Supervisory Committee Members: Your role, your duty, and bridging the information gap

Matt Fullbrook

NAFCU 2020 Board of Directors and Supervisory Committee Conference, Matt Fullbrook Expert on corporate governance for boards of directors

Good corporate governance demands that the board, supervisory committee and management understand their roles. But where does one role end, and the next one start? Get clear understanding on your role to monitor and understand your credit union’s financial condition. In the breakout sessions, Fullbrook will explore the tensions of your position and how your supervisory committee can make the most of the limited time you have together to be proficient as a group.

Listen to Matt Fullbrook discuss the importance of avoiding conflict and enhancing governance for supervisory committee members.


Interview transcript available below. Don't see the play button? Download the audio file.

More about Matt Fullbrook

Fullbrook is a manager at David & Sharon Johnston Centre for Corporate Governance Innovation at the Rotman School of Management in Toronto. He has over 15 years of experirence studying corporate governance, advising boards of directors, and educating executives in all sectors. He is also the bass player for the funk band, KC Roberts & the Live Revolution.

  • Anthony Demangone: Hey everybody, this is Anthony from NAFCU and it is my pleasure today to be speaking with Matt Fullbrook. He’s the manager at David & Sharon Johnston Centre for Corporate Governance Innovation at Rotman School of Management. He studies corporate governance, he advises boards of directors, and educates people on this topic. We are so lucky to have him at our Board of Directors Conference where he’s going to be doing breakouts for the supervisory committee and also doing a general session.

    I know you’re going to be giving 3 different presentations, Matt, but what are some general thoughts? I know you’re going to be talking about how to avoid conflict and enhancing governance. Why is this such an important topic? 

    Matt Fullbrook: We tend to like to think about this idea of governance as being all about process, all about systems, when really I like to boil it down to the way an organization makes decisions. And so we’ve got a group of people who all have their own personalities. They all have their own skill sets. They all have their own quirks. We’re trying to get together and make decisions that move the credit union in the right direction and that’s in the best interest of our members.

    If we take a step back and think about it, what could possibly be more important than governance when we put it in that light?  So yes, it does involve systems and it does involve processes and it does involve bylaws and regulations and so on. But even more importantly, it’s the way that human beings work together to create value for our members.

    AD: I know you speak to boards and supervisory committees and management teams. What’s something from your presentation at our conference that you really want these groups to take back to their credit unions to chew on, think about, discuss?

    MF: When I’m working with boards, one of the things I emphasize the most is, sure, we’re going to make the choices to implement certain processes; we’re going to make the choice to take a certain approach to governance. But often what we don’t do a great job at is taking a step back and asking ourselves how well is this working. And that might mean that we’re doing a formal assessment of the board or its committees or of the supervisory committee.

    Or it might be something less formal where you simply have the self-awareness to have a conversation about, “okay, we decided we were going to this process or that practice and the reason for it was A, B, and C where a year later, did it actually have the impact that we hoped it would to the extent that if it did, how are we going to make sure it keeps going, and in the sense that it didn’t, what are we going to do differently?” In short, what I’m saying is what you’re going to hear as  a theme through my sessions is, yes, there are specific recommendations that I make and there are specific approaches that I think are good. But they only matter if we’re taking the chance and taking the opportunity to look in the mirror and ask ourselves frankly, “are we doing a good job and what can we do better going forward?”

    AD: Perfect. As you are talking about this issue, and sometimes it’s one of those things – corporate governance – it’s hard to get your hands around it, but is there a story or a statistic that you bring up when you’re talking that really makes the lightbulb go off and people can really understand what you’re driving at?

    MF: We’ve got a report that’s just come out about credit union governance called, “The State of Credit Union Governance 2020.” There’s a piece of that that actually builds off of another piece of research that I did 3 or 4 years ago where we asked 2 questions of survey participants. The first question is, “what are the skills and competencies that you focus on when recruiting board members?” And the answer to that question usually includes mostly resume skills. So, we’re really interested in people who have senior executive experience or professional services experience and so on. So, tangible resume stuff. This year, in fact, above all that resume stuff was demographic diversity, which is a great development.

    But the key piece is when we asked then that second question. And the second question is, “what are the skills and characteristics and capabilities that actually make a director effective in the credit union board room?” And what gets to the top there is not resume skills at all. But rather, it’s soft skills. It’s consensus-building. It’s independent-mindedness. It’s an ability to focus on the future and be strategic. So we’ve got this gap between what we’re recruiting on and what actually makes people effective. And I think what this highlights is the piece I mentioned before where that human element, it turns out, is extremely important. Because you might have someone who on paper who looks great, but in the room is not able to engage constructively in conflict or doesn’t have the confidence to speak truth to power, or some other thing that makes them less than valuable in the board room.

    And so, one of the things that I like to emphasize is that the data is starting to show that in the board room and committees, it’s very important to have the basic resume skills that are required to do your job properly, but they don’t matter if you don’t have the right soft skills.

    AD: Excellent. And hey, listen, we only have a couple minutes left. So, Matt, what are some final thoughts for the people listening in?

    MF: Well, I’m really grateful to have the chance to zoom in on the supervisory committee in my sessions. This is not an opportunity that comes up very frequently and I think it’s a governance element in the credit union systems that doesn’t get enough attention. And I think these questions that we’re going to focus on – to whom do you own a duty and how do we bridge the information gap – are ones that the board might get quite a bit of attention, but the supervisory committee faces equally difficult challenges and sometimes the solutions are more nuanced. I’m really looking forward to the opportunity to dive into that with you.

    AD: Matt, you are the best. Thanks for carving out some time today. Everybody, Matt’s going to be at our Board of Directors and Supervisory Committee Conference in San Francisco. That’s going to be April 27-30. I think it’s going to be a great place for us to sit back and measure where we are where we need to go.