Stop Saying Structure

Last week over on the CU Warrior Blog, Matt wrote an interesting piece about a more perfect union, domestic tranquility, and promoting the Credit Union Way (my paraphrase not his) in which he draws some parallels between the way the great US of A is structured and the way that credit unions are set up. He claims (of credit unions) that “It’s our structure that attracts members by the millions.”

I really like a lot of what the CU Warrior has to say, but I think he’s really missed the mark here. People do not care about how your organization is structured. They just don’t. They don’t care about your org chart or the size of your marketing team or who the shareholders are. They don’t care.

If you were asked the difference between your CU and the one down the street, can you imagine responding with “Well our IT department has 6 people, including a C level position, while they only have 3 in IT with no representation at the C level? I didn’t think so.

People care about the products, services, and experiences you offer them. Now your org chart and marketing team and yes, even who your shareholders are can influence these things, but make no mistake about it, people care about the WHAT not the HOW.

Instead of touting “structure” as the “difference”, I believe credit unions need to tout WHAT that structure allows them to do. For Member’s CU in North Carolina (home of the CU Warrior), their structure allowed them to create the “Holiday Skip-a-Pay“. Now that IS a difference.

Our “CU Difference statements” need to evolve from “We are owned by our members.” to “Our member ownership allows us to (fill in what a local/awesome cu is doing)”

If we can’t fill in that blank, well then we’ve got bigger problems than just our verbage. :/


After thought: If people cared about the HOW, then why do credit union memberships vote for mergers and conversions that ultimately take away or lessen the impact of the structure on their financial institution. I’m just sayin…


18 comments so far

  1. tinfoiling on

    Here is part of a press release for a recently announced merger here in BC:

    “We believe this merger and continued partnership offer our members and employees the best of all worlds,” says the CEO. “It offers us economies of scale, access to new markets and expanded career opportunities for our employees. At the same time, it preserves local identities, local decision making, community focus and close member contact.”

    You have to love this verbage, over and over and over again. How can real local identity, local decision making, close member contact fit in with economies of scale. (52 branches $5.5 billion) Should the defining position be one that suits the members instead of everyone else? You are right – stop saying structure.

  2. Dean Wilson on

    I think Matt’s blog was referring to the structure as a not for profit not the internal structure of the organization. I would agree the organizational structure means squat to a member or a potential member….but I would premise that if member knew because of the not for profit, democratically controlled structure the credit union is supporting the local school districts fin-lit programs, Neighborhood Association watch programs…yada yada yada.

    As an ex-BC’r I still am amazed at how one of largest CU’s in the world can stay relatively true to it’s community roots and continually reinvest for the betterment of not only members but neighbors.

    The structure south of the border seems to me to help us point out the only difference between us and the other guys. We are all in the money brokerage business, but credit unions do it for the benefit of the member-owner and a bank does it for my sad little 201K these days(stock holders).

  3. CU Skeptic on

    @Dean – He was, but structure is structure is structure in my mind. (I included shareholders in my list of structure items above.)

    Check out the about page for the Red Cross, one of the most well known non-profits on the planet. You won’t find the word “non-profit” anywhere on that page. It’s all about 1) what the Red Cross does awesomely and 2) who helps them do that.

    Contrast that with the generic CU about page that starts “State CU is a member-owned, non-profit cooperative…”

    The Red Cross about page:

    As you read over that about page, notice how many ACTION VERBS are used. The word “is” doesn’t even appear until the 6th paragraph. Of course we could talk about and be presented with tons of info about what the Red Cross IS but instead they choose to share with us what it DOES. I think the later is much more powerful and CUs could do a lot better job about focusing on what they DO.

  4. Anthony Demangone on

    I’ll never stop saying structure is key. The way we are set up, in my mind, creates the biggest difference.

    Credit unions are run by volunteers who may not be compensated for their efforts. They are not for profit organizations, where each member has an equal voice, whether they choose to use it.

    For profit organizations, especially those that are publicly traded, generally exist to create profit for investors and owners. Those systems aren’t bad, but they are very different from credit unions.

    Our structure does not create an incentive to drive up profits at any cost. Sure, we need to bring in more than we pay out, but profit is not our reason for being.

    Our structure allows us to offer better deals many times than our competitors. It allows us to do things that are in the best interst of our “customers” rather than our owners. Because they are the same.

    Sure – most members do not understand this distinction. And basing a marketing campaign on how our corporate governance differs from other financial institutions would be less than overwhelming.

    But structure really, really matters. In my mind, it is the foundation upon which we place everything else.

  5. Winter on

    We are looking at this question in a task force at our league and I have to echo something a CU CEO said in a meeting. “Sure you talk about it (structure, co-op ness), but you don’t lead with it…”

    When I get my dividend check from REI, I am reminded that they are a coop and that my membership has a tangible benefit. That’s when I pay attention, read the annual report, think “great. that makes sense.” But if they didn’t have a decent price on North Face stuff I’d never walk in the door in the first place.

