Education takes time
Industry leaders agree the average consumer isn’t aware of how and why credit unions are different than banks.
“Members understand that credit unions deliver great service and have lower rates, but they don’t necessarily understand how credit unions work,” says Herman. “That comes with education—how we teach kids about finance, having credit unions on college campuses and actively recruiting there, using job fairs, and advertising that we’re a different type of employer.”
“Bergengren [a credit union pioneer and the first managing director of the Credit Union National Association (CUNA) and CUNA Mutual] talked about the practicality of man,” says Beach, “and the fact that credit unions survive because they’re inherently practical institutions. Cooperative financial institutions make sense, but it takes time to educate people. It’s easier to advertise that we offer better rates—and maybe that’s what it takes to get them in the door. But once they’re there, we have to talk to them about our philosophy, too.”
Many of the dynamic leaders who made credit unions what they are today are still working behind the scenes to shape the credit unions of the future. One way is through CURE, founded in 2008 by Herman and former CUNA Chairman Juri Valdov, who saw these leaders as a “treasure trove of advice and experience. They want to stay engaged and give back to the industry, and this is a perfect way for them to do so.”
CURE is completely volunteer-run and all services are free. Queries and replies are sent via confidential e-mail.
Many young leaders 'get it'
It’s a mistake to assume the credit union flame will die out as today’s leaders retire. Many senior leaders are being intentional about passing the passion on to their successors.
In many ways, younger credit union employees understand the importance of cooperative financial institutions better than many older employees, says Rick Rice, president/CEO at $2 billion asset Teachers Credit Union, South Bend, Ind.
“Too many current leaders have come to measure success in financial terms,” he says. “The person who will be taking my place at our credit union is in his 40s, and he has a real feel for member satisfaction. I have no doubt he’ll do a great job.”
“We’ve spent the past decade talking about how we’re on the verge of losing the people who understand what credit unions are all about,” says Holly Herman, co-founder of Credit Union Retired Executives (CURE). But new leaders, she adds, have had ample opportunity to learn what makes credit unions unique, and they’re putting it into practice.
“There have always been people who were more bottomline oriented than member-oriented,” adds Carroll Beach, president/chief operating officer of CO-OP Shared Branching. “I’m finding that the younger generation is committed, as a group, to helping society. They’ll be very interested in helping credit unions continue to play our traditional role, but they might require more education.”
Mentoring is critical to future leaders’ success in carrying forth the movement’s vision and values, says Dianne Addington, interim CEO at Southwest Corporate Federal Credit Union, Plano, Texas. “Statistically, there are more new CEOs coming from within the movement than from outside it.”
One caution: Don’t just create succession plans—execute them, she says. “I know of some instances where the top person didn’t retire as scheduled— often due to the impact of the recession on his or her 401(k). The person being groomed to step in left in frustration—and not just the individual credit union, but the industry. We can’t afford that.”
Credit unions also are adding more former bankers to their ranks. A banking background can be helpful, leaders agree, if it’s combined with a thorough knowledge of credit union philosophy and principles.
As credit unions have added a broader range of services, “there have been times when we had no alternative but to reach out to those in the banking world,” says Rick Rice, president/CEO at $2 billion asset Teachers Credit Union, South Bend, Ind. They had the experience credit unions needed, he says, such as commercial lending or trust services. “But it’s crucial to look beyond those skills.”
“If anything, I think we need leaders who know even more about financials than they did in the past—even a philanthropic organization needs those skills,” says Herman. But you need to make sure that financial knowledge and experience line up well with core credit union values, she adds.
To do that, she recommends careful scrutiny throughout the hiring process. If your credit union decides to hire former bankers, she says, “Look at whether they’ve been involved in volunteer projects. What do they do in their free time? What kind of language do they use to describe their long-term goals? All of those things can help you understand who you’re hiring—not only their skills.”
To put the transfer of leadership into perspective, Baranowski says it’s important to remember that credit unions have made it through other tough times.
“If you look at the history of credit unions, you’ll see we have a history of survival,” he says, adding that U.S. credit unions “were born in 1909 at a time of financial crisis, and we also saw growth in the midst of the Great Depression and after World War II. As long as we stick with our core principles, we’ll survive.”
Credit unions’ fundamental principles still make sense, agrees Sebastian. “We were founded with the belief that cooperation is the ideal way to do business, and I still think there’s value in that philosophy. It’s not necessarily what people are hearing in business school, but the real world has proven it can be a successful model.”
“This tough time too shall pass, and credit unions will regroup,” says Addington. “Our philosophy is well worth the pain of preserving it.”
Impressions From a Young CU Leader
Brian McKay, vice president of member service at SC Telco Federal Credit Union, Greenville, S.C., thinks the credit union movement's vision and mission are alive and well with new generations of leaders.
CUMag: Do you sense that the next generation of credit union leaders will be equipped (and care) to carry the torch of the credit union mission?
McKay: Yes. As the chairman for the South Carolina Credit Union League’s Vision 2020 Task Force, I'm fortunate to be surrounded by some of the next generation of credit union leaders. I can tell you that our generation of leaders is still focused on the No. 1 priority: the members.
CUMag: Are credit unions becoming too much like banks?
McKay: Yes, but that’s not necessarily a bad thing. We couldn’t compete in today’s marketplace with the old credit union business model. Today’s consumers demand both convenience and a full suite of financial services. If we are to compete, we have to evolve while staying focused on our members.
CUMag: Is it important to differentiate?
McKay: I think it's important to differentiate politically, but that shouldn’t be our primary focus. In any marketplace, if your efforts to differentiate cause confusion for the average consumer, you've gone too far. Consumers understand how to do their “banking,” but who knows how to do “credit unioning?” If we truly live up to our charge to serve people of modest means, we will be different.
CUMag: Will we lose the vision/mission when these leaders retire?
McKay: We will lose some of the history, yes. Like me, many of my generation of credit union leaders didn’t grow up in the credit union industry and don’t have a perspective on some of the great political fights of yesterday. That’s why it's incumbent on the leaders in place today to choose successors carefully and spend time developing them for the future.