“Kaizen” Philosophy Helps Credit Union Meet Efficiency Goal

A Georgia credit union encourages critical thinking to expose flaws in processes and procedures.

 
 

LGE Community Credit Union ($945.4M, Marietta, GA) took a long-term approach to meet its organization-wide efficiency goal. The credit union won’t take yes for an answer, and its focus on “why … why … why …” paid off. At midyear, its efficiency ratio — which measures how comfortably a credit union can cover its operating expenses — was more than four percent lower than its state and asset-based peers. In the case of efficiency ratios, lower is better, and LGE posted 76.47% versus 80.96% for credit unions in Georgia and 81.53% for credit unions with $500 to $1 billion in assets. Its operating expenses as a proportion of average assets were also lower than its regional and asset peers, 3.03% versus 4.22% and 3.36%, respectively.

Here, Susan Tillery, vice president of lending for LGE, talks about what made the credit union’s approach so successful.

What was LGE’s strategic goal regarding efficiency?

Our efficiency goal focused on driving better processes through the system. This was one of several goals that came out of the credit union’s strategic planning meeting with the board of directors back in 2009. We wanted to help employees at all levels question things in a constructive way and find new solutions to serve members more efficiently and effectively.

How did the “Kaizen” philosophy play a role?

Kaizen [which means “continuous improvement” in Japanese] was adopted during this efficiency focus. We encouraged people to ask “why?” five times. This allowed people to keep diving deep enough into entrenched processes that they were able to peel back the layers of the onion and determine whether all of the steps were necessary. This was also a key part of empowering our employees — it gave everyone throughout the organization an opportunity to ask why and to challenge the status quo in a constructive way.  

How did the credit union set out to achieve its efficiency goal?

Our action plan broke the overall efficiency goal into five areas or steps:

  1. Communications
  2. Processess
  3. Empowerments
  4. Trainings
  5. Delivery methods

A team was assigned to each of these areas. The initial team began by gathering feedback. Some of us used focus groups or sent questionnaires via email. We also had departments meet among themselves to determine any inefficiencies or pain points they experienced throughout the day that impeded them from getting their job done.

Who was on the initial team?

Initially, the team was made up of mostly managers. From there, sub-groups were established to address certain portions of the goal so it was not so massive of a task for any one individual or group. For the goal to be successful, it was important we included people from all departments and all levels. 

Can you talk more about how you encouraged feedback?

In addition to the focus groups and questionnaires, our CEO created a virtual suggestion box. Employees could email suggestions about the credit union. These could be related to process improvements or other general ideas. We also went back to the departments after we gathered the initial feedback to determine potential solutions. It was communicated that everyone should “Ask why. Why do we do it this way? And then why that way? Could we do it better? What could we change to make the process even easier?”

Can you share some specific examples of changes you made?

Absolutely, we made a number of changes as a result of this process, which lasted about three years. One of the changes was extending our call center hours to better accommodate our members.

We also created tools to improve communication — both internally and externally. In the past, it was difficult for employees to get in touch with people in another department, so we implemented an instant message function. This allowed front-line staff to instant message someone in another department with a question from a member if they didn’t have access to a phone. We also created a link on our website for members to communicate with LGE if they had an issue or wanted to compliment the credit union. We monitor those submissions and contact the member as quickly as possible to resolve whatever issues they are having or answer their questions.

One other item we are going to implement in the lending area this year is e-signatures. We’ll implement this by Nov. 1 and it will represent a tremendous efficiency improvement for our members. We’re really looking forward to that.

Have you continued any of the efficiency focus or Kaizen philosophy?

The initial process took place over about three years. As a result, the culture of the credit union is considerably different, in a good way, because of the efficiency improvements that have been made and other strategic goals we’ve focused on. A lot of the Kaizen-style questioning is naturally being done now. It has certainly empowered the employees to be open with their managers. The senior management team is also more focused on getting out and touching base with the staff periodically. Whether it is walking through departments or visiting the branches from time to time, even seemingly casual conversations allow lines of communication to remain open and can produce greater efficiency.

The complete culture shift change has been truly remarkable. From my perspective, I think it shows in how happy the employees are because each staff member feels they have a stake in what we do, how we do it, and how well we serve our members. That’s what it is really all about — everyone is part of the team, and that’s what makes us special.

How Do You Compare?

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Sept. 2, 2013


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