5 Rules For Running A Multibillion-Dollar Organization

These tactical approaches to products, channels, vendor management, employee engagement, and compliance keep BECU moving forward year after year.


No one would accuse BECU ($13.1B, Seattle, WA) of thinking small. But as the footprint and capabilities have grown at the credit union, so, too, have the complexities in managing them.

The following article examines five areas where BECU has reinforced ownership, regardless of the number of people, processes, or programs involved.

1. Treat Products Like Collaborations

A robust product line requires a robust approach. As such, BECU has created a product management and development group that gives specific team members ownership over both deposit and loan products, with the exception of investment services.

These managers do not replace the operational heads responsible for the credit union’s product and service lines. Instead, the managers provide a tactical yin to the execution-focused yang, addressing things like product profitability and end effectiveness. Depending on the area of focus, a product manager may be working with one, five, or 500 different individuals in support of those specific goals.


BECU Credit Union
data as of 12.31.14
  • HQ: Seattle, WA
  • ASSETS: $13.1B
  • MEMBERS: 886,677
  • BRANCHES: 43
  • 12-MO SHARE GROWTH: 7.99%
  • 12-MO LOAN GROWTH: 12.86%
  • ROA: 1.45%

“In order to stay relevant, you need to understand where members' needs — and the needs of consumers as a whole — are going,” says Doug Marshall, the senior vice president of member channels and service delivery responsible for the eight–person group. “It’s the ability to be analytical and almost rabid about a product that allow us to adapt them to members’ needs.”

This combination of tactical and operational expertise has been critical in developing areas of the portfolio like business lending, which the credit union dabbled in prior to the recession but has since relaunched in a more deliberate way. 

“We started out with support-oriented hires first and leveraged partnerships with other credit unions to build assets and credit-decisioning ability,” says CEO Benson Porter. 

From there, BECU hired a front-line team of five relationship managers to fully build the business. Today, the credit union has relationships with approximately 30,000 small business borrowers, 6,500 of which it established in the past year alone. 

Cross-department teamwork has also had an impact in BECU’s $800 million card portfolio, which should see more growth thanks to a ramped-up focus on affinity relationships. For example, the credit union is launching a co-branded credit card with the Boeing Company that will feature images of Boeing commercial and defense aircraft and is in the process of creating a similar program with the University of Washington.

Such products align well with the values of the organization because they allow BECU to make credit available to more people rather than lend deeply to just a few, says Scott Strand, senior vice president of member lending, business, and wealth.

“From a risk standpoint, how many credit card charge-offs among young or low-credit members would it take to equal the losses from just one $100,000 home equity loan?” he asks.

At the end of the pipeline, the credit union has posted total loan growth of 12.86% year over year as of fourth quarter 2014 according to data from Callahan & Associates, compared to 12.81% among peers $1 billion plus and 10.81% among all credit unions nationally. 

2. Understand The Links Between Online and Off

For years, BECU ran branches and the contact center separately from the digital side of its business. When the head of BECU’s brick-and-mortar divisions retired, the credit union expanded Marshall’s role — which had been focused on digital channels — to include oversight of all member-facing channels, both physical and virtual. 

“Our members don't really think about channels,” says Tom Berquist, senior vice president of marketing and cooperative affairs. “Members think about what's convenient and available, so it makes sense for us to manage channels in this way.”

The constant proximity of the mobile channel to the membership is quickly making it the leading touch point through which more activities naturally and efficiently flow. To underscore the importance of mobile, Marshall compares BECU’s online adoption last year — which was relatively flat — against the combined use for BECU’s mobile app and website when accessed via a mobile device — which was up 8% over the same timeframe.

“For us, leading with mobile doesn’t just mean having an app, it means starting every enhancement discussion with the question of, ‘What does that mean for this device?’” Marshall says.

The launch of Apple Pay by BECU in early 2015 — an endeavor brought from concept to execution in just two months' time — was another big step forward in this channel. So, too, was the ability to allow members to check estimated wait times and create branch appointments in advance of arrival via their mobile devices.

When it comes to lending, though, BECU’s online channels are still the most-robust remote option. With mortgages, for example, online drives approximately 50% of all applications. By comparison, mobile lending is limited to the consumer portfolio and attracts far less activity. 

From a technology standpoint, nothing says you shouldn’t be able to apply and be approved for a loan on your phone in five minutes. 

