A few years ago in a post titled Strategic Resolve Leads to Better Tactics I wrote “Much of what we do in the name of strategic planning is a about as effective as making New Year’s resolutions (in other words nice ideals for a few months but then little change by year-end).” Now that we are almost one month into 2012 (hard to believe), how is your strategic plan looking? Are you still resolved to complete it?
Author David Maister refers to resolve as Strategy and the Fat Smoker. A fat smoker knows he or she should quit smoking, exercise, diet and lose weight. The resolve to do that, however, is not always there. Think about it. If it was that easy, there would be no drug addicts, alcoholics or bad marriages in the world. It’s the same with business strategy. The necessary outcome of strategic planning is not analytical insight. It’s resolve.
Here are four areas you might need resolve with your strategic plan:
(1) Budget Resolve
How committed are you to completing all the tactical items on your strategic plan? The real answer to that question lies in your budget. If you don’t commit budget dollars to certain projects, then don’t bother putting them on your plan. For example, your credit union may need to rebrand itself. Did you give your marketing department extra dollars to complete this key strategic task? If not, why bother having it in the plan at all? It’s the same with IT issues. Implementing technology initiatives (mobile banking, live web chat, etc.) costs money. Your budget will show your resolve.
(2) Staff Resolve
Some areas don’t just need more money—they need more staff. Yes, every department at your credit union is overworked (what area couldn’t need more help?). However, when you are focusing on your strategy, you probably know of particular areas that need more people. It may be collections, loans, technology, business development, marketing, or some other area. The trick is knowing when a department has tipped (especially if it is back office when there is no immediate positive impact with members). One great example of staff resolve is social media. One of the two “Ss” of social media is staff. Don’t expect your current staff to magically produce social media without help. Your hiring will show your resolve.
(3) Time Resolve
It’s great to establish many strategic goals. However, when are you realistically going to have time to do all the action items? When Steve Jobs was running Apple, he was extremely diligent about focusing on no more than three initiatives: he felt people could not adequately focus on more than three big issues. That is the same principle in place with time: odds are you won’t have enough hours in the day to accomplish an entire laundry list of items. You may want to ask, “What Should Your Credit Union Stop Doing?” How you spend your time will show your resolve.
(4) Culture Resolve
Culture is a hot topic in many planning sessions. Statements like “we need to implement a sales and service culture,” “we need to change our culture,” or “what is our culture,” are uttered in almost every credit union. Those are easy statements to say and many times some form of “culture change” works its way into the strategic plan. But that is when it gets hard. Actually changing the DNA of your credit union probably takes years (truly a long-term process). In the post Changing Your Credit Union’s Culture, Matt Monge offers some great advice on how your credit union can go from talking to acting on your desire to change. How you plan to implement your culture will show your resolve.
Your credit union’s strategic plan may be filled with research. It may have keen insight. It may be a work of genius. But those things don’t matter if your strategic plan doesn’t have the most important thing of all: resolve.
We often talk about onboarding new members: getting them to use more products and services per household during their first three to six months of membership. Every credit union serious about member retention should certainly be using that strategy. But there is another key group we should consider for an onboarding strategy: your new employees.
I’m currently reading Grow, by Jim Stengel. It is an excellent book about how ideals power growth (in other words, “companies with ideals of improving people’s lives at the center of all they do outperform the market by a huge margin”). It’s an excellent book and I’ll write a complete review in the coming weeks.
But one principle from the book is already striking: companies that grow put as much emphasis on their employees as their customers. One tactic they suggest is to onboard your new hires. They cite Method, a household cleaning products company, as an example. “Method’s leaders decided that they needed to put as much energy into onboarding new employees as they did into hiring them…..which starts with a welcome package delivered to their home and continues with a sixty-day personalized plan.”
Your employees will make or break your credit union’s brand. Since your employees must live your brand every day, you want to ensure they have a positive first impression about the credit union. In other words, brand your culture and your credit union to your new hires.
