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Go Along to Get Ahead


March 2014 – Vol: 37 No. 3
by Karen Bankston

Leading with an emphasis on cooperation can produce gains for individual credit unions and the movement.

A pair of cyclists races, drafting off each otherIn the same way that cyclists compete as individuals but sometimes work together in teams by creating a “paceline” to reduce wind resistance, credit union leaders can look for ways to work together for the good of the movement and their individual organizations.

Sharing expertise and resources has the potential to enhance efficiency, improve service, and differentiate credit unions in a hypercompetitive marketplace. This spirit of collaboration may inspire internal cooperation on the executive team and among departments, joint ventures with other credit unions and third parties, and/or partnerships with organizations and community groups within your field of membership.

Inside Your CU: Tear Down Silos

“Any organization that works together succeeds together,” says Julie Wilson, head of coaching and senior consultant with Predictable Success, Marblehead, Mass.

Internal competition is a short-term solution at best, especially in punitive situations. A practice touted by business executive Jack Welch is to fire 10 percent of employees identified as the lowest performers, but some companies found that approach was counterproductive, setting up unhealthy competition in a fearful, selfish environment rather than encouraging everyone to work together for the good of the organization.

“Knowing that you’re going to be graded against each other doesn’t make for a productive environment,” Wilson says. “Team goals encourage everyone to bring their best games.”

Executives should also lead in ways that encourage teams from various departments to support each other in furthering an “enterprise commitment,” putting the CU’s strategic goals above individual and departmental interests.

“There can be a huge waste of talent if you’re not leading the folks in your organization to collaborate,” Wilson says. “Innovation happens at the intersection of disciplines, when HR feels comfortable bringing a challenge to the table, for example, and finance and marketing weigh in to offer suggestions based on their perspectives.”

Working together in this way requires conscious effort, she says. “We go through an education system where we don’t necessarily learn how to cooperate. These lessons are sometimes best learned in a dysfunctional team environment where it is more obvious that you need to figure out how to improve the dynamics.”

Enhancing Your EI

Executives tend to exhibit one or more of three different management styles, Wilson explains: The visionary focuses on the big picture and talks about ideas; the operator emphasizes getting things done; and the processor aims to ensure that things get done right, with the risks well managed.

“A fourth style is the synergist, which is more of a learned style,” she says. “These leaders can step back and look at the dynamics of interactions. They understand the need for a blend of talents and styles and for an atmosphere of trust and collaboration.”

How can executives develop their inner synergist? “If we focus too much on people and not enough on task, it can start to feel like group therapy. We encourage senior leaders to ground team conversations in the work—the organization’s goals and the means to achieve them,” Wilson says. “That approach can make concrete the dynamics of what we need to do to get there.”

A good litmus of how well the executive team leads through collaboration is what happens in meetings, she adds. Does the CEO do all the talking? Do two executives often argue while the rest sit by passively? Does the team mow through the agenda, following up with “real meetings” among small groups of executives in the hallway?

The most effective leaders—those who understand the need for a cooperative management approach—work to develop their “emotional intelligence,” a concept introduced and championed by psychologist Daniel Goleman, Wilson notes. Key aspects of EI are self-awareness (understanding your own talents and “hot buttons”), self-management, social awareness, and how you interact with others.

“One of my pet peeves is that in our industrial management model, emotional intelligence gets short shrift,” she says. “The most accomplished leaders I’ve seen have a high degree of EI. This is a muscle that can be built over time. That’s where feedback comes in. It helps you recognize and address your blind spots.”

Wilson describes an executive who modeled the benefits of self-awareness and self-improvement by sharing openly the 360-degree feedback he received and how he was using it to improve his performance.

Reaching Outside the CU

In addition to fostering cooperation inside your organization, partnering with colleagues at other CUs, vendors, and even business experts from outside financial services may lead to useful innovation, Wilson suggests. “True inventions come from people who are not immersed in the industry at hand, so look for opportunities to collaborate outside your industry.”

CUs need to work together to solve internal operational issues and develop innovative offerings for members, agrees CUES member Harry F. Gunsallus, CCE, executive vice president of $3.5 billion Redstone Federal Credit Union, Huntsville, Ala., and president/CEO of the CU’s credit union service organization, Redstone Consulting Group, LLC.

“We must create products that solve our own problems, and we’ve got to partner with folks that solve problems in this industry. Why buy from a disinterested third-party vendor when we can buy from ourselves?” Gunsallus says. “If Redstone is experiencing a problem, our guess is that other financial institutions are, too, so we have a solution to sell them.”

