There are few ideas that are discussed in credit union circles more than the need for increased and more effective collaboration. This isn’t just a recent topic of conversation. I’ve been privileged to work in our industry for more than 20 years, both in credit unions and for the leagues that support them, and have experienced the need for more significant collaboration being promoted for the past two decades.
Interestingly, you rarely, if ever, hear someone argue that increased collaboration would be a bad thing. So, if most agree that increased and more effective collaboration is desirable, why does it remain so elusive?
I have worked closely with several significant collaborative efforts and in my experience, the following are the most difficult hurdles:
Collaboration requires leaders to sacrifice some level of control. It’s never easy for individuals who have likely been running their own shop for some time.
Collaboration means extra work. Often, the individuals given responsibility for managing a new collaborative effort still have very full plates back at their ‘real job.”
Measuring success can be tricky. The partners in a collaborative effort will often view success differently over time, which can lead to a breakdown in the commitment to work together.
Given these hurdles, and you could likely list several more, is collaboration really worth the effort. Isn’t consolidation just easier? After all, doesn’t consolidation hold out the promise of scale and efficiency gains without all of the hard work of collaboration? While this is a topic for another time, in my experience, consolidation rarely produces all of the expected cost-savings and efficiency gains.
Effective collaboration creates value in multiple areas, but I would like to focus on two: retention of local governance and stake holding and the preservation of creative idea generation.
Local governance is very often a casualty of consolidation between credit unions, especially, when a small credit union merges into a much larger institution, and accompanying the demise of local governance is the loss of almost irreplaceable institutional knowledge. The board of directors of a small credit union can easily have more than 100 years of experience with an original sponsoring group or employer.
While it can be difficult or too expensive for a small credit union to offer the full suite of financial products and services demanded by members, effective collaboration can potentially provide the opportunity to offer them and in doing so, not just survive, but thrive. As a result, this should allow local governance to remain intact.
When organizations collaborate instead of consolidate, creativity is heightened. Effective collaboration allows members of different entities to work together to create vision and solve problems while retaining diversity of thought. In most consolidations, the vision of the new company is driven by a small group of senior leaders and a single board. In collaborations, there is a deeper, more diverse pool of leaders upon which to draw. While this can be more difficult to manage, handled properly, it will likely result in superior decision making.
A few final thoughts on the ingredients needed for effective collaboration. All partners must be willing to sacrifice some control, sufficient resources, both human and financial capital, must be committed to the initiative, expectations for early success should be conservative and all parties have to be flexible. Collaboration is not easy but our industry will be stronger and consumers will be better served as more effective collaboration occurs.
Eric Jenkins is chief operating officer at CU Partner Link in Duluth, Ga. He can be reached at (404) 428-6781 or firstname.lastname@example.org.