Using the '6P' Approach to Strategic Retail Delivery Development
The credit union industry employs 217,000 people, has $680 million in assets and serves 85 million members. With total assets expected to jump to $900 billion by 2010, it is essential that executives make every effort to grow with minimal risk and to respond to changing conditions with the most efficient, effective approach.
Executives need to think strategically about how to best manage the new facilities that are appearing across the nation. The number of credit union branches grew from 18,805 in 2003 to 19,478 in 2005. Land and building, as a line item, grew at a staggering 11.58% since 2003, from nearly $9 billion to nearly $11.2 billion. This growth in fixed assets has been matched with growth in overhead. Office occupancy expense increased from 6.5% of non-interest expense in 2003 to almost 7% of non-interest expense in 2005, or $1.47 billion. Branch growth averages 1.53% on a compounded basis since 2003. Even if branch growth slows to 1.25%, the credit union industry will be adding 1,250 branches by year-end 2010.
How do credit unions manage this growth in asset and facility-related expenses? What do they need to do to improve member service while maintaining fiscal discipline and, at the very least, maintaining operational efficiency and effectiveness? Credit unions must take a holistic approach to managing the deployment of fixed assets. The 6P approach to strategic retail delivery is a comprehensive methodology for managing credit union building programs.
The 6P approach is comprised of the following components:
oPlan: In the words of Dr. Stephen Covey, "begin with the end in mind." Always, always begin with a plan.
oPhilosophy: Know your limits as an institution and understand your philosophy toward your market, field of membership, members, employees, technology, and facility design and development.
oProcess: "Technically elegant" solutions breed better member service, heightened employee productivity, and reduced operational overhead.
oPeople: Recruit, train, and inspire employees to outpace the demands of members and management alike; more importantly, know the people who walk through your doors and their likes, dislikes, and most of all, their needs.
oPerformance: What gets measured gets done; efficiency and growth measures are certainly key, but measuring a service driven work ethic is even more important. oPlace: The ultimate place lies at the intersection of a great location and people-focused design. The strategic retail delivery plan is the foundation for all the other implemental components of the plan. Each is required. As a living/breathing institution, made up of people, places and process, credit unions cannot take shortcuts. This is true regardless of size, geographical location, or the composition of one's membership. Whether you devise your plan yourself or by using an outside advisor, write it down and commit to it. Commit to it by aligning rewards with 1) the completion and implementation of the plan and 2) the outcomes associated with implementation.
Descartes said "to be is to do". First one must see what is to be done (the plan) and then determine how they will approach what is to be done. This philosophy is a key ingredient in the strategic retail delivery planning cycle. Leaders of credit unions must marshal their troops around a philosophy, or a set of governing principles. How do we serve--brick/mortar, electronically, hybrid--and to what extent in each channel? What design and branding philosophy do we want to have in each retail outlet? Do we want to be cutting-edge, bleeding-edge, or the trailing edge? Again, write down your philosophy.
As the credit union considers branch expansion, it must consider the process employed by the branch or branches internally and between the main or regional office and the branch. Internally, does the credit union want to employ a more open, nontraditional retail delivery system or does it desire the traditional teller line and member service approach? How is technology leveraged to create efficiency and support your employee's relationship with the member? Can you see the entire member relationship and are you equipped to enhance it? Does the main office support the branch's endeavors knowing full well that Branch A and Branch B may have very different needs? Document your process and commit to it.
Hire, train and retain the best employees. Depending on your philosophy and process, this aspect of strategic retail delivery could be similar or very different from you current people management initiatives. Have a personnel deployment plan for each and every retail outlet in place. And don't forget, people want to work with other people. It has been proven time and time again. Focus your people management on the members walking through your doors. Document the people management program. There should be a direct correlation between your people management program and member service and credit union performance. Performance
A New York Times article suggested that numbers alone do not denote a higher life form. We are a culture preoccupied with numbers, and within the financial institution realm, it's almost obsessive. Higher life form or not, numbers are important. Performance is important. Financial, human resource and machine performance can all be gauged. Measuring philosophy, process, and other intangible elements can be, at best, challenging. More importantly, understanding a member's financial performance and supporting their initiatives (no doubt, they are struggling with their own 6P program, whether they know it or not!) is the next level in measuring strategic retail delivery success.
Location, location, and location. Location is the foundation of real estate development and has been throughout the ages. Depending on the desired use, the emphasis on location will change, but it is at the core of choosing where to place your institution. Find the right location and then design the right facility--brand it on the outside and the inside. Incorporate your philosophy, deploy your process, and engage the right people to create superior member service. Most importantly, remember that the ideal place blends both location and a people-focused design.
Arp D. Trivedi is senior consultant with Level5 of Atlanta, Ga. He can be reached at 404-761-0008.