6 Arguments for Thinning the Credit Union Herd

If you’ve read any of my articles or heard me present, you know I’m a passionate credit union advocate. If you know me, you’ll understand how hard this opinion piece was to write – but I’m writing it in hopes it will catch the attention of a few people who are hindering and not helping their credit union membership, employees and/or the credit union movement.

Expressions such as “thinning the herd” sound harsh, except when we talk about non-performing members. We’re comfortable when it comes to members. Many are willing (anxious even) to close accounts that are not profitable, become dormant or become a net expense to the organization. We try to cross-sell, activate and then – at the end of the day – if they don’t engage, we either fee or escheat them out.

We need to have the same commitment to thinning out the leaders, organizations and employees who consistently hinder or derail our progress in serving our members, creating healthy and vibrant cultures, and achieving growth and long-term sustainability.

Like it or not, sometimes we need to allow the natural selection process to work its course, and even take intentional steps to thin out those who demonstrate they cannot survive on their own, as well as those who aren’t the right fit for our organizations and collective movement.

Here are six “for instances” to consider:

Credit Union Volunteers

• Roadblocks. There are credit unions in our herd that are dying a slow death because one or more board members is not open to change, period. These are credit unions that should be considering new growth opportunities, or adapting their business model, but have an “over my dead body” mindset. So be it. I’m not advocating change just for change’s sake. But times have changed, and so must our mindsets, business models and culture.
• Bullies. There are too many boards that are dominated by one or two loud and confrontational directors. These bullies shout down new ideas and, sadly, set the tone for management, and that trickles down to the staff and membership.
• Bigotry. There is absolutely NO place for prejudice in the credit union movement. Good ol’ boy networks need to be thinned yesterday. Frankly, I see this more with boards than I do credit union management. The saddest thing I see or hear are credit union examples of prejudice based on gender, race, ethnicity, religion or sexual orientation. If you hear it, see it, experience it – speak out. I safely speak to 99.99% of us when I say this is not what the credit union movement represents and we all need to do what we can to eradicate it.

I’ve written about these issues before in “Board Members Behaving Badly,” the 2015 CUInsight.com Article of the Year, and today the topic is still one of my most popular breakout presentations. Why? There are some very dysfunctional boards and volunteers in the credit union space. We need to change this.

Credit Union Leadership

• Laggards. We need fewer credit union leaders who are “just buying time until retirement.” They avoid the necessary steps needed today to ensure long-term sustainability. They aren’t taking any risks because they don’t want to rock the boat before their retirement. Some are just holding out, waiting for a golden merger ticket. If this isn’t selfish and unlike the cooperative model, I don’t know what is. Seriously – waiting for a merger to take care of the leadership’s retirement? This isn’t usually in the best interest of the membership, or the employees who may not survive a future merger. Credit union leaders should be fully engaged until the end. They should be committed to leaving behind a wonderful legacy that will ensure the credit union is successful long-term.
• Poor performers. After they’ve exhausted a long list of options, credit unions with consistently negative membership, loan and revenue trends should merge. In these situations, sooner is usually better than later. Credit unions that wait too long may have a very difficult time finding the ideal merger partner, because they just aren’t attractive candidates anymore. Let me be very clear – I’m not usually an advocate of mergers. But credit unions that fail to remain relevant (in the areas of growth, revenue and member impact) are not viable in the long-term.
• Jerks. Narcissistic leadership does not belong in a cooperative movement. Now, I’m not talking about a healthy ego. We all have egos, and we need confident leaders. However, when a healthy ego crosses the line into narcissism, it’s time to go. I recently ran across an example of this when a small (and thriving) credit union CEO received a package at her office. The sender of the package was a third-party vendor who represented a large credit union in the region. The package contained a merger kit and background information, with the assumption that it would be in the best interest of the smaller credit union to merge. There was no phone call and not even a personalized letter from the CEO. Who do these people think they are? This goes way beyond a healthy ego; it lacks respect and common sense. Then there are the jerks: These are the people who don’t play well with others, and are demeaning and flat out disrespectful. The good news here is that the new generation has less tolerance for this behavior than previous generations.

Why It Matters

At a minimum, poor leadership and negative cultures limit the potential for member and community impact, strong workplace cultures and employee development, consistent balance sheet growth and sustainable revenue. At its worst, these unchecked situations are killing the credit unions they serve and detrimental to the quality of life for the people they employ. It’s a shame to see unhappy people in a movement that accomplishes so much good. It shouldn’t be this way.

I’m not happy with the rate of credit union consolidation. However, when it comes to leaders who behave badly, or organizational cultures unwilling to adapt and change, I think it’s time for more of us to do what we can to thin the herd.

Scott Butterfield is Principal at Your Credit Union Partner. He can be reached at 253-507-2443 or scott@yourcupartner.org.