Economic and regulatory demands are putting pressure on both credit union staff and executive leadership. The average full-time employee serves 384 members, according to Callahan & Associates’ Peer-to-Peer Software. Four years ago, that number was 372. Add to this workload the daily demands of running a business and it’s clear that any spare time for improvements or passion projects comes at the expense of valuable time and energy.
In a 2012 survey conducted by Capgemini Consulting and the IESE Business School, only 42% of respondents from various international companies reported having a dedicated innovation strategy in place. To formalize the production of creative ideas that typically happen only by chance, Local Government Federal Credit Union ($1.2B, Raleigh, NC) created two strategic innovation positions nearly two years ago. Then it moved a communications manager and a web manager into the new roles.
“Growing credit unions can’t afford to use the excuse of ‘we’ll get to this project eventually’ or ‘we’ll start planning for that issue next year,’” says Michael Spink, an innovation strategist at LGFCU. “There’s a difference between addressing growing pains and letting inactivity on new fronts become your status quo.”
But LGFCU doesn’t want to be everywhere first or keep up with the proverbial Joneses. Innovation for Local Government is about identifying where the credit union must invest to prepare for the future and then building the resources to move in that direction.
Spink and his colleague, Lamar Heyward, are the only two of the credit union’s 81 employees who are not tied to a specific department. Instead, they effectively act as “free safeties" to ensure windows of opportunity do not slip by.
It’s a nuanced role that requires monitoring each segment of the institution, following the actions of peers, and remaining apprised of what goes on beyond the curtain of financial service.
“We're the odd guys. People don't fully understand what we're up to and why we're doing it,” Spink says. “That's a drawback and also a blessing because we don't need to fit any particular department’s mold.”
In some ways, the innovation team works from the top down, meeting with each of the department heads to discuss priorities. But Spink and Heyward also spend time creating opportunities for the frontline and channeling those employees’ ideas up to key decision makers.
“We have a lot of intelligent, creative people here and we want all our staff to have opportunities to present their ideas without someone over them killing it,” Spink says.
Fostering Participation And Collaboration
From identifying underutilized talent to creating new channels for better inter- and intra-departmental communication, much of an innovation strategist’s work comes down to connecting the right people at the right place and time.
For example, when it was discovered a member development officer had a strong propensity for data analysis, she was afforded a move into that discipline, providing an opportunity to do what she was passionate about while pursuing new business intelligence projects for the executive team.
“She did three times more than we could ever have anticipated, even working on the project at night,” Spink says. “Employees that are given these opportunities always get their main job done, if only so they can work on what they really want to do.”
Another move that has improved the rate at which the credit union initiates and completes projects is the development of multi-departmental project councils. Plus, the councils help expand the impact radius of projects, helping to benefit more of the institution.
“People say if you don’t want to get something done, throw it to a committee,” Spink says. “For us, it’s the opposite. Getting people who don’t typically meet to brainstorm together is having an impact on what we are able to accomplish.”
For example, the credit union’s asset liability management team, which previously operated only as a function within the finance department, has been including IT, lending, and other departments in its meetings. Opening the meeting has given a face to the finance department and helped the lending people see they are more than a cog in the machine, Spink says.
Even a tiny boost in employee confidence can pay dividends on the frontline. LGFCU achieved 4.75% total loan growth in fourth quarter 2012, and its employees drove an average of $6.81 in revenue for every one dollar spent on salary and benefits compared to a peer average of just $3.77.
“Two years ago, when you asked employees why they liked to work for us the answer was usually about their benefits,” Spink says. “Now, people are seeing their ideas and projects moving, and that creative satisfaction is more powerful than many other things we offer.”
Repositioning The Institution
“We’ll be 30 years old this year and have had double-digit growth as long as we’ve existed,” Spink says. “It’s not like we are going to disappear if we don’t make these changes, but we do need to start taking calculated risks when there is a clear advantage in doing so.”
From the reverse exodus of rural populations back into urban areas, to the rise of car-sharing services such as ZipCar, how members choose to pay for major consumer goods — if they decide to own them at all — will change rapidly in our lifetimes, Spink says. Financial institutions will have to adapt to transformative business models sooner rather than later.
“You’ll see fewer 30-year fixed-rate mortgages because you can’t project the risk,” Spink says. “These loans also don’t work for borrowers anymore because people don’t stay in their home, or even a region, for 30 to 40 years.”
As demand for traditional financial products dissipates, many markets will be primed for new types of lending, including options like community borrowing. With its dedicated innovation strategy, LGFCU is prepared to invest in its future and build the resources it needs to stay relevant to a changing membership.
“If fewer of our members own homes or cars, and more are developing their own jobs or creating their own products,” says Spink, “then we need to figure out how we as a financial institution can stay relevant to them.”