A ‘philosophy auditor’
“As an industry, we’ve gotten all caught up in CAMEL [capital adequacy, asset quality, management, earnings, and asset/liability management] ratings, but I’ve always thought we should add an ‘s’ for ‘service,’?” says Baranowski. “What gets measured is what gets done, and if we incorporate service into our metrics, we’ll do a better job of providing it.”
Baranowski was so committed to the credit union philosophy he designated a staff member to serve as Navy Orlando Federal’s “philosophy auditor” during his tenure. “Whenever we considered adding a new service, this employee’s task was to subject it to the philosophy test. Did it help our members? Did it align with the credit union philosophy? Did it keep our purpose constant? This was an excellent way to go beyond the numbers.”
Visions Federal uses the Carver Policy Governance® Model, says Berrish. “This allows us to look at all our actions and strategic plans through the prism of member benefit. We certainly have to meet our regulatory requirements, but at the end of the day, we’re also trying to run our credit union in a way that benefits the blue-collar guy who’s out there driving his used truck and wondering how to put his kids through college.”
The reality is that all credit unions have to worry about income. But Holly Herman says income growth shouldn’t come at the expense of members. Herman is principal of Total Coaching & Consulting and co-founder of CURE. She has been CEO of two large credit unions, and was chief of staff to NCUA Chairman JoAnn Johnson.
“A true sales culture shouldn’t be about selling,” she says. “It should be about meeting members’ needs with products that are superior to, and more affordable than, what they’ll find elsewhere.
“Training can give your staff the language and the tools they need to do this effectively,” adds Herman. “As an industry, I don’t think we’ve done a good job of this.”
Berrish thinks of profitability in terms of priorities. “In my 35 years with credit unions, my philosophy has been that your first priority is to your members, your second priority is to be fair to your employees, and if you do these things, profitability will follow,” he says. “If you’re offering services merely to generate income without factoring in service quality, you’re going to be in trouble.”
Meet market demand
Historically, credit unions have had a reputation for offering a small range of services. Many consumers don’t look to credit unions for much beyond car loans. But it’s not necessary to keep such a narrow focus to maintain a commitment to core credit union values, says Herman.
To stay relevant, a credit union has to offer what its own market demands, she says. “I don’t think it confuses members if their credit union offers the same services as the local bank. It’s simply the cost of doing business. If you don’t offer the expected services, consumers see little reason to become members.”
On the other hand, says Berrish, “If you’re really connecting with your members and they need only a narrow range of services, you might be able to be a niche player. But your services have to be driven by market needs. In our area, we had a local employer lay off more than 90% of its work force. If we hadn’t branched into a wide range of services, we would have been in a tough spot.”
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