PERSPECTIVE IS EVERYTHING. A credit union that struggles to develop fresh strategies can benefit from a deeper, broader pool of ideas. After all, senior managers and board members can be so close to a problem that they don’t see it or so far removed from it that they never encounter it.
To avoid falling into a trap of insular thinking, Neighbors Federal Credit Union ($616M, Baton Rouge, LA) takes an unorthodox approach. Five or six years ago, the credit union asked everyone on its staff, especially people who had direct contact with members, for suggestions on strategic initiatives.
Vice president or teller, the credit union wanted ideas from them all, says Neighbors CEO Kathi Gill. Staff members didn’t have to bring forward polished ideas, just a reflection of what members were saying about products or services the credit union already offered and those it had yet to conceive of.
Mixing Up The Points Of View
Neighbors starts its brainstorming process in the middle of the organization, with employees who supervise staff. Over two or three months, midlevel managers host departmental focus groups to discover what their own staff members — tellers, call center representatives, loan officers, etc. — have to say about member feedback.
Our front-line staff has so much to bring to the table.
“Our front-line staff has so much to bring to the table,” Gill says. These employees give a voice to members in a way a member survey does not. That feedback then filters up to senior management and the board, who take it into consideration when choosing the year’s initiatives during a half-day planning session.
For the past few years, Gill also has invited a colleague from CUNA Mutual, which Neighbors has partnered with to deliver financial services to members. Having CUNA Mutual attend planning sessions gives the credit union someone else to bounce ideas off of and strategize with.
“There’s value in getting an outside perspective from someone who knows our industry and us,” Gill says. “It’s like having a close first cousin you don’t see very often stop by for a visit. This is someone who is well versed on credit unions, can talk our language, and understands our planning.”
Like many credit unions, Neighbors’ strategic plan includes short-term initiatives for one or two years out as well as a broader, long-term goal that spans five to seven years. To be part of the strategic plan, the initiatives and long-term goals have to advance the credit union’s overriding, unchanging mission — offering value to the membership. Currently, the credit union’s long-term goal is to improve operational efficiency, something Gill believes is essential for her medium sized credit union to survive alongside larger institutions whose deeper pockets offer greater economies of scale.
Based in part on the information they were getting from the staff, the board and senior management set four strategic initiatives: expand indirect lending, improve loan processing, maximize branch revenue, and complete the credit union’s search for a new data core processor. The credit union revisits its initiatives every year at its planning session, and there are always some goals it carries over to the following year because they’re either perennial initiatives that never fall off the radar or projects that take longer to complete. “To be perfect at all four initiatives at the same time just doesn’t work,” Gill says.
Teams of mid- and senior-level managers devise a tactical plan and implement the initiatives. Here, too, the credit union benefits from new perspectives. It places staff members from other departments on different teams, for example, placing a lending expert on the marketing team or an IT person on the lending team. Mixing up the expertise has become so popular with the staff that team members from outside a department sometimes ask to stay on a project until the initiative is complete.
“We decided against that because we’re pretty slim staff-wise,” Gill says. “And there are still opportunities for them to provide input.”
Metrics For Success
To keep the ball rolling and provide accountability, Neighbors assigns each of its initiatives to a senior manager, who updates the board and executives with quarterly progress reports. Senior managers may give those updates more frequently, like during one of the weekly senior management meetings held every Monday morning, if necessary.
Neighbors uses benchmarks on what it calls “metrics for success” to monitor progress on initiatives. For its loan processing initiative, the metrics include increasing the credit union’s loan to share ratio 5%, increasing the dollar value of its approved loans 10%, and establishing a faster, minimum time for processing a mortgage loan from application to settlement.
Although senior management suggested the loan initiative and its accompanying benchmarks, Gill credits lower-level staff input for helping Neighbors establish and achieve an earlier initiative to increase membership through mergers and acquisitions. Over the past two years, Neighbors has merged with three credit unions and built its brand recognition by helping smaller credit unions accomplish their strategic initiatives.
Earlier this year, Neighbors did a neighborly thing and helped fund a much-needed drive-through window for SHPE Federal Credit Union ($2.4M, Greensburg, LA).
A Wake-Up Call
The nature of strategic planning is that something unexpected will inevitably come up. So when the manufacturer of the core processor Neighbors had selected for its database told Gill it was discontinuing the product, she was unfazed. Gill simply reassembled her team, which went back to the drawing board to find another processor.
Less easily addressed was the staff reaction to the announcement of the initiatives for the upcoming year. Some staff members thought a vital initiative was missing from the lineup: a solution for the credit union’s inadequate office space.
“One of our employees raised her hand and said, ‘You’re not sharing an office with three people or working in a department where everyone is spread too far apart,’” Gill recalls.
Gill and the senior managers were aware of the problem but thought they had more time to act. Clearly, however, many employees felt the inadequate design hampered their ability to achieve Neighbors’ long-term goal of working efficiently. So the credit union added a fifth initiative on the spot along with parameters for creating temporary fixes until it could implement a more permanent solution.
The team charged with addressing the space issue moved quickly. Neighbors was constrained in that it could not lease additional space or add on to the existing building. The team could, however, renovate, tear down walls, and redistribute the space to provide more workstations and create a more effective floor plan. Construction has begun, and although it’s a work in progress, the credit union discovered unexpected expertise to address the unforeseen addition to the strategic plan.
“One of the individuals on the team has a background in architecture that we didn’t even know about,” Gill says. “We definitely feel we’re going to get a good product.”