By Donya Parrish, MCU VP- Risk Management
While I was participating in a recent conference, a speaker intrigued me when he mentioned the article “When Having Too Many Experts on the Board Backfires.” To make sure I hadn’t heard wrong, I had to look it up. After reading it, it seemed appropriate to share it with all of you.
Credit unions all spend a lot of time trying to find experts in various areas — law, accounting, governance, marketing — to agree to volunteer on your boards and supervisory committees. The real bonus is if you can find a retired credit union executive who knows the ins and outs of the industry. But, is that a positive move or not? Turns out, it depends!
The study discusses three factors that can compromise the effectiveness of expert-dominated boards in some circumstances. That includes being “less flexible in our thinking and less likely to change our perspective” along with overconfidence and a tendency to defer too much to the judgment of the experts.
The interesting part of the study was that in normal times, those factors do not seem to change the performance of the financial institution, but … when faced with uncertainty or unfamiliar situations, those institutions with more experts on their boards were less flexible and able to pivot quickly. In this time of COVID and so much rapid change, I found it interesting and hope you do too!