Think deeply about the risk on your balance sheet and then leverage the rest of it for growth and success.
That was the strategy $6 billion asset Bethpage (N.Y.) Federal Credit Union employed during the worst financial crisis in credit unions’ history, said former Bethpage CEO Kirk Kordeleski of Kordeleski Consulting. “And all the credit unions here did so as well.”
Bethpage's world changed dramatically when Northrop purchased Grumman Corp., which had been the credit union's single SEG, Kordeleski says. Employees left, members lost jobs, and delinquencies rose.
So the credit union made some changes. It began to serve multiple SEGs. It refocused growth on first understanding the balance sheet risk. “If you want to be great, you have to know what you want to achieve and have the right people to do it,” Kordeleski said.
►Focus on brand. Members and nonmembers can’t purchase products from you or use your services if they don’t know you exist. Your brand can be the most important and valuable in the market, Kordeleski said. Bethpage focused on strengthening the brand internally and externally..
►Realign the board. It was critical for the board to understand exactly who they’re representing, he said. “If you deal with diversity, term limits, other governance issues, you’ll be set for success," Kordeleski said.
►Set aggressive goals. Our leadership team agreed that achieving 80% of a really aggressive goal was better than making 100% of an easy one," he said. “We were accustomed to always being successful. But to provide spending authority, you have to invest in finance, information technology, etc.—all to to prepare for what’s next. That’s a mental shift by a board and senior staff—and it makes all the difference. The board trusted us and did not engage in operations, but provided support.”
And management's role, according to Kordeleski, is to be transparent and acknowledge mistakes. With aggressive growth strategies, you’ll make mistakes.
►Develop winning strategies. “This is my key story—balancing cooperative principles and the value they represent with running your credit union like a business. Understand that most of us have retail models: We create scale, we price for service strategy, and then we execute," he said. "You need to be hiring for the next two years rather than the past two years. Are these the people who can take you to the next level?"
Kordeleski adds the board and leadership team chose from day one to act like a credit union and live out the cooperative principles: “We’re the best option in the retail market. It’s magical. It changes everything. Always consider what’s best for members."