Breaking points. We all have them—both personally and professionally. My breaking point tends to occur after several straight weeks of being on the road and away from my family. There are only so many delayed and cancelled flights a person can take. I’ve seen a few mommy or daddy breaking points in retail outlets. There are only so many fits a parent can take.
And just like a personal, professional or parental breaking point, our credit unions and banks have them as well. After all, there are so many non-productive meetings or “same old” strategies one financial institution can take.
A strategic breaking point is when your current business model can no longer sustain itself. It is the moment—recognized or unrecognized—when your current strategies are a bust and you have started your decline. Strategic breaking points can even happen to successful companies. In his book Onward, Howard Schultz, CEO of Starbucks, says, “The damage was slow and quiet, incremental, like a single loose strand that unravels a sweater inch by inch.”
Is your credit union or bank unraveling (slowly or quickly)? How do you know you’ve reached a strategic breaking point?
Here are five signs your credit union or bank might be at a strategic breaking point:
- Your income is not diverse—Relying on just one income stream (loans, fee income, etc.) will break you. How is your overall loan portfolio looking? And what is your strategy to make up the squeeze to non-interest income? If your credit union or bank does not find alternative sources of income, it is nearing a strategic breaking point.
- Your staff levels are too high or too low—One thing sure to drive a CEO crazy is to walk around a branch and see tellers chatting about what happened on TV last night while they wait for members to show up in the lobby. Examining staff levels is more than just looking at ratios. You also must look at how you are utilizing the folks you have.
- Your products are stale—When was the last time you introduced a new product or service? If it’s longer than six months you are nearing a breaking point. The reality is we all offer the same stuff. So make sure you are bringing innovation to that “stuff.”
- Your staff is confused about your brand—What is your bank or credit union about? What is your value proposition and what makes you different? You may (or may not) know the answers to those questions. But does your staff and can they articulate those differences clearly? Staff confusion leads to institutional breaking points.
- Your balance sheet numbers are hitting a wall—How are your numbers and ratios looking these days? Are they moving in the desired direction? We sometimes hit walls with our growth. If you are not breaking through those walls, then you might just be breaking.
- Nothing is changing—If you are not changing, you’re not growing. When was the last time you didn’t something new and different at your credit union or bank? Doing the same things year after year will only lead to the same (stale) results.
Those are a few strategic breaking point signs. What other breaking point signs we should be aware of?
This is Halloween week. A time for ghosts, haunted houses, tricks or treats. And monsters—lots of monsters. Some banks and credit unions allow their employees to dress up on Halloween. In some cases, there is no telling what costumes they will wear to work: Dorothy from the Wizard of Oz, Superman from DC Comics, a minion from Despicable Me.
What if your employees came as a “sales monster?” Think of yourself as the famed Dr. Frankenstein, crafting a creature from various body parts (okay, that’s a little morbid, but after all, it is Halloween). How would you create a sales monster for your financial institution?
Below are some key ingredients every sales monster should have:
- Passion—You start building your sales monster with the right attitude. No amount of the
items below will help your sales monster if they don’t first and foremost love
sales. That means loving people and loving helping people. For more about the
right passion, check out the post “Your Employees Need the Selling Mindset.”
- Knowledge—How well do your employees really know your products and services? My guess is not as good as they should. People don’t sell what they don’t know. When creating your sales monster, focus a great deal of time on teaching your creatures (employees) about your products and services. (Side note: be careful not to teach them just the product features; then they tend to “feature dump”; rather teach them the product’s benefits).
- Focus—By focus, I don’t mean focus on sales. Today’s best salespeople focus on what is best for the customer or member and not necessarily the institution. If you focus on service, the sales come.
- Care—As I said in a previous post, “Smarmy sales guys are dead.” If all your sales monster is worried about is their own numbers, that shows. It’s not sincere. It’s an old saying but it’s true: “people don’t care about how much you know until they know how much you care.”
Sales is the lifeblood of any organization—especially community banks and credit unions. But sales don’t happen automatically or by osmosis. To increase our product numbers, we need to create sales monsters.
In recent strategic planning sessions for two different clients, I was visiting with the respective CEOs prior to the session. In each case, one of the outcomes both of them desired was a definition of success. They more or less said, “We need to define what success means for our organization. The board may think one thing while we’re aiming for something else.”
As a result, in each session we spent time discussing how to define success.
So where do you start your strategic planning sessions?
In the words of Stephen Covey, “You begin with the end in mind.”
Defining success is easier said than done, however. So here are some tips on how to do so.
- Prevent generic answers—How do you define success? Too many people say “serve customers,” “help members,” “make a profit,” “grow loans,” etc. Duh! Of course a bank or credit union wants to do those things. So when defining what success is, don’t allow generic answers.