Here are some suggestions about how you can onboard your new employees:
- Take them to lunch the first day—On my first day of work at one of my prior credit unions, someone stole my brown bag lunch from the employee break room. That wasn’t exactly a good first impression (“what had I gotten myself into?”). That first day on the job is stressful; lighten it up with a lunch with the new person.
- Have the CEO informally visit with them within the first week—No matter your credit union’s size, the CEO can be an intimidating position for new people. When the president of an organization takes time from their busy day to talk with a new hire, it sends a strong message: you value them as a person.
- Connect their job with a higher purpose—Some jobs in a credit union can be boring. Be sure to let them know that what they do every day impacts members’ lives. Most people don’t want to just punch a clock: they want to make a difference. Show them how working at your credit union does just that.
- Give them free logo wear or t-shirts—Everyone loves free stuff; especially free shirts or t-shirts. Even if costs you a few bucks, the good will you earn is priceless. Giving them logo wear lets them know they are part of your team.
- Send them a hand written note to their home—We often suggest the hand written note as a tactic to use with new members. It’s also a great tip to implement with new hires. After a month or so, the new employee may need a word of encouragement. Sending them a personal note that comes to their mailbox (not inbox) demonstrates that you care about them.
These are just a few suggestions. We all know employees impact members (positively or negatively). The better your new employees feel about your credit union, the more likely they are to live your brand.
It’s a hard topic for credit unions and certainly a touchy one these days: executive compensation. None the less, executive compensation is a strategic issue many credit unions must address. I had the opportunity to visit with Alec Berkman, president of Executive Compensation Solutions. They recently published their yearly survey on credit union executive compensation and benefits. Below is my Q&A with Berkman.
(1) ECS recently published an employee and executive compensation & benefits survey for credit unions. What were some of the trends you identified?
It still looks like about 30-40% of credit union CEOs will be retiring in next five to seven years. That is a big number and credit unions and boards must be prepared for that shift. Many of them are Boomers. Another 20% of credit union executives change positions for perceived greener pastures every year. There is more movement across the country than most people would imagine. Evidently, there is sustained demand for higher levels of talent.
We’ve also seen a slowing in the growth rate of base compensation. We saw reactionary moves in 2009 and 2010, where some plans and salaries were frozen. Those were tactical rather than strategic decisions. Prior to 2008 we were seeing a seven and eight percent growth in base pay; it has now slowed to about four percent.
For awhile we were seeing a narrowing of the gap between bank and credit union CEO pay. However, bank CEO compensation is accelerating again. So now the gap between banks and credit union is widening.
We are also seeing a shift in credit unions where more CEO compensation is “at risk” or tied to performance. Executives will get paid when they hit credit union goals.
(2) When it comes to CEO compensation, are there pay differences by gender? Why do you think that is?
This is the first year we looked at the gender issue. There are wider opportunities for women in credit unions than in other industries. There is also significant disparity between male and female credit union CEO compensation. When you look at credit unions under $50 million in assets, over 70% of the leaders are women. When you look at credit unions over $2 billion in assets, women occupy 30% of those positions. However, the glass ceiling seems to be in place. Women on average earn between 75% and 80% of what male CEOs make.
(3) From a compensation standpoint, what are some things credit union boards can do to keep their CEO?
Boards have a primary responsibility to think about executive compensation in ways that align the interests of the executives and the credit union. A credit union board and its executives are well served by setting expectations in advance and benchmarking along the way.
(4) If a credit union board and its CEO have differences when it comes to compensation, what do you suggest they do?
The best approach is to set mutual expectations in advance. From there, establishing the right communication is critical. Professional advice plus accurate and relevant data is important in making good decisions. Transparency is essential.
(5) In this day and age with increased scrutiny on executive compensation and the economy, why should credit unions be concerned with rewarding their CEO and executives?
