Credit unions have changed tremendously over the last 20 years, indeed over
the last 10 years. This was a carrot-and-stick evolution. Outside the credit
unions, traditional single-sponsors shrank, evolved or disappeared; the financial
services industry radically altered; and Americans demanded better and more
sophisticated services. Inside, credit unions saw that they provided good deals
to the American people and so they changed in order to continue to offer their
advantages in the best ways possible. What have emerged have been credit unions
of varied business functions with immense size, sophistication, and reach.
Some operate not only traditional credit unions – taking savings and
making loans – but they also in essence operate credit card companies,
first and second mortgage companies, business lending companies, debit card
companies, check cashing companies and more. Some have more assets under management
than the small banks in their communities, or even than all but a few of the
large banks in their communities. Even those credit unions that have not moved
to these levels of sophistication have nevertheless evolved in this direction.
More than ever they have open FOMs or are community charter credit unions, able
to serve not just a select few of a community but vast swaths of a community,
if not everyone.
Management has had to change in step. Staffs have had to change in step. What
has not particularly matched the intense evolution of credit unions has been
A New World
Volunteer Boards were always essential to credit unions. Before there were staffs
there were Boards, the volunteer owners who kept the books, who knew the members,
plus their families and their needs, especially their credit worthiness. They
would grant loans on the value of a name alone. Because credit unions were cooperatives,
Boards were the very essence of local ownership and control for the greater
good of the members.
Alas, now Board members have to be masters or nearly so of data processing,
Internet banking, accounting, real estate economics, business strategy, marketing,
transaction fee economics, human resource management, investments and more.
Lee Iaccocca would be hard-pressed.
Nevertheless, there is no turning back the clock. This is the world we live
in. Small credit unions that have not changed nor intend to and have their shrinking
member base can have their old-fashioned Boards, picking Harry to replace Sue
because Harry is a good guy at meetings and won’t rock the boat, but they
are going to disappear as they have been disappearing for these last two decades.
To survive, credit unions and Boards have to do more.
Boards as Organizational Assets
Boards must now think of themselves as organizational assets. They are more
than supervisors of the CEO, which is basically a reactive role. They need to
be proactive, and look out over the horizon to where members are going to need
value in the future.
Boards need to give much thought and act wisely in choosing a CEO. It is the
CEO who then sets the tone for the organization. But this job done, there is
no resting on the oars; there is much to be done. Board members have to watch
the credit union but not be distracted by credit union practices so as to neglect
their higher function of searching for and securing new value for members, wherever
that value is to be found. They are the people who have to “think outside
the box,” to not limit themselves to yesterday’s solutions.
Accordingly, Board members cannot look to fill empty chairs with persons like
themselves, or “who might be good on our trips.” Rather they need
to look for sophisticated expertise, professionalism, proven success, and dedication.
Door to the Future
In some respect, credit unions have had an inferiority complex. Its Boards comprised
blue-collar workers who represented membership well enough but also understood
that they were not corporate manager types. This was a strength, but it cannot
be allowed to hold us back. We looked inward at our own select memberships;
now we have to look out to all Americans who can benefit from our practices
and philosophies. Boards, to be organizational assets, have to be asset managers.
They have to acquire, manage and dispose of assets over the assets’ useful
lives. These are uncommon skills requiring much thought, imagination, and tough
For our members’ sake, for credit unions’ sake, it is not enough
to look back to the wonderful and helpful principles of our past. We have a
limitless future; we could be the entities that bankroll the new corporations
of the new new economy, that bankroll the new Microsofts. But to do so we need
Boards with imagination, drive, professionalism, training and resolve to deal
with the big pictures and not the small.