A New Paradigm for Credit Unions Strives for Engagement
The credit union movement tries to differentiate itself from any other financial services providers by embracing member satisfaction, best products and services and best employment practices. But at the pinnacle of this model is a sense of excitement and pride on the part of both employees and members.
Credit union members and employees are given the opportunity to be part of something--it is not a transactional relationship. Excitement, pride and participation in the CU movement leads to what I call engagement, and that is the golden ring we should all be striving for.
I am not stating that credit unions as a movement have arrived at this new model. We do enjoy an inherent advantage given that the sense of involvement is a core value. But the average credit union has fallen short in two areas: best practices relative to product development and delivery and best practices relative to employment practices. Neither of these represents obstacles that are impossible to overcome. In fact, I would argue that fixing your tactics is much easier than recasting yourself in the public eye as a movement.
In most cases the products and services being offered by even the most progressive credit unions are offered by banks or other financial institutions. How many times do we read about credit unions that have formed CUSOs to offer business services or loans or insurance products? The reality is that while our rates may be more competitive or our service may be better, these are not unique product offerings.
Most credit unions are still heavily reliant upon traditional delivery vehicles like branch infrastructure, ATM networks and call centers to bring in new members. Some credit unions have embraced indirect lending as a differentiator but many have found that these are customers rather than members.
Few credit unions utilize demographic mapping and other more sophisticated marketing tools to identify current and potential member needs and desires and build their delivery infrastructures around those models. We are still heavily invested in the "build it and they will come" model. Larger credit unions have invested in community charters and expanding geography as a growth vehicle, but in my mind that is just an extension of the old model.
Similarly, in the area of employment and human resource practices I would hesitate to put credit unions at the leading edge. We have been slow to embrace things like targeting top graduates with skills in marketing and business, performance-based compensation systems tied to results and similar approaches. Many credit unions are still heavily invested in defined-benefit health and retirement programs, annuity-based compensation systems and other co-dependent models.
The good news is that these practices are much easier to fix than shifting from a transactional to an engagement model.
The engagement model is better for many reasons.
Moving an employee's level of engagement from low to high yields an average 21% per capita improvement in productivity. Organizations with high levels of engagement have productivity levels 20% higher than their peer group. Employees who are engaged are 60% more inclined to stay with their current employer. The savings from reduced turnover alone are astronomical.
When you combine high employee engagement with high member engagement, highly engaged employers outperform their peer groups by 100% on key financial metrics.
These are real numbers that have been validated across a number of industry sectors, including banking.
Now the bad news. Technology does not create engagement. Putting in a new core system will not cause engagement to break out. Transitioning to a sales and service culture will not ensure engagement. Engagement strategy is hard work and it begins with an essential foundation. That foundation is trust--trust at the employee level and at the member level.
Technology plays an important role. The ability to track and collect the right data and to make appropriate interventions based on that data is critical to success. What gets measured gets done. Engagement will not replace a sound marketing strategy. You must engage
your membership as well and to do that you must have an active, ongoing dialogue with your current and desired membership and act on it.
True engagement will be built upon a platform of solid marketing intelligence and excellent human resource systems and practices.
Of all financial institutions, credit unions are uniquely positioned to embrace engagement in its fullest sense. Not for profit, not for charity, but for service. The very motto of the credit union movement speaks to engagement at the highest level--pride and excitement and a common purpose.
This is our time, and this is our place. The numbers make the case. When we can move our employees and our members to form a commitment to their credit union, we will have built a strong foundation of trust for our goal of engagement. What is needed is respect, responsibility, information, rewards and loyalty combined with clarity of vision and a strong leadership model. That sounds like engagement to me.
Mark F. Herbert is a principal in the consulting firm
of New Paradigms LLC. He can be reached at
541-741-3490 or Mark@newparadigmsllc.com