From the executive team to the tellers, mergers can inspire excitement and hope but also create concern about one’s place within a changing organization.
When three financially healthy credit unions ─ Powerco Credit Union ($64.5M, Columbus, OH), Western Credit Union ($68.1M, Columbus, OH), and Members First Credit Union ($52.6M, Columbus, OH) ─ decided to merge, they looked at the people as well as the financial figures to assess whether the three credit unions would be a good fit.
The merger isn’t scheduled for completion until later this year and executives haven’t even released the name of the new credit union, but many aspects of its human resources strategy are already in place. These four tips from their strategy can help other merging credit unions fend of the stress of merging staff.
Look For Overlap And New HR Opportunity
“From the start, our goal was not to gain success through the elimination of positions or people,” says Thomas Furrey, the retiring CEO of Western who will serve in an advisory position after the merger. “The beauty is that the meshing starts from the heart in terms of the intentions of the people you’re working with.”
Initial merger conversations require getting realistic about staffing strengths and weaknesses, but they also let credit unions consider their full range of options. A thorough pre-merger staffing assessment can reveal many gaps, both known and unknown, that oncoming staff could fill or complement.
“There was so much synergy at the executive management level, at the senior management level, and in the areas of institutional focus," says Greg Kidwell, the current CEO of Members First and the soon-to-be president of the merged credit union. "That’s what really got us thinking this could work.”
Redundancies are costly, and in cases where the branch and operational structure will remain fairly concrete or grow in the short term, cost effectiveness will likely be an issue.
Combining leadership and executive talent can be trickier. But just because individuals share the same title doesn’t mean they have the same skill set. A merger is a great opportunity to adjust roles in the institutions and perhaps create new ones to strengthen overall capabilities.
At some institutions, just maintaining a full roster can be difficult, so embrace the opportunity to run at peak performance with surplus staff.
"We simply don't have the financial resources to have more than one or two high level executives to help achieve all of the goals of the credit union," says Michael Shafer, the CEO of Powerco and soon-to-be CEO of the merged credit union. “We don’t have a budget like the big credit unions do.
“But as we put together our three credit unions, we’re taking several strong senior managers from each and putting together a stronger team than we could ever afford on our own.”
Vet Potential Allies
Furrey, Shafer, and Kidwell had a long personal and professional history together, viewing one another as peers and even allies rather than market competitors. Shafer and Furrey had worked together for roughly 10 years at Western, and Kidwell and Shafer had known each other for more than a decade, having spent the past four years growing a mortgage CUSO.
These relationships set the groundwork for initial discussions and eventually trickled down to help create trust among all parties involved in the merger.
“That synergy started to flow down into the organizations, so they complement each other,” says Kidwell.
Check Egos At The Door
Executive leadership provides critical guidance both before and long after a merger, so it’s an important move to get right. The new credit union will feature unique bilateral leadership, with Shafer as CEO and Kidwell as president. Both will report to the board of directors, but each will have defined roles and areas where they will take the lead according to their expertise.
“We knew there was going to be a redefining of roles, because we had three CEOs," Furrey says. "I took care of one of them by retiring, but there were two remaining. We identified early on the strong potential this partnership had but also the challenges it created for us to work out the leadership roles. We wanted both individuals to be happy and feel fulfilled with what they’re doing in the organization.”
Navigating this leadership arrangement is a personalized process. Each party can have their say and a chance to promote their own strengths, but there should be little room, or desire, for anyone to make a power grab.
“We worked with a motto of ‘check your ego at the door,’ and we had no hidden agendas," Furrey says. "It was just a discussion about how this can help the credit unions, employees, and members in the long run. The staff of the three credit unions see our CEOs are working hard together to make this a huge success for members and for them.”
Put Talent To Work, Not To Pasture
When it comes to volunteer talent, executives wanted equal representation from each credit union. But there was a question of how large a board could become before its size detracted from its strength.
“Our goal is not to have 25 board members,” Shafer says. “We realized that’s not going to work.” But the credit union is looking at how to use that incoming talent into other complementary channels.
One possible solution could be the creation of an advisory board structure, either by branch, or by brand, as the credit unions plan to keep their own localized names and identities.
“I don’t think anyone who wants to be involved and is currently a volunteer, needs to be left behind or is going to be left behind,” Kidwell says. “If these individuals aren’t on the final board, they can still be involved in another capacity.”