Still, the credit union is looking to beef up its mobile lending appeal by prioritizing accurate automatic decisioning over pure speed.

“From a technology standpoint, nothing says you shouldn’t be able to apply and be approved for a loan on your phone in five minutes,” Marshall says. “A quick ‘yes’ is tremendous for the member but a quick decline might send the message that they weren’t given full consideration. You have to be careful there.” 

In the future, BECU’s ATMs and website will also begin to harness available data more effectively, with the eventual goal of personalizing messaging according to the purpose of a members' visit, what they’ve done previously in that channel, and where there are untapped benefits for the member.

“We know all of our products and services, but our members don’t,” Berquist says. “They just know what they have and what they bump into by chance. So the challenge moving forward is educating them that there’s a closer ATM than the one they’re using now without scaring the heck out of them.”


Next: How to keep 1,233 people happy, healthy, and engaged »

3. Eliminate Churn And Burn

For BECU, keeping an employee network of 1,233 people happy, healthy, and engaged often boils down to something as simple as keeping an open ear.

“We can’t sit here as a department and not involve the people who are going to be using the tools we build,” says Anne Shannon, senior vice president of human resources.

To bridge potential gaps, Shannon created nine cross-functional teams composed of managers, vice presidents, and senior vice presidents working under the guidance of an executive sponsor. These teams were responsible for 29 deliverables based on employee programs that ranged from recruiting and training to succession planning. Each rebuilt their respective programs from the ground up over a period of 12 to 18 months.

Among other accomplishments, the teams’ efforts contributed to the creation of realistic job previews, which gives pre-hire candidates a “day in the life” experience to help establish accurate expectations for both parties. Once hired, all employees go through a two-day, culture-based orientation. After that, many roles also require an additional two to three months of job-specific training.

Another outcome of the cross-functional team project is that all employees — production based or not — must now create their own measurable goal worksheet. Although managers help their employees accomplish these goals, it is up to the employee to track and report on their progress at mid-year and year-end. 


Click the image above to see a full-size
version of BECU's executive organization chart

In return for higher expectations, the credit union has created a more diverse mix of base salary, short-term incentives, performance-based incentives, and long-term benefits such as pensions and a 401(k). It even offers wellness incentives. The last is especially important because BECU is a self-insured organization — a move that has saved it approximately $3.0 million since 2013.

Employees also get a wellness account and $25 a month to put toward anything that benefits the body, mind, or pocketbook, such as financial literacy training, a yoga class, or nutritional support.

Lastly, in October 2012, the credit union replaced its suggestion box with two crowdsourcing and visualization tools — the Ripple Effect and Idea Stream, powered by Mindjet — to encourage directed innovation from employees. Now, executives can put forth a personalized challenge that addresses specific issues, and anyone in the organization can contribute solutions, vote, and comment on ideas presented by their peers

BECU calculates value from launched ideas when possible, though some member experience or employee engagement ideas are difficult to quantify. Since the program’s launch, BECU has implemented more than 40 ideas to the tune of $900,000 in cost savings or revenue generation. One particularly valuable idea has an estimated five-year net present value of $11.1 million.

BECU incented top contributors with gift cards during the first year of the crowdsourcing program. Today, it still manages to achieve an employee participation baseline of approximately 45% even without that carrot.

These proactive HR changes have allowed the credit union to hire more of the right people as well as retain top talent longer. The average tenure for a BECU employee is approximately seven years; however, after filtering out departments known for frequent turnover, average tenure increases to eight years.

4. Hold Partners Accountable

Credit union staff members often have good working relationships with the vendor companies that support them; however, organizations with the breadth of BECU must hold those inside and outside the institution accountable for every dollar they spend.

That’s where Jennifer Hancock, BECU’s director of vendor management, comes in. Hancock hails from American Express, where her first role was answering the customer service number.

The credit union has ditched its 10-item vendor questionnaire in favor of an 1,800-item licensed questionnaire that requires specific documentation to back up a vendor’s claims. 

“They said in training that if I could learn to do that successfully, then I could take on any role I wanted,” she says. “Customer service allows you to understand the customer experience and how all the pieces of the business come together.”

Today at BECU, Hancock and an associate handle financial, performance, and risk assessments for the organization’s more than 776 external vendor relationships and 2,800 individual contracts.

