Bowing to Innovation, Young CEO Says Experience Is Overrated
The average credit union CEO is around 50, and that makes age and the graying of the industry a common topic. When generalizing about why it is important for the industry to have CEOs and staff that go less than the age average, Filene Research Institute CU Tomorrow Driver Ben Rogers said that soon-to-be-released data from a Filene survey shows that young adults crave work environments where they can innovate, and credit unions-faced with competitive pressure and difficulty attracting new members and growth-have to innovate.
Jeremy Presta, president/CEO of the $108 million Park Side Federal Credit Union in Whitefish, Mont., is one of those CEOs that bucks the average age. Now in his early 30s, Presta was hired at age 25 to be the CEO of Park Side in March 2002. At the time, he was working for a bank in Montana and was recruited to become the credit union's CEO.
On top of Presta's list of concerns for the industry right now is the Corporate Stabilization Plan. "Any time you have to pay 60 basis points of your total assets, it's going to be a concern. That's a big chunk of change. With PIMCO doing the research too, it can come in for more than that, which is really spooky."
With that in mind, Presta said, it's hard to make any plans for growth in 2009 or to hire new people because you don't know what the outcome is going to be yet and what the cost will be to the credit union.
Unemployment is another area that is high on Presta's list of concerns. Being a credit union that serves a small community, the potential for losses is big if a large number of people that in that community start losing their jobs. "There's a lot of uncertainties out there, and unfortunately, a lot of businesses are in a hold pattern and are just doing whatever they can to survive right now."
While older CEOs may pull from experience to deal with tough economic times, Presta said that he sticks to his basic business outlook. "Whether you're young or old, you should plan your business accordingly to make sure you have enough liquidity. You plan for the worst but hope for the best."
Experience, Presta said, is something that may even be irrelevant for dealing with this specific financial crisis.
"With all do respect to older CEOs, they haven't seen anything like this either. This has been said to be the worst recession since the Great Depression."
Rogers said that he sees two pressing problems credit unions are facing right now. One is managing earnings and the balance sheet to weather the NCUA insurance levy, and the other is long-term viability, innovation and strategic marketing, which is an area he said where young CEOs can shine.
"I will always be the first to advocate giving a young applicant a shot at the CEO job, but today's ideal is a CEO with the experience to manage through the financial squeeze while anticipating a different credit union future."
In times like these, Presta said that there is the inclination to stop training and stop growing and innovating, but he feels that credit unions shouldn't give up and bury their heads in the sand.
"You can get organized internally. Look at operating expenses and costs and organize to become more efficient."
With board members hearing all the doom and gloom and some of them losing their jobs, Presta said, it's tough to convince them of the need right now to hire a high-level person.
Looking to promote from within and cross-train people whenever possible is one way Presta said he will be organizing to continue to achieve growth within his staff.
"We have a younger crew here overall, and that's not necessarily because I'm a young CEO. We aim to balance work life with personal life. We allow people to work from home as often as possible, which gives us the opportunity to have employees that live some three or four hours away. We make sure that employees have the ability to progress as they choose to and that every area has a succession plan."
Historically, Presta said that the average age of the credit union's 12,606 members has been a little lower than average as well, so even with all the issues at hand due to the economy, Gen Y is still a pretty important focal point for the credit union.
Park Side just revamped and retooled its teen program CU Succeed, www.cusucceed.net. While Gen Y may not be the most trying issue at hand right now, it is still something the credit union is focusing on.
"It's important to help these members structure and plan for their financial future. There's a lot of work that can be done with Gen Y."
Rogers said, in his opinion, the aging of the industry and credit union members is more important now than before the economic downturn.
"While large groups of middle-age and older Americas are turning inward to wind down debt and accumulate an overdue savings cushion, young adults 18 to 25 are just getting started. Few are dealing with the weight of a HELOC, two car loans and three credit card lines. Instead, they still need their first car loan, their first credit card, their first student loans. Credit unions that open up to that group, instead of tightening credit like the competition, stand to win."
In general, Presta said right now he's trying to keep members, employees and the credit union's board as informed as possible.
"My goal is to provide all of them with enough information to make good decisions."