations. Also, it takes time to understand the operations and mentality of the financial cooperative model. When regulatory and economic pressures are high, educating a new board member can be one more challenge.
This is one of the most difficult topics for a credit union’s board and management. At the very least, having the conversation is an important place to figure out what is best for each individual credit union.
Want to learn about term limits and volunteer educational opportunities? Register for the upcoming Volunteers Conference: contact Education & Business Services Assistant Janet Owen: 206.340.4791, [email protected].