Credit union executives gathered in Charleston, S.C., in March to rekindle the spirit of cooperation within their ranks.
Two of the leaders of the “Building Alliances” roundtable came to the discussion from vastly different starting points: Mansel Guerry from a credit union career in Mississippi, and David Mooney, whose credit union career began after two decades with big city banks.
The roundtable was sponsored by CU24, a Tallahassee, Fla.-based CUSO that allows credit unions of all sizes to be part of a nationwide ATM network. Guerry is cu24’s president/CEO; Mooney is president/CEO of Alliant Credit Union ($9.5 billion in assets, 345,193 members), a Chicago-based member of the network.
Guerry said he decided to organize the gathering because some of the spirit of cooperation has weakened among credit unions in the last 20 years. This will be the third annual roundtable, a hand-picked group of credit unions diverse in size and location.
“We see credit unions that are more focused on their own achievements and growth and prosperity: Pushing somebody out of the way so they can get it before you can get it, holding cards close to the vest and not sharing strategies,” Guerry said.
“It’s all about me, instead of all about me,” he added. “It bothers me because I believe in the credit union movement and what it can do for us today.”
The 57-year-old Mississippi native spent 12 years with the Mississippi Credit Union League and was president of what is now called Brightview Credit Union ($27.7 million in assets, 3,500 members) of Ridgeland, Miss., for 10 years before joining CU24 in 2012. He became its president/CEO a year later.
Guerry talks with a lot of credit union CEOs. Sometimes when he asks how the credit union is doing, the executive will comment that its capital ratio is up, its return on assets is solid, and its noninterest income is healthy.
“This is what we allow to drive our conversation. Credit unions have gotten so fixated on numbers. Numbers are easy to understand. We think we’re successful when the numbers look good,” he said. “But if I say, ‘Let’s make the world a better place,’ that’s more intangible, and hard to wrap your mind around.”
Mooney spent about 20 years as a banker before he left JP Morgan Chase and joined Alliant in 2003.
He had been recruited to the position and knew little about credit unions. He was impressed by the degree of cooperation among them. “It was fairly unusual in the banking industry. It’s more proprietary and much closer to the vest.”
As tech firms and other nonfinancial companies encroach on lenders, credit unions have been cooperating increasingly through CUSOs, which allow smaller players to provide services that they otherwise could not do on their own.
But Mooney, like Guerry, believes that the cooperative spirit among credit unions can diminish if neglected.
“It has to be nurtured. It has to be reinforced, and actively pursued,” Mooney said.
Cooperation makes the whole credit union industry stronger, Mooney said. But in recent years some credit unions have cut their ties with their state or national trade association.
“In general, an insistence on serving the proprietary interests of an individual organization over the collective interests certainly undermines collaboration, and undermines alliances that benefit the whole,” Mooney said.
“Then the whole credit union effort breaks down. It’s important to guard against that,” he added.
Mooney said credit unions can both strengthen their ties to members and build their cooperative spirit by forging closer ties with their employees.
Technical investments are important for credit unions, but their people are the most important ingredient for success.
“In our business, there are very few unique business strategies. There are no patents or proprietary technologies. Strategic plans are just good intentions. Performance, in our business, is largely a matter of execution. And execution is primarily about people. Human capital is the ultimate competitive advantage,” he said.
Building an effective workforce requires consistent attention over a long period of time.
“And because it is time-consuming and difficult that is precisely why it is a source of competitive advantage,” he said.
Some institutions, especially among for-profits, tend to view employees as interchangeable parts, Mooney said.
Effective credit unions seek to develop employees who are:
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Aligned with the organization’s mission and their role in it;
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Engaged and emotionally committed to the organization, and emotionally present; and
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Competent, that is, being equipped with the knowledge, skills and tools to do the job.
Mooney believes the key measure is engagement. Since 2003, Alliant has run an annual Gallup employee survey, along with periodic spot checks to measure engagement among its 450 employees. Each year the credit union ranks at the 85th percentile or better among organizations tested. This is a good thing for Alliant and its senior executives, whose incentives are based on how well their employees are engaged.
“We measure that carefully. We monitor it. We sweat it,” Mooney said. “We think it translates directly into individual and organizational productivity.”
Concentrating on engagement is important for effectiveness and ensuring employees’ actions are aligned with the intents of management.
The alternative was illustrated by Wells Fargo, which announced last September that its employees had created as many as two million unauthorized credit card and checking accounts. The San Francisco bank has since been trying to shed an aggressive sales culture that pressured employees, leading to thousands of them creating sham accounts in customers’ names.
Mooney’s credo: Hold loosely to goals, firmly to intent. “Organizations like Wells Fargo forgot that,” he said. “The goals became paramount. In organizations that are very rules-based you eliminate situational judgment, particularly around customer service. For frontline employees, it sometimes feels a lot safer to follow the rules. In the big banks, which are very rules-based, deviating from the rules can be career threatening.”
Guerry said one challenge for credit unions is their decreasing number. While membership is hitting record numbers and shares of loans are increasing, credit union mergers have reduced the number of charters.
Sometimes credit unions ought to die, Guerry said. “I’ve been around a few of them myself. They’re small. They’re misguided. They’re mismanaged,” he said. “But there are other credit unions that are doing all they can to serve the people they were intended to serve.”
One way to enhance the cooperative spirit would be for credit unions to find creative ways to cultivate its smaller entities, rather than letting them be closed down or taken over.
For example, Guerry said larger credit unions might “adopt” smaller, troubled credit unions, providing them assistance to find their footing.
Credit unions today often compete for easy-to-acquire members, while in many parts of the country people are underserved. They’re not familiar with why credit unions exist, how they’re different than banks, or whether they can join, Guerry said.
“There’s a great opportunity for credit unions to serve more people than they serve today,” Guerry said. “We have to do some soul-searching as credit unions. We’re still a small part of the financial industry landscape. I think we can be a much bigger part.”
