Archive for July, 2008|Monthly archive page

Principle #2: Democratic Member Control

I’m finally getting back to talking about the 7 cooperative principles. You can check out my other posts in the series here.

Let’s talk about Democratic Member Control

Cooperatives are democratic organizations owned and controlled by their members, one member one vote, with equal opportunity for participation in setting policies and making decisions.

This principle gets us a better understanding of how this “volunatary, cooperative, not-for-profit organization” is setup. It’s a democracy. (Yahoo for democracy!)

What strikes me about this principle is it’s simplicity. Doesn’t it sound so nice, simple, and peaceful?

Once again, the modern day credit union is far from looking like this simplistic cooperative principle. (Now that I think about it, just about the only place you hear about “one member one vote” actually playing out is in conversion votes.) We elect a Board and they do most of the “participation in setting policies and making decisions.”

I’m not against this kind of representative system, however, in the credit union cooperatvie (as it does in other representative democracies) representation does create a disconnect between “regular members” and “board members.”

In most cases, this disconnect is fair price to pay for each member in return for not having to deal to many of the policies and decisions that have to be made in a fully functioning credit union. However, as evident by stories of board/member clashes and even board members suing members, this disconnect is one that if left unchecked can get really ugly.

Back to You…

What are you thoughts on the current state of credit union democracy? I’d love to hear your thoughts!


Embrace your constraints

I’ve grown a little weary of the word “restriction” as it is used in CU circles. I’ve seen or heard it used to describe fields of membership, lending practices, marketing efforts, talent pools and just about everything else, especially if that something else has the word “budget” attached to it.

Some people within the CU industry seem to believe that what is needed for ultimate CU success is the removal of these restrictions. (Some even think that it’s worth losing tax exemption for in the US, which is another topic for another day.) While it sounds like a great plan, I’m afraid it’s not the silver bullet answer.

See, the problem with the “remove restrictions” solutions is that it isn’t sustainable. As an organization, you will ALWAYS been under some type of constraint. If you remove one today, you’ll find a new one tomorrow. If you expand your Field of Membership from a single employer to a community, you haven’t removed “field of membership restrictions”, you have simply moved them.

Your CU may be too small or grew too fast or can’t reach gen y or has too many gen y members (with not enough money) or can’t find talent or can’t keep talent or a thousand other things. There is always something holding you back from your ideal situation. And that brings me to my bold declaration of the day:

In the majority of cases, it is more beneficial for a credit union to focus efforts on working within its given constraints than trying to move them.

It’s not a new idea to embrace constraints, but it’s one that I believe CUs need to spend more time on. Embracing your constraints allows you as an organization to actually take the reigns of change instead of waiting (and waiting and waiting) on government  or association bodies to do it for you. Not only that, but you might just end up with a much more relevant solution than one that comes from the external.

And I’m not just talking about purely external 30,000 feet things here. I’d even say it beats waiting for local economic or communities attitudes or staffing situations to change.

So if you’ve got Boomers, know them better than anyone. If you in a college town, figure out your campus and its students. If you can’t do business loans, have the best/edgy/coolest personal products around. If you can’t keep talent, work on how to best share knowledge and train employees decrease the negative effect of employee turnover. If you can’t cross a city line, know every corner of your city, including the best places to have coffee, or dessert or get an oil change.

The time spent focusing on what you can do, sure can have a lot more value than whining about what you can’t.