BECU must dig deep into a vendor’s capabilities to ensure it receives services in a safe and sound manner. That’s why the credit union has ditched its 10-item vendor questionnaire in favor of an 1,800-item licensed questionnaire that requires specific documentation to back up a vendor’s claims.

Centralizing this responsibility has allowed BECU to not only better track vendor relationships and create a more accurate ROI for each but also uncover potential shortfalls or areas of overlap.

When contracts arrive at Hancock’s desk, she can see where multiple employees are buying the same products or where a single vendor could replace multiple relationships. 

Of course, all this doesn’t mean BECU is averse to spending money. In some cases, it means exactly the opposite.

“I’m going to squeeze until there’s no more room to squeeze because that’s my job,” Hancock says. “But in general, you don’t buy one Lego to build, you buy a whole set.”

Hancock is also responsible for establishing baselines for how much BECU should expect in return for its investments.

Hancock’s position within the organization also allows her to play bad cop when necessary, letting staff escalate issues without fear of damaging their professional relationships with vendors.

“In the end, we’re here to help, not to take control away from people,” she says.

However, employees know if they make a decision that contradicts BECU’s outlined expectations or the findings and recommendations of Hancock’s department, the credit union will hold them accountable.

So far, most employees have chosen to heed the advice of vendor management, much to the benefit of themselves and the credit union, which has saved millions of dollars as a result of this department’s efforts since 2013.


Next: Own high-level obligations »

5. Own High–Level Obligations

BECU knows well the burden of being a large credit union in the current regulatory environment. It employs 10 people for compliance, three for enterprise risk management, two contractors for state and federal governmental affairs, and two lawyers to catch anything that falls between the cracks.

“When I got here in 2009, we only had four people in this department,” says Parker Cann, general counsel and senior vice president of governance, risk, and compliance. “We’ve grown tremendously.”

Part of the increased oversight is tied to the fact BECU is now well beyond $10 billion in assets, which means it is subject to examination by the Washington State Department of Financial Institutions, the NCUA’s Office of National Examinations and Supervision, and the Consumer Financial Protection Bureau, which also monitors banks with $10 billion or more in assets. Right now, approximately 95% of the compliance team’s tasks revolve around CFPB-related issues. For BECU, documentation is more critical than ever.

“Absence of evidence does not necessarily equate to evidence of absence, but that’s not the way regulators view it,” Cann says.

BECU self-identifies regulatory violations and potential violations as well as subsequent corrections to the board and audit committee. It is also doubling down on the time and dollars it spends capturing meeting minutes regarding compliance discussions.

In addition, the credit union is navigating a capital planning and stress-testing requirement added for credit unions in its asset category last year by the NCUA. 

Activities there include creating a definition for capital adequacy and incorporating that definition into its risk identification framework, says Kathy Elser, the credit union’s senior vice president of finance and administration, chief financial officer, and corporate treasurer.

Absence of evidence does not necessarily equate to evidence of absence, but that’s not the way regulators view it. 

“It wasn’t fun, but when we stepped back and started building our enterprise risk management system, we were having some of the best discussions we've ever had,” she says. “It’s much more than just mathematical calculations of what could happen. If you’re willing to look at it from that wider perspective, it makes it much easier to swallow.”

Across the organization, BECU is also spending time and effort to shift the institutional mentality of who owns compliance away from a singular department working in a compartmentalized way toward a broader obligation that belongs to all employees regardless of their role.

Business unit managers that wanted to implement a new product or change an existing one used to jokingly refer to compliance as the department of “no.” Now, they come to the compliance team early on, Cann says. 

“We’re collaborating and having conversations with the managers much earlier so we can build things right, right from the start,” he adds.

Externally, BECU realizes it has a larger voice than most and feels it has an obligation to help push the cooperative industry forward. For example, in his comment letter on NCUA’s capital planning and stress testing rule, Cann — himself a former state regulator — suggested rewriting and reordering the rule to include the ability to delegate more authority to committees so the board doesn’t have to deal with everything. NCUA largely incorporated Can’s feedback into the final ruling.

The credit union also partnered with Bethpage Federal Credit Union ($5.8B, Bethpage, NY) on a supplemental capital effort in Congress called the Coalition For Credit Union Access for a number of years before handing over the reigns to the Credit Union National Association.

“We’re the largest or second-largest credit union in most of our trade organizations, so we have responsibility to provide input and add our weight to things,” Cann says. “But we still have limited resources, so we have to know how to pick our battles.”