The financial challenges SPIRE Federal Credit Union ($596.7M, Falcon Heights, MN) experienced during the recession did not occur by chance or by economic circumstance alone; but then again, neither did its subsequent recovery and success. Its turnaround was largely the result of a methodical, ongoing strategic planning process implemented by CEO Dan Stoltz, who assumed the position in 2010.
“One of my favorite quotes is, ‘A person who aims at nothing is sure to hit it,’” Stoltz says. “After the recession, we discovered we needed to establish specific goals for one, two, three, and five years out as well as find better ways to track our progress.”
Major components of the credit union’s strategic plan now include transitioning to zero-based budgeting, bolstering allowance for loan loss analysis capabilities, drafting a long-term vision for technology and human capital, developing and refining branch and product profitability scorecards, and readying for possible merger and acquisition opportunities. Each of these investments help build what Stoltz calls a “decision science engine,” whereby the credit union is able to seamlessly harness and weigh hard financial data and statistics, member and employee feedback, and other quantifiable resources to inform key decisions.
Getting More Out Of The Net Promoter Score
The credit union already has an established reputation for high-quality service.
But in order to improve, SPIRE needed to go beyond what it knew it was doing well and focus on identifying what it could do better.
“When you have a strength, it’s not good enough to just accept it,” Stoltz says. “Instead, you want to work to make it even stronger.”
To achieve that goal, SPIRE turned to the Net Promoter Score (NPS), which measures member loyalty by asking the key question of how likely members are to refer someone and helps foster insightful two-way communication. Implemented just two years ago, the credit union has already reached a Net Promoter Score of 70. NPS scores can range from negative 100 all the way up to 100 depending on the industry, but top performers typically score somewhere between 50 to 80, according to the company behind the NPS system.
“We’re continually sending out relationship and transactional surveys,” says Scott Jax, director of strategic management. “We send between 120 and 150 surveys that are triggered by transactions every day. There’s also a random sampling that goes to between 100 and 150 members every day. And on a quarterly basis, we send our general relationship surveys.”
But to get the full benefits of this program, collecting information is only half the battle, Jax says. The rest is about taking action.
“Between the two types of [NPS] surveys, relationship and transactional, there’s about 1,500 members we’ve been able to follow up with,” he says. “Members are often surprised that we are following up on their suggestions or concerns.”
Through discussions spurred by surveys, the credit union has addressed several key issues for members and implemented new products or policies. For example, members identified expanded business hours as a bigger priority than the credit union thought they were, so SPIRE began staggering branch staff to keep half of its locations open on Saturdays.
A Five-Year Facility Plan
SPIRE currently has 10 brick-and-mortar branches, but the credit union relies on other resources, such as shared branching, to make its footprint feel larger than it is.
“A lot of our members will go to Arizona, Florida, or other warmer climates over the winter, so our shared branching partnership has increased options for these members to roughly 5,600 locations,” Stoltz says.
In addition to the ATMs it has at each of its branches, SPIRE promotes the availability of ATMs in area KwikTrip convenience store locations to get maximum channel impact at a minimal cost.
“KwikTrip’s strategy is … no matter who you are, wherever you bank, the ATM units in these stores are free,” says Kellie Eaton, vice president of retail and card services. “So we market that option heavily to our members.”
Lastly, partnerships with several area cooperatives that use SPIRE for merchant services have opened the door for free ATM placement at many of these locations.
Over the next three years, the credit union plans to hold off on market expansion in favor of strengthening its current branch footprint, Stoltz says. So far, renovations and small-scale relocations have proven effective in unlocking the full potential of struggling locations.
A prime example is the credit union’s Maple Grove branch. For roughly two decades, this location was effectively buried within a strip mall retail slot. In early 2013, the credit union moved the branch to a newly constructed stand-alone building. Since then, the branch has seen a steady 25-30% lift in both loans and transactions. According to Eaton, the last new branch the credit union opened took two or three years to reach the same level as the reopened Maple Grove location.
“We constantly have members say, ‘I’m so glad SPIRE is finally in Maple Grove,’” Stoltz says. “We’ve been in Maple Grove for years, so it just goes to show that the branches need to be out there front and center.”
An Investment In Human Capital
“Because of our size and the complexity of our operation, we have an obligation to the membership to get people on board who have the skills or the ability to develop the skills SPIRE needs to succeed,” says Jeff Streiffer, vice chair of SPIRE’s board of directors.
And as part of its HR strategy, SPIRE has taken a keener interest in the acquisition, training, and assessment of individuals at every level.
Part 1 — Employees
The lessons gained in the recession have stuck with SPIRE from an operational perspective. Although recent successes have lessened the financial pressures and opened new doors, ongoing economic and regulatory challenges mean the credit union must continue to get the most out of every available resource.
“I’m a strong believer that we do not blame poor service on an extra piece of paperwork or regulations,” Stoltz says. “When we serve our members, we should avoid using outside issues as a crutch for longer wait times on a loan app or poor service at the counter.”
Each of SPIRE’s 147 full-time employees serve 438 members versus a peer average of 348, according to Callahan & Associates’ Peer-to-Peer analytics, without sacrificing either service or loan generation to get there.
“For the most part, our employees are universal,” Eaton says. “But we’ve found that the success of this model depends on both the size and makeup of the organization as well as your rate of employee turnover.”
