The big question is, beyond hiring people with the right degree and job title history, how does a credit union acquire and develop the talent capable of making complex risk-management decisions in an uncertain economy?
Credit union CEOs have had success managing in a growth environment, creating cross-functional teams to research and implement products to attract an emerging market or enhance member service. Regulators promoted these growth strategies and even applauded efforts that served the underserved as the costs were absorbed relatively easily as the organization grew capital.
However, that is not the case today. The pendulum has swung toward conservative business practices and has nearly shut down new opportunities. Our industry will not survive if we continue this short-term reaction. Instead, we need leaders who can balance managing the short term while still positioning for the future. This demands a dynamic set of skills that include communication, collaboration, broader systems knowledge, financial acumen and the ability to create solutions and retain composure in a time of crisis.
And, it requires an understanding that risk management means more than just tighter underwriting. It also requires mitigating and balancing opportunity risk to rebuild capital.
We'll need leaders with both experience and energy. These times have increased the demand for seasoned baby boomers who have the poise to reassure their management team, employees, volunteers and members. It's also increased the value of leaders with experience turning around a struggling institution.
Credit teams must be prepared to work with members who, over the next few years at least, won't demand, or even qualify for, traditional lending products. Instead, credit union lending could look more like it did back in the 1960s and 1970s, when we were known as the only place a single parent could get a home loan and character counted.
We need leaders who support "managed risk" and encourage employees to be creative and explore new ways to qualify members while being mindful of laws and regulations. We must employ tough love in our collection efforts and focus on the bottom line while still showing respect for members. And, we need people who understand that their contribution is not only recognized by compensation, it is rewarded by making a difference in peoples lives.
We need to successfully restructure nonperforming loans, creating departments devoted to workouts if necessary. My hope is that our regulator will let our leaders make the adjustments needed to work with members, keeping one important thing in mind: credit unions know their members. We know where they live, work and worship, and front-line folks know the names of their kids, their hopes and dreams and their financial habits. That kind of relationship fosters a little something called loyalty, a concept we're told no longer exists in any market.
The three R's of organizational development extends to the recruitment and retention of our volunteers and their value to the industry. While many would agree we must broaden our board and committee member knowledge, we also must recognize that we owe them far more respect. Many of our regulators relate better to a for-profit structure and that equates to a belief that if a volunteer doesn't get paid for their service, how valuable can his or her contributions be? We can't allow our regulators to be influenced by this bottom-line mentality and create an unwarranted fear of risk within our boards. This will lead to finger pointing and excessive management of CEOs.
Credit unions must remain mindful that these times, too, shall pass. Resist the urge to go too far into crisis mode; consumers recognize the value of credit unions in tough times. I encourage you to recruit and retain leaders who can balance recovery and recognize opportunity, so you can nimbly adjust your organizational development in response to any market.
Susan Mitchell is CEO of O'Rourke, Mitchell & Associates. She can be reached at 800-394-1918 ext. 5065 or firstname.lastname@example.org