Redstone Consulting Group was created for just that purpose, after its sponsor CU developed an application that works with the DNA core data processing system from CUES Supplier member Open Solutions, Glastonbury, Conn. The application helps CUs resolve the problem of researching overdrafts placed on accounts with adequate funds when the overdraft occurred because of gas pump, hotel, and other types of holds.

“That ‘app’ sells for $15,000 in the DNA app store and has been downloaded over 200 times,” Gunsallus says. “Do the math; you can see there’s a business plan here.”

Redstone FCU’s IT staff also developed an application for real-time registration, processing, and posting of remote deposits in conjunction with Open Solutions and its technology partner Vertifi, Burlington, Mass. The remote deposit capture app is also marketed by the CUSO.

“We’ve really changed how Redstone does business,” Gunsallus says. “We used to go looking for a vendor to solve these kinds of problems.”

Ten people on Redstone FCU’s IT staff are dedicated to the software development efforts that are eventually sold in the marketplace by the consulting group. All the consulting group’s employees work for the CU; it has no independent staff.

‘Frenemies’

Working together can sometimes be a challenge for CU executives, says Janice Hollar, CCE, SVP/operations for Florida Credit Union Shared Services, Inc., based in Palm Beach Gardens.

“It’s difficult to be open with the credit union next door if you feel like they’re a competitor. It’s almost a ‘frenemy’ situation,” she notes.

Collaborating for the good of all participants can seem especially challenging in markets where CUs may compete more directly for members’ business, those regions not dominated by Bank of America, Chase, and other big banks. However, even in those areas, collaborative ventures like shared branching provide a safe haven for working together, since shared branching networks prohibit cross-selling services to other CUs’ members, Hollar says.

Cooperative ventures offer the potential to improve efficiency and member service. For example, shared branching can be “much more cost-efficient than building a new branch, and you can earn revenue for the transactions you perform, which may be enough to turn around an underutilized branch,” she notes. “There’s also a benefit for disaster recovery, with the ability to refer members to other branches if yours are closed.”

Leadership primed for these kinds of cooperative ventures requires a special type of mindset, Hollar maintains. “It takes somebody who is confident that their organization is doing a good job serving members and who wants to take the next step to improve service and convenient access for members and increase revenue. If you’re already providing great service, there’s less concern about losing members. Happy members are not looking for another credit union.”

One option for collaboration is to look for partners outside your market area, she suggests; CUs serving geographically distinct fields of membership could share back-office functions like IT. (Read about a CUSO that does this.)

Building ‘Community’

CU leaders can also emphasize cooperation as a path to forge community connections. $600 million Seattle Metropolitan Credit Union reflects the strong cooperative movement in its hometown by structuring its mission around a variation of the Rochdale Society’s Seven Cooperative Principles, which the CU displays on its website: inclusiveness, voice, participation, independence, education, cooperation, and community.

Seattle Metropolitan CU hosts “Co-opalooza” to showcase co-op organizations and sponsors business training for people interested in starting a co-op.

“Our philosophy of being a nonprofit is really important to members,” says President/CEO Richard Romero, a CUES member. “We live by the seven principles, and our employees value that philosophy just as much as I do.”

Its strong positioning around the cooperative movement also helps to differentiate Seattle Metropolitan CU from other financial institutions, but the CU has shared its best practices in building this reputation with interested financial cooperatives.

“Credit unions are clearly the best financial services choice for consumers, period,” Romero says. “More people joining a credit union simply means more people are enjoying the benefits of the cooperative structure, and communities are made better because of that.”

How CUs cooperate with each other can be a bit of a balancing act. They have public policy issues in common and thus can and should work together on political activism, Romero notes, and shared branching, ATM networks, and CUSOs. Trade associations provide opportunities for research and training, and credit union executives and managers network and share ideas.

“This is not about turf wars,” Romero adds. “Our commitment to the cooperative model is primarily in how it affects individual member/owners. It comes down to what’s best for our members.”

 

Credit Union 2.0 Based on Collaboration

As we neared press time, three Wisconsin credit unions announced they would be merging in the spirit of collaboration, with the idea of taking on the evolving business landscape and bringing a new business model to the CU movement. In the video, learn more about the plans of $68 million Best Advantage Credit Union, Brillion; $107 million Lakeview Credit Union, Neenah; and $386 million CitizensFirst Credit Union, Oshkosh.

 

Karen Bankston is a long-time contributor to  and proprietor of Precision Prose, based in Stoughton, Wis.

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