Part 2 — Executives
Siloed thinking doesn’t just affect the front line, it can be equally rampant in the corner office. That’s why SPIRE has retooled its communication structure for executives so no one party or group of interests dominates the process of putting together a compelling vision for the organization. Each August, Stoltz goes on a group session listening tour. The tour includes one-on-one time with the board as well as mid- and lower-level managers, and although the vice presidents are in attendance at these sessions, they remain silent and allow their employees to provide unfiltered feedback.
Likewise, Executive Vice President Stan Edwards holds his own group sessions with the vice presidents. Stoltz does not attend these meetings, which allows his team to have a more off-the-cuff discussion.
“We match up the best insights from these sessions to see where our VPs and other groups, as well as we as a team, feel we should go,” Stoltz says.
During an all staff meeting on Presidents’ Day, credit union management educates the entire staff on the year’s key issues and initiatives. SPIRE also shares this information with members during its annual member appreciation day event.
Part 3 — The Board
The board at SPIRE is about as diverse as they come. And that’s a trait the credit union wants to develop in the years ahead.
“My saying is “If we’re not here, who can we help?” so I personally put on more of a business hat than a co-op hat,” says Jim Taglia, board member. “But we also have an engineer, an attorney, and a couple of people that were in human resources, so we all look at things a little bit differently.”
In addition to studying traditional board packets and high-level updates from the CEO, the board is also expected to stay apprised of both industry-specific as well as general events, publications, and resources according to their personal interests and strengths.
“Because I’m a lawyer, I pay particular attention to the legal side,” Streiffer says. “I’ll take newsletters from my industry and webinars on the latest with the Consumer Financial Protection Bureau or Dodd-Frank and share those with management so everyone is up to speed from a regulatory perspective.”
The board has also become more involved in building its own transition strategy as well as a self-appraisal process. Term limits have proven to be a successful tool in creating a balance between fresh perspectives and seasoned, experience directors, says Stoltz. The next step for the credit union will be to develop volunteer channels outside the traditional board structure that can serve as a source for qualified board candidates when an opening becomes available.
Part 4 — Bringing It All Together
“As we continue to grow, we want to better understand where there are gaps in our institutional skill set so when we recruit for any of these roles, there’s some intent to whom we bring aboard and why,” Stoltz says.
We want to better understand where there are gaps in our institutional skill set so when we recruit for any of these roles, there’s some intent to whom we bring aboard and why.
Every employee at SPIRE now participates in the StregthsFinders assessment program, which highlights a person’s top five dominant strengths out of a total range of approximately 34 different profiles. The credit union also offers two hours of coaching with a program specialist so employees can improve the traits they have, diversify their skills, or simply discuss any personal or professional issues.
These assessments have already played a role in increasing departmental efficiency, and they will play a larger role in team building strategies and staffing decisions in the years ahead. The credit union is also in the process of turning its NPS lens inward by creating an employee version of the survey (eNPS) to stimulate new idea generation and proactive issue resolution, as well as benchmark how employees support one another.
“Strengths that are too strong can also be your biggest weakness,” Stoltz says. “The next level is to use this information to continue to create desired diversification in all of our key groups.”
A Three-Year Technology Plan
Although it identifies itself as a technology fast follower rather than an innovator, SPIRE is more than willing to invest in proven tools to help its members and employees. One of these investments was Niel Devasir, the credit union’s new chief information officer.
In the 75 days since his hire, Devasir has implemented new technology, such as a mobile app, as well as formulated strategies to build out the credit union’s other remote channels. The credit union already has a contact center that handles calls, chats, and soon, email interactions from a singular interface.
Approximately 30% of SPIRE members participate in the credit union’s Internet banking, and although it is too early for a solid read on mobile penetration rates, the future integration of iPad technology within the branch environment will help increase members’ exposure to this option.
“The demographics of SPIRE are right in that middle age group,” says Matt Ball, branch supervisor. “Since we’re trying to expand and reach a younger audience, one of the best ways to do that is through our mobile application.”
New channels also mean new vulnerabilities, particularly when it comes to members’ personal devices, which are outside the institution’s control. Education remains one of the most effective ways to counteract fraud, but the credit union is also exploring the option of including a free anti-malware resource that automatically installs alongside any future SPIRE applications for Android mobile devices.
Another important initiative is the continued development and enhancement of data warehouses that can support more large-scale analytic activities.
“By linking together our various information resources, we can use data to make decisions rather than our gut,” Devasir says.
SPIRE’s IT team is also ramping up its support and development capabilities to provide technology directly to members as either a value add or as an additional income strategy.
“In the business world, we can provide a business user with a check scanning machine,” Devasir says. “If it is a pizza place, maybe we could provide point-of-sale terminals and charge a fee for it.”
The last piece of this IT transition is to help other credit unions with technology, whether through a subsidiary or a specific product that other cooperatives would want to buy outright.
A Merger-Ready Mindset
SPIRE’s various investments in its business model are designed to keep the credit union out of a merger of necessity, but the credit union has also set the groundwork to identify and move on complementary opportunities when they appear.
“The merger-acquisition phase is still going to be strong over the next five years,” Stoltz says. “We were entertaining a merger a year ago, but it wasn’t the right fit and both parties agreed to that in the end.”
Since that time, enhancements to SPIRE’s analytic capabilities allow it to rapidly compare future opportunities and project the long-term implications of these actions to filter out a potential mismatch.
“If these discussions come our way, we certainly are going to look at them,” Stoltz says. “But now we have a process to more quickly see if they are something worth pursuing.”