DOWNEY, Calif. – Nader Moghaddam knows all about dealing with changing the corporate culture of a credit union. Since joining Financial Partners CU as president/CEO in January 2005, he's successfully helped the CU's staff create a new corporate vision and adapt to a new way of doing business that benefits the CU's bottom line while retaining the member service priority. The results speak for themselves. Since implementing its new strategy, the $637 million FPCU generated $4.1 million in income in 2005 – in 2004 it only generated $1.2 million in income – and grown its portfolio about $58 million. Delinquencies in 2004 were 53 basis points and it had almost 100 bp in chargeoffs. In 2005, delinquencies dropped to 22 bp and charge offs to 43 bp. "When I first came to Financial Partners, we were very reactive and by and large a static, stagnant, inward-looking organization that was closed to new ideas. Everyone was kind to everyone, but there was no accountability. There was also a reluctance to change, a kind of "we tried that 10 years ago and it didn't work" attitude," said Moghaddam, adding that there was also a "sense of entitlement", that is some staff felt that since they'd been at the CU for awhile, they were entitled to certain things. "We realized we needed to substantially improve our performance, we weren't really growing the balance sheet. Everyone agreed they wanted the credit union to be a forerunner instead of running behind the crowd. Necessity is the mother of invention, and we put forth an aggressive plan to change things," he explained. Moghaddam admits that, "Diving into the unknown can be tough on employees and management alike, but if done correctly the long-term benefits far outweigh the temporary difficulty of adjustment." In fact he spoke on this topic last month at the California Credit Union League's Long Beach Chapter event on Jan. 25. Among the topics he addressed then were aligning the credit union culture with the corporate vision; creating a framework that "institutionalizes" service excellence; success score cards for staff; improving member and employee value; incentive programs; and sales and service training. To accomplish making a cultural change, Moghaddam says CUs need to assess three things: what they want to accomplish, their capabilities, and making sure their staff is motivated. "Good things happen when those three things come together," says Moghaddam who worked at Kinecta FCU as executive vice president, member service, sales, operations and lending, before coming to FPCU. He has 20 years of financial services experience, beginning his career in 1984 at Bank of America before joining the CU industry in 1998. Moghaddam observes that the biggest mistake credit unions make when they try to make a corporate culture change is they look at those three elements "as training, not a way of life. It's an on-going event. A lot of credit unions want to have a sales culture, do the training and have some sort of rudimentary training program. In fact, that's only the link between the service and sales culture. You have to live it day in and day out." He admits that one of the biggest obstacles to the successful implementation of a sales culture at credit unions is helping staff get over their fear factor of change and making mistakes. To that he says, "Sometimes there is no getting over it. The biggest challenge in any change of management early on is realizing you may not be the most popular person because of the changes you're recommending the staff make. People are uncomfortable with change, they need a motivation to be uncomfortable. Once the benefits start coming in, then they get excited. When you start seeing results, then it's easy to fan the fire." Sometimes implementing those changes requires bringing people in from outside the credit union who have experience and skills they can impart to the staff, Moghaddam says, and he refers to this process as "cross-pollination." "You have to make it very clear to your staff that change isn't negotiable. Once they decide on a certain path to change, then there's no going back. Sometimes some people will say they don't want to go through the changes, they're afraid of them. I tell them that when our members' business is at hand and at our core, then their well-being and long term benefits is the over arching issue we need to focus on," says Moghaddam. "Just think of where credit unions would be if they didn't try new things," he adds. As chair of the executive committee of CUNA's Operations, Sales & Service Council, Moghaddam's had plenty of opportunity to interact with credit union leaders and debate with them whether credit unions should be sales or service oriented, whether it's a good or bad thing. "The competition and reality is out there, and we need to get comfortable with a sales culture," he says, emphasizing that "doing business as a credit union is not just about smiling at members and being comfortable. "The definition of service is changing in consumers' minds. It includes being able to offer better advice and whether our employees are better trained. Members will have less trust in someone who's not demonstrating their ability and completely offering their advice," he says. Moghaddam says many people associate having a sales culture with pushing widgets and being impersonal. "I'm not prescribing credit unions become pushy and just throw products at members. I'm saying that when we interact with our members we should care enough to suggest certain things to them," he says. -

[email protected]