We are still in a competitive marketplace where you want to attract the best and the brightest people. You want to reward them meaningfully, but reasonably. The compensation program also has to be affordable. It has to tie to credit union goals and performance. A good team has a deep bench. Having a talented executive team in place probably leads to more success. Optics are an important consideration. One way to explain the reasonability of a CEO’s compensation is to look at the ratio of compensation to member. For example, if your CEO’s total compensation is $500,000 and you have 200,000 members you are only spending $2.50 per member or $.20 per member per month. However, having a compensation philosophy and a methodology for establishing CEO compensation is at the core of the issue of fairness and increased scrutiny.
(6) What are some ways credit unions can reward executives and the CEO?
There are four components of executive compensation: base salary, short term bonuses, long-term incentives (retirement/retention) and perks. Most credit unions overlook the effectiveness of the long-term piece. You need to coordinate all four areas and all four areas should be linked to sustained achievement.
(7) How can credit unions use the ECS survey?
Good decisions come from good information. Our survey can help guide them through a consulting process that is matched to their decision process. While our survey, which we provide free to anyone who wants it, is a great tool, you have to remember the analogy of building a house. You don’t build a house with just one tool: you use multiple tools. Credit unions should also use additional data from Callahan, the ABA survey, CUNA survey and CUES survey. Usually, a pattern of competitive compensation information will emerge.
(8) How does ECS help credit unions with their services?
We have constant engagement with our clients. While the decision process belongs to the client, we can help the credit union develop or revise their compensation philosophy and evaluation methodology. We look at peer groups, regionalization, other industries and succession plans for credit unions.
(9) What business books should every credit union professional read?
The Ultimate Question, by Frank Reichheld; Answering the Ultimate Question, by Richard Owen; Funky Business by Kjell Nordstrom, Merge, by William McDonald; Think Big, Act Small, by Jason Jennings and The Fifth Discipline by Peter Senge. In my opinion The Fifth Discipline is the best business book ever written; it’s about how to build personal mastery and a growth focused culture.
Executive Compensation Solutions (ECS) is a client-focused consulting firm that brings innovative thinking to compensation and benefits issues with an exclusive focus on the credit union movement. Their staff has a broad depth and range of experience that provides a comprehensive approach to the credit union challenge of attracting, retaining and rewarding key value creators while aligning the goals of the credit union and itsexecutives and its membership. For more information, you can visit their website or download a copy of their Credit Union Executive Compensation Survey.
Note: This article first appeared in the Texas Credit Union League’s Lone Star Perspectives.
All credit unions want more members. And all credit unions want satisfied members. But what if credit unions had members as advocates? Member advocacy is far more important than member satisfaction. According to Business Week, 60-80% of defecting customers described themselves as “satisfied” or “very satisfied” just before they left a service provider.
As Jeffrey Gitomer, best selling business author, says, “member satisfaction is worthless, member loyalty is priceless.”
According to a study by CFI Group, 90% of credit union members are willing to recommend their credit union to a friend or colleague and 76% have already done so. So how do you turn your satisfied members into advocates? Here are five simple steps to help you start the process.
Connect with Your Membership
Your members want and need to know that they are more than just a deposit, loan, account number or yet another car in the drive-through on a Friday afternoon. Reach out to them. Learn their names and use them. Demonstrate real interest in their lives, their families, their jobs and other key areas. Hand-write thank-you notes on loans. Reply to their posts on your credit union Facebook page. Don’t fall back on communications just for promotions. Engage with your membership on a regular basis and develop an interactive relationship.
We all know the usual talking points. Credit unions exist not to serve shareholders but their member-owners. Lower rates on loans, higher rates on deposits. Friendlier service. The list goes on. While it’s a valid list and one of which you can be justly proud, do your members know about it? Do you promote it in more than the usual rote way? Advocate members need to know exactly what bang they are getting for their buck, so tell them! Show them, in dollars and cents, what they save with your credit union versus the competition. Include loans, savings and deposits, credit cards and fees.
Respond in a Timely Manner
When members ask questions or make comments, respond as quickly as possible. Nothing is as loud as the silence of an unreturned call or unanswered email. Make your answers succinct and, most importantly, honest. If you do not know the answer immediately, be honest and say so, with the promise of a reply as quickly as possible. Don’t let voicemails, emails, and social media messages fade away without responding.