    So the bennies can educate to the value and keep me there, even expand my use of the place. B

    I think we do a poor job of telling CU members who don’t use us as a PFI (AKA low hanging fruit) that the structure is the “why” of better deals across the board. But we better have the better deals to get them in the first place.

    My question – is our only option to lead on price point? Any marketer will tell you that is death to real growth…

  6. Ken Gardner on

    I have to side with Winter on this one. She is spot on about using the structure argument to explain the how when we provide members value. I would also echo the sentiment that we darn well better provide that value or we shouldn’t get the tax breaks we currently enjoy . I think the structure argument plays better to legislators but it does have a place in member dialogue nevertheless.

  7. Ron Shevlin on

    The “problem” with this discussion is that, in practice, there is no absolute. Structure does matter — but it’s not the only thing that matters, and the degree to which it does matter differs by member and prospective CU member.

    But I will say this (I think reinforcing the Skeptic’s position): I think it “matters” more to CU employees than it does to CU members.

    I think what’s important to remember is that it’s not the “structure” that members care about, it’s what the structure “produces” — i.e., superior member advocacy (advocacy for the member, not the other way around).

    The structure — in and of itself — is NOT the “CU difference”!

  8. Credit Union Warrior on

    @CUSkeptic Thanks for continuing this discussion. I’m afraid I may not have articulated my side well enough. My point is (was) simply this: everything that makes credit unions great starts with their structure. I’m not talking about organizational structure, I’m talking about constitution – the basic building blocks of what credit unions are. The democratic control of an individual CU, and how each individual institution puts their philosophy into action is what causes differentiation and unique appeal to FOMs.

    @Ron Structure creates the “CU Difference”. You cannot have the “CU Difference” without it.

  9. Ron Shevlin on

    @cuwarrior yes you can. stop deceiving yourself.

  10. Credit Union Warrior on

    @rshevlin Nope. Without that unique structure, you don’t have a “CU Difference”. Instead, you have something that a bank can replicate.

  11. Jeffry Pilcher on

    @CUWarrior – Really? A bank couldn’t build its model around something that mirrors a credit union not-for-profit structure if it wanted to? Are you saying it’s impossible? Someone couldn’t start a not-for-profit bank, making themselves the single shareholder?

  12. Matt Davis on

    @Jeffry You just answered your own question. The bank would be changing its structure to do that.

  13. Denise Wymore on

    Wow. I just joined this conversation and read it all. One thing that was not mentioned and needs to be.

    Banks are costing tax-payers billions and billions of dollars because of their structure. We are on the brink of another Great Depression.

    Alan Greenspan said it best “I made a mistake in believing that banks, operating in their own self-interest would do what was necessary to protect their shareholders.”

    Credit Unions were offered $100 million in the FIRST Depression to boost their bottom lines and Roy Bergengren, (the first CUNA president) refused the money. He said, and I quote:

    “To him, it meant destroying the vital principle of the whole movement by converting a community enterprise into an agency of the government. To teach people how to help themselves was more important by far in times of depression than at any other time.”

    Now more than ever we need to talk about our structure – we HAVE a real and very relevant difference thanks to the greed and stupidity of the banking world.

    AND if CUNA doesn’t belly us up to the TARP trough – we can remain a 100 year-old credit union structure that has NEVER ever cost tax payers a dime.

  14. Credit Union Warrior on

    @rshevlin There can be bad democracies. But, a true democracy’s actions are a reflection of its people. The “Credit Union Difference” can take many public forms, but it is the CU’s structure that allows everything else to follow. The “Credit Union Difference” can be a competitive advantage, but sometimes it isn’t – it matters how that democracy puts CU principles in action…and how reflective it is of the values their constituencies (FOM) share.

    My post was simply that. It was a discussion on how our structure makes our greatness possible. It doesn’t guarantee commercial success, I agree. This structure, however, when implemented properly, most certainly helps define the best of what we have to offer as financial institutions.

  15. James on

    You guys are kidding yourselves if you think that another FI can’t provide a similar or better financial experience to a credit union.

    Think about the end result:

    – Member/Customer gets better rates
    – Member/Customer knows that FI will give back to the community
    – Member/Customer gets great service and advice
    – Member/Customer knows that his/her FI will act ethically

    What’s to say that a BANK can’t do this? Seriously. Nothing.

    CU Skeptic is spot on. Nobody cares about the HOW, It’s all about the WHAT.

    (FTR, In Australia we do not have NFP status. We still do great things in the community and for our members.)

  16. Matt Davis on

    @James You do great things because that’s your mission…and a product of your structure. The how creates the what.

    The point is not whether or not a bank can offer great products & services to their customers. They most certainly can and often do. The point is that we are democratically owned and operated, and that STRUCTURE mandates that we serve and report to our members. That mandate, that structure, is our difference. Otherwise, you’re exactly right – there is no difference.

  17. Michael on

    Looks like two arguments are mixed here. The structure affects how an FI treats its members. But, members care about the treatment, not the structure.

  18. […] are credit unions any different than banks? You hear a lot about the not-for-profit structure of credit unions. Or as a member “you’re an owner.” Even “one member, one […]

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