DIRECTOR TRAINING AND QUALIFICATIONS
FREQUENTLY ASKED QUESTIONS (FAQs)
Topic / Question/ResponseQ. Will Directors’ assessments, training and competencies results be part of DICO audits?
A. As outlined in the Guidance Note: Director Training and
Qualifications, DICO will assess the adequacy of director competency levels within the context of the credit union’s size and complexity and its risk profile. This assessment may include interviews with the Chair and other directors, and also consideration and review of a number of key areas including:
- The credit union’s policy and practices on director training and qualifications
- Director competencies and competency levels, including members of the Audit Committee and Chair of the Board
- Director competency assessment criteria and processes
- Initially, expectations on examinations will focus on whether there is a policy, a process and a plan in place to adequately address the director competency requirements set out in the Guidance Note. In subsequent examinations, DICO will look into how much progress has been made in clearly identifying development needs and how these needs are being addressed in terms of growth and development opportunities (which may include training) for directors, and implementation of a well defined plan to address competency gaps.
Competency Requirements / Q. How confident is DICO that the investment required to implement these new requirements will ultimately improve the effectiveness of all credit union boards over time?
A. There are creative approaches to address director development in an
efficient manner. It is advisable to take a best practices approach – perhaps combining training with mentorship and additional orientation and succession planning activities to accelerate the development process. Refinement and streamlining of the assessment and development process over time should yield tangible results in terms of a board capable of making educated, well informed decisions and providing the level of governance that will position the credit union to thrive rather than merely survive in the future.
Q. Why is it no longer sufficient for a credit union’s board as a whole to be effective and well functioning?
A. We believe that is not realistic to expect that all board members will be
at the same level in all competencies. There would generally be a range of competencies due to differences in practical board experience and career experience, as well as individual aptitudes. Differences in competency levels would also be expected to persist due to turnover and differing levels of familiarity with the given area or topic within the competency. Setting competency requirements for individual directors is easier to administer, and provides better, well defined opportunities for director development. It also ensures that Boards have a sufficient range of competencies at all times to improve it overall level of oversight.
Nominations / Q. Can a board recommend Director Candidates to the members based on competencies that are being looked for to give a better all around Board.
A. Yes. The Board or Nominating Committee will generally make
recommendations based on specific competency and/or skills requirements. The criteria should be established and reviewed annually. However, ALL directors will still need to meet established competency levels within the time frames established by the credit union, including the nine core competencies. Further information is included in the Director Candidate Information Guide which is available on DICO’s website.
Q. If a candidate feels that he wasn't fairly evaluated by the Nomination Committee, what avenues may the candidate take to pursue his goal to be elected on the Board?
A. The assessment and selection criteria should be made available to each
potential candidate to help ensure a fair, consistent and transparent process. The Nominating Committee bases its assessment and recommendations on a number of factors including competency and skill levels in a number of areas and additional specific skills requirements for a particular election period. Initially, a candidate may wish to review the application with the Nominating Committee to see what gaps or deficiencies might need to be addressed before further consideration. In some cases, the Nominating Committee may review its decision with the candidate and discuss is assessment in greater detail. It is likely that other more suitably qualified candidates at that time were available. However, in line with thedemocratic process of credit unions, a candidate may still choose to go on the ballot for election.
Assessments / Q. How will a true self assessment be objectively measured and evaluated?
- The main responsibility for determining competency levels rests with individual directors. Credit unions should generally develop their own processes for objective evaluation of responses to self assessment questions, and also balance these results with observations of the director’s performance and their apparent areas of strength and needs for improvement in specific competencies. This may include a Governance Committee (if the credit union has one) or a dedicated committee established by the Board with representatives such as the chairs of the Board, Audit Committee and/or/Nominating Committee etc.
A. This is up to the each credit union. Sample responsibilities are outlined in the Policy Development Guide which is available on DICO’s website. Examples may include the Corporate Secretary or a designated Board committee. This would include recording or tracking assessments and development initiatives to address any gaps in competency requirements and progress to date within the established timeframes.
Q. Can the excel spreadsheet version with modifications to suit our credit union be used as our primary tool for assessing competency levels?
- The excel version of the self-assessment tool can be adapted as appropriate and used as part of the director assessment and development process. The tool can help identify gaps and competencies although other factors will need to be considered when determining overall competency levels etc. Institutions will also need to establish a process for validating competency levels. As noted in the overview of the excel version of the tool, any modifications may require changes to formulas used to identify responses and scoring options.
- Assessment responses should reflect a director’s level of knowledge, training and experience. Sample responses are provided in the self assessment tool for different levels of understanding and experience. A “Limited” response on an expert level question would likely arise where more development is needed for this level. This response would typically be from candidates at lower competency levels.
Training / Q. What is DICO’s view on the CUDA Director’s training program?
A. The CUDA training program is an established, national program. The
competency requirements and considerations outlined in the Guidance Note, Application Guide and sample self-assessment tool were developed from reviewing areas covered in this program and the Professional Directors’ Program (PDP) offered by Level Five Strategic Partners.
Tools and Guidance / Q. Are the guidelines, samples and, tools on your web site at current or will they be updated?
A. The Policy Development Guide, Director Candidate Information Guide
and the Director Self-Assessment Tool are available on DICO’s
website. We are currently working on updating other tools and
developing additional guidance. This includes a revised Director’s Handbook, Governance and Risk Management Guides. We are also revising the Examination Manual and modifying the Assessment Workbooks which are used to help assess adherence to By-Law No. 5 requirements.
Premiums / Q. With increased knowledge and improved risk management by directors, will DICO consider lowering premiums?
- It is expected that improvements in director qualifications and competency development will result in better financial performance and examination results. This could result in a credit union achieving a lower premium category, with a correspinding decrease in premiums. More importantly, better knowledge and improved director competenciesare expected to lead to a higher quality of governance and strategic decisions which will yield improved longer term success and viability of institutions and the sector as a whole.