Credit unions adhere to co-operative principles, one of which is a commitment to open democratic member control. Some credit unions have refused to be overtly involved with the election of directors, in the belief that to do so would offend those democratic principles. In those cases, it results in both the board and management playing a much smaller role in board succession than their private sector peers.
However, fully two-thirds of co-op boards are also involved in selection, i.e. in the presentation of the names of individuals to the membership for consideration.
A credit union board can respect democratic principles while providing for its own succession. The board can recruit and should endorse candidates for election. When it does so, the members have the ultimate authority to accept or reject the board’s recommendation. This preserves the democratic member control envisioned in the Co-op Principles.
As Canadians, we are familiar with elections for public office. The situation with co-operative boards differs in many respects from those elections: the nomination process and party system screen candidates to make sure their views align with the stated views of the party. The officials’ performance will be recorded by the media and eventually evaluated by the public.
An individual elected to a credit union board of directors is in a very different situation. Most credit unions do not have any political parties or alliances to identify candidates, so absent a nominating committee, the screening is done by the rules setting the requirements to run.
Another difference is that the performance of directors takes place in the boardroom where much of the credit union’s business is confidential until released. This makes it nearly impossible to hold a candidate to account for election promises because no one knows whether the matter was even raised by that candidate, never mind convincing the board to take action.
Third, the board of a credit union acts as a whole. While vigorous discussion should be encouraged within the meeting, once the board makes a decision, all directors should stand by it. They definitely should not discuss it or oppose it outside the boardroom. If a director feels that s/he must openly oppose a board decision, s/he must resign. This is the duty of loyalty that directors owe to the credit union.
A credit union can respect the power and control in the hands of the members with both involvement in the election process and transparency of factors in the decision-making.