Archive for the ‘The Credit Union Difference’ Category

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. :/

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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…

Citi, fund managers, and the CU difference

There’s a great discussion going on over on the Filene blog that is centered around an article and what it can tell us about the credit union difference. I encourage you to check out the whole writeup and the comments.

I’ve copied my comment because I’d like to go just a little deeper with it here.

* Citi claims some 370,000 employees worldwide, so the reduction we are talking about represents a little over 8% of their workforce. Don’t get me wrong, that is a lot of families, but unfortunately layoffs of this size are not unheard of in our present day economy.

* It looks like Citi wasn’t going on a hiring tear to increase profitability or throwing people at their problems. They were playing the acquisition game that our financial institutions (both banks and CUs) are so in love with. The people were just by-products of the acquisition.

If you’ve got some spare time, look at the Citi 4th Quarter and Full-Year 2007 Earning Review. If I’m reading everything correctly, I read that 50% of Citi’s 2007 Expense Increases and that 75% of the Headcount Increases were due to acquisitions. All this to get a 4% boost in revenue. I know it’s crazy, but that’s the game everyone is playing right now.

What does this article and these comments tell me about the CU difference?

The difference between shareholder and stakeholder value is intrinsic in the bank v. cu debate. While some say the everyday corporate world needs to approach value from more of a stakeholder position, this article makes it clear that this is currently not reality. Credit Unions naturally take this position and it is evident in the way they approach everything they do.

However, I also believe that as banks become focused on stakeholder value, triple bottom lines, and the like, the magnitude of this competitive advantage could shrink significantly.

So here’s the question burning in my brain: At what point is laying off employees good for a credit union? I’m not talking about firing bad employees. I’m talking about letting people go to increase member value.

Presidents, GM, and Board Members: Would you let 1% of your staff go if you wouldn’t lose productivity and could drop rates across the board? What if it allowed you to offer more small business loans? More education loans?

Credit Union Members: How do you handle inefficiency at your cooperative? Would you let 1 employee (and fellow coop member) go if services didn’t take a huge hit and it meant everyone got a bigger dividend check?

You see what I’m getting at? I understand that credit unions are definitely more emotional about these things, but you can’t run a coop on pure emotion. (Even the “triple bottom line” still includes a financial line.)

I’m interested in hearing how real life CU people handle these types of things. Would you ever even consider this? Has anyone had to do this after a consolidation? Was it worth it?

(Anonymous or Pseudonymous comments are welcome. They kind of have to be!)