- Give specific numbers—While you don’t want to manage your financial institution to specific ratios, numbers do matter. When looking at what success truly means, put some numbers with it. So when defining success, talk ratios, percentages, and numbers
- Think huge goals—No limiting or sandbagging is aloud when it comes to defining success. Make your goals stretch goals. If you are currently growing loans at 7%, then make your growth goal double digits. So when defining success, don’t be afraid of setting the bar as high as possible.
- Gain a consensus—Not everyone is going to agree on how to define success for your financial institution. And that is a good thing. Make sure there is robust discussion. Debate efficiency versus experience. Argue about service versus profitability. So when defining success, embrace debate but at the end of the day get everyone on the same page.
Planning sessions are not worth the paper they are printed on if you don’t first know how you will define the plan’s success. So start your strategic plan with the end (success) in mind.
When it comes to change, most credit unions and banks move slow. Like glacial slow. We conduct focus groups, we examine reams and reams of MCIF and demographic reports and we talk about issues without resolving them.
A great deal of “blah, blah, blah.”
Your credit union or bank is either moving forwards or backwards—it is not standing still. So if you’re going to move, move fast or don’t move at all.
It’s time financial institution boards, executives and managers stop talking and start doing. As I told one client who had been considering a name change for over 10 years, “you either need to fish or cut bait.” Okay, I probably used a little more colorful language than that. But you get the idea—just make a decision one way or the other!
So how can credit unions and banks pick up the pace when it comes to making key strategic decisions? Here are a few suggestions:
- Make a deadline—With a background in journalism, I think in terms of deadlines. Your credit union and bank needs to do the same thing. Put a date with every one of your strategic decisions. A deadline holds you accountable.
- Appoint a project manager—One credit union recently hired a full-time project manager. Their job? Ensure projects that cross multiple departments get completed. Too many managers think in their own “silos” rather than the entire organization. And that slows things down.
- Go with your gut—When it comes to most decisions, you probably know what to do. So in the words of that famous Nike tagline, “just do it.” In his book Blink, Malcolm Gladwell argues that great decision makers are not those that process the most information or spend the most time deliberating.
- Use a consultant—Sometimes we just need a push. And oftentimes those pushes have to come from outside and not inside. A good consultant will push and challenge you to get things done rather than accept the current status quo. In other words, they will get you moving.
Analyzing is good. Discussing is good. But too much analyzing and too much discussing only leads to ineptness. So start moving—fast.
With three quarters of 2013 behind us, budgets are getting smaller and financial institutions are starting to look at which expenses they can shift to next year. Will external training be one of the first line items your financial institution delays? Many businesses make that mistake, and it ends up affecting their bottom line in ways they never realize. Do not let this happen to your organization.
Nobody has to tell you that your employees need training. Someone in every business knows if your employees can’t serve the customers or members, they won’t be your customers or members much longer. However, many organizations fail to see the value of consistent, ongoing training, both internally and externally. Each has an important purpose.
It makes sense to provide internal training and policies, procedures and even systems. Nobody knows that stuff better than your people, and you no doubt have several experts on staff equipped to provide this training. External trainers have entirely different skill sets than many staff trainers. They tend to specialize in specific areas of business. They stay current on the business trends and methods which can help improve productivity, efficiency and even morale. They also don’t have the baggage that might exist. If Sally staff member was overlooked for a promotion she thought she deserved, she might not be receptive to training for the person who did get the job. External trainers have a more objective viewpoint and are able to motivate your employees in areas where internal trainers struggle.
Of course, training is more than teaching them how your financial institution operates and how they fit into those operations. Training employees also is about developing people. According to the American Society for Training and Development, the chance for ongoing development is one of the top five factors employees want to experience at work. The inability of an employee to see progress is often cited as a reason for leaving an employer.
When employees feel valued, they also have fewer absences, make fewer mistakes and contribute to an increase in employee morale.
So where do you start? Developing a training plan for each job description in your organization helps. Every employee should take new hire orientation, necessary skills and systems training, information about your company culture and the like. Leadership training is a must for any employee with a desire to go into management or already in management. Being a leader
requires different skills than managing processes or employees. Managers who haven’t been taught the difference risk losing valuable employees for the organization. I actually offer a powerful leadership program which has proven successful at many different financial institutions.
Every training plan also should allow for professional development, whether the employee plans to stay in that position or plans to move up within the organization. This is the part of the training program which really makes employees feel valued, and it doesn’t have to be expensive.
For more in-depth information on internal and external training, including creative tips for keep training fresh and affordable, read the August issue of my monthly newsletter.