New Opportunities Present Challenges, Require Culture Change
Legislative initiatives have been giving credit unions the ability to expand their operations beyond traditional parameters. The passage of the Small Business Jobs and Credit Act gave credit unions the opportunity to increase their small business member lending. Other regulatory reforms (like the proposed rule on debit card interchange fees) have the potential of removing incentives for customers to join a credit union. In either case, both the new opportunities and challenges are requiring credit unions to change their operations and corporate cultures. Managing and driving this change effectively from within is no easy task. It demands a clear mission, vision and the right strategies and processes.
The old adage, “The only constant is change,” is particularly relevant for credit unions today. They went from what some regarded as the step-child of the banking industry to formidable competitors. While banks have had to fight to retain their customers, many credit unions have seen their memberships grow. There are now an estimated 92 million credit union members. The opportunities for continued growth are strong.
In a Nielsen Claritas survey, “Consumer Reactions to the Banking Crisis,” conducted shortly after the September 2008 financial crisis, 40% of bank customers said they were considering changing their current banking relationship. Banks’ historical struggle to retain customers, and recent legislation placing credit unions on a more equal footing with banks, is good news for credit union management. For their employees, however, growth and change can be overwhelming. One of the most important things credit union executives can do to help assuage staff anxiety is to empower them. This holds true for staff across all departments, from loan officers and product specialists to customer service and administration.
Through employee empowerment, credit unions can create a climate whereby staff members are better motivated, committed and responsible. Empowerment not only helps employees cope with change, it gives them the tools to embrace change and harness the opportunities it affords. Employee empowerment is achieved through open communications with the organization’s leaders and other staff members. An empowered employee has confidence in communicating new ideas, taking ownership and acting on them. They not only are willing to suggest changes, they gain confidence in adopting them. They start to act like leaders and engage others in the process of change as well.
A study by the research and consulting firm of Bersin & Associates confirmed the power of empowerment, reporting that:
- 46% of organizations with empowered employees are more likely to be strong innovators in their markets,
- 34% are more likely to get to market before their competitors,
- 33% are more likely to report higher customer satisfaction, and
- 17% are more likely to be market share leaders.
There are several ways in which credit unions can foster employee empowerment. They include asking employees for their suggestions, establishing self-directed work teams, allowing employees to lead meetings, and giving employees (rather than executives) training responsibilities. Equally important is making certain every employee knows that he or she has a direct line of communication to the credit union’s top executives.
Empowering employees is an important step in effectively managing change. Also critical to the process is having clear, realistic goals. They should be reviewed regularly to make certain they reflect the organization’s current performance metrics, as well as marketplace dynamics. These goals should need to be written and shared with employees. It has been demonstrated in study after study that written goals gain results. Often, management needs assistance in establishing goals. This support can come from an advisory board, a trusted consultant or industry association resources. Effective goal setting, achieved through a guided process, will result in attainable goals which, in turn, will pave the way for better focus, productivity and performance against those goals.
Change doesn’t happen in a nanosecond. It takes time and is a continuous process. Management must allow for the proverbial buy-in by staff and the progressive adoption of new processes and systems. Armed with clear goals and the ability to communicate directly and freely, empowered employees can be a credit union’s best drivers of change. What management can expect in return, in addition to the attainment of goals, is greater retention of creative and skilled employees, now more motivated than ever before.
Jerry S. Siegel is president of JASB Management Inc. CONTACT 516-364-1116 ext. 21 or firstname.lastname@example.org