BACK ON THE BUS

Credit Union Management,  Jun 2004  by Pratt, Laura

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Such a modus operandi, she concedes, does not require a lot of education. "But in today's environment, people are understanding that the role of the board is different from the role of management, and that it has its own job to do-which is not management's job."

A board is accountable to its membership for every decision made by the credit union, but it's a rare director, she says, who comes to the table fully prepared to see through his or her responsibilities. In reality, individual directors have varying levels of skills, expertise, experience and understanding of how to govern well. The job of the board, Radford believes, "is to assess the total composite level of governance expertise around the boardroom table, and target director education and training on filling the necessary gaps."

Governing effectively is a "learned skill," she says. "Having a seasoned board of individuals who have knowledge and expertise in business does not necessarily mean that the appropriate level of understanding of governance is there."

But Radford feels that, while a certain amount of attention has been turned to the importance of educating a board, the system is too top heavy. Director education, she says, is overly focused at the management level. Its current emphasis is the business of running a credit union, and it doesn't, she believes, concentrate enough on governance and the responsibilities of the board.

"A modern director is not just expected to react; they're expected to be proactive," Radford says. "But there's a misunderstanding by the directors and the board that their job is somehow to manage better than management, and to second-guess management decisions. And in order to do that, they feel they have to understand the business better than the management does. But that's not their role."

Instead, she says, a director's role is to govern the business-an entirely different undertaking that, at present, receives precious little attention in the drive for education. "Directors should have a good general knowledge of the business and the industry sector, but only insofar as their risk oversight role is concerned. A common mistake in director training is to train [directors] in the same way as management is trained." Many existing education forums are based on a management perspective, and this, says Radford, is a problem.

She feels strongly that director education should focus more on the governance role of the board, and should include instruction on understanding the governance theory (in terms of clearly defining board and individual director obligations) and how to translate that theory into the practical application of the board's "job," from meeting to meeting.

She believes it would be useful to have the following questions-that will not be answered in managementfocused education sessions-addressed in director education:

* How is our role as a board different from management's role?

* How do we focus on our job and let management focus on theirs?

* How do we know that we're talking about the right things, and in the right way?