Improve by Using Their Feedback
The best source of information regarding levels of satisfaction and dissatisfaction comes straight from your members. Harness their potential to improve your credit union. When you receive a member compliment, share it with your staff and the membership at large to encourage a culture of shared success and achievement. Track comments (suggestion box, surveys, emails, social media, etc.) and act upon them. Members appreciate it when you hear their voices and act in response to them.
James Robert Lay with PTP New Media says, “Think of this: a member has an experience with your credit union online, over the phone or through live chat. When they finish the transaction, they are asked to go to a microsite to complete quick and simple survey. If they rate their experience as positive (4 or 5 on a scale of 1-5) then the "thank you" page could ask the member to refer friends or family. If the member rates their experience as not so hot (1 or 2 on a scale of 1-5) then the "thank you" page would not want to ask for the referral but display a more empathetic message. There is huge potential for credit unions to invest in member feedback and referrals as a way to grow loans and membership.
Make Every Member Interaction Remarkable
Strive to make every touch-point with your members one to remember. Every smile counts, whether seen in person, heard on the phone or read in an email. Empower your staff to go above and beyond in the pursuit of member service excellence. See a member celebrating an anniversary, engagement or birth in the newspaper? Take time to congratulate them. Notice a member in the parking lot with a dead car battery? Have a pair of jumper cables handy and help out.
In today’s hyper-competitive world, merely satisfying your members isn’t enough to keep them. Your competition is willing to do a lot more to earn their business and your credit union must be ready and willing to up its game. A great way to start this process and jump-start your next membership drive is by creating advocates out of members.
“Younger, younger, we must get our credit union younger.” That is a mantra many credit unions are chanting these days. While attracting Generation Y members is a critical strategy, credit unions must not forget a core constituency: old people. For the sake of this post, I’m not going to define “old.” I’m guessing some folks will consider anyone over 30 “old” so I’ll leave the defining to you. However Matures are typically between the ages 69 and 86.
Who are you calling old?
First of all be careful how you address old people in your marketing. They don’t want to be called “seniors”—until they go to Denny’s or the movies! More than likely, many of your credit union’s board members are from this generation.
This demographic still has plenty of things that are a fit for credit unions. Their deposits serve as a base for loans to our younger members. They are also planning on transferring a huge amount of wealth to their children and grandchildren. Products like investment services, reverse mortgages, RV loans and vacation loans (to take their grandkids to Disney) are all good options.
Tips to reach Old People
Here are a few suggestions on ways to market to the Mature generation:
1) Make branch printed material larger—One of the worst parts about getting old is failing eyesight (not that I would know anything about that). Make sure your rate sheets aren’t printed so small that someone can’t read them.
2) Emphasize savings—Don’t assume you have all your Mature members’ money. One friend recently recounted the story of his older mother letting him know she had $5,000 cash in her freezer for safe protection.
3) Remember investments—Obviously, they are a good target for estate planning because of the wealth transfer issue. Having a CUSO for investment services can generate additional non-interest revenue for your credit union.
4) Reward loyalty—This generation tends to be your most loyal members. Relationship building through a high level of personal service is fundamental.
5) Don’t write off technology—They do indeed have some level of sophistication with technology. Because they have now discovered pictures of their kids and grandkids they are using computers to connect with their family.
6) Treat them with respect—This is perhaps the most important thing your front line staff can do. Use the words “Yes, sir” and “No, mam.” We tend to de-value old age in our society. Give them the respect they’ve earned.
7) Ask for family referrals—Be sure you know who their kids and grandkids are. Getting to know the entire family will help when the wealth transfer issue becomes a reality. One credit union actually told a story in their newsletter about one of their Mature members who had over 20 grandchildren: all of whom were members of that credit union.
So yes, your credit union should certainly “go young.” But not at the expense of reaching the old.