Internal Culture On Fire - A Series

Edgar Schein, a professor at MIT Sloan School of Management states: “The only thing of real importance that leaders do is create and manage culture.” Credit Union leaders like Matt Monge of Fort Campbell Federal Credit Union  and Thad Angelle of MCT Federal Credit Union  seem to both agree with Professor Schein.

Matt feels so strongly about credit union internal culture, he created The Mojo Company, a consulting firm that deals solely with internal culture. In an article on Mark Arnold's blog, Matt states: "While it’s easy to throw out the words “culture change,” it is in fact much more difficult to actually do it."

Well, we found a credit union CEO that is putting his words into action and "actually doing it."

Thad Angelle is a CEO with great conviction about the impact of internal culture on his credit union…  which is why he is the highlight of the next several blogs you will see from us. You see, Thad is different. He is putting his money where his mouth is and we like that. Over the next couple of weeks, you’ll see us talking a lot about Thad. And you’ll see why – he’s a pretty cool guy with a lot of passion for his credit union. Passion he has put to action.

MEET THAD ANGELLE

He’s a leader who’s always had a big smile and a bit of swagger. But these days he’s more eager to boast his newly gained appreciation for listening first, talking later and giving credit to his team before all else. Thad didn’t attend MIT, but he’s certainly validating Professor Shein’s position. Better yet, he’s putting this philosophy into practice.

Learn why next week…. 

Pop Quiz

HOW CAN YOU MAKE SURE YOUR CREDIT UNION'S INTERNAL CULTURE IS HELPING OTHERS?

BE YOU.

People can usually tell whether you are putting on an act or being genuine. And nobody is better at being you than… well, you! Find what makes your credit union unique, cultivate it, and celebrate it. Help your employees understand this unique story and make it their own.

USE YOUR INSIDE VOICE.

Good internal communication is crucial to the success of your internal culture. It’s the difference between functioning like a herd of cats versus a school of fish. When your employees understand and believe in the culture, their customer service will make sure your members understand and believe too.

SHARE THE LOVE. 

Cultures that recognize the contributions of employees will be stronger, truer, and longer-lasting than cultures where behavior is forced by top-down decrees. If leaders and employees don’t have a strong sense of team, it can undermine your culture very quickly. Employees who feel the love are more likely to inspire similar feelings among your members.

WALK YOUR TALK. 

Remember that actions speak louder than words. Every interaction (no matter how small) is an opportunity to affirm your brand in the eyes of your employees and members. Your brand is a promise you make to your members; your culture is how your employee team lives, breathes, and delivers on that promise.

IT'S A MARATHON, NOT A SPRINT.

Your culture is your credit union’s personality, not its wardrobe. A strong culture endures over time, responding to changes in environment with the steadiness of self-awareness. Evolution is a natural and healthy trait of organizational culture; chasing fads is not. Customers seek long-term relationships with brands they know they can trust throughout the test of time.

Your Internal Culture Impacts Your.... (Fill In The Blank...)

Your Internal Culture Impacts Your....

EMPLOYEES


Individual and collective employee performance can be affected either positively or negatively by the corporate culture you embrace. (www.kellyservices.com, “Corporate Culture Affect Employees”) 
The cost of losing an employee is about 38% of the departing employee’s annual wage. (John Dooney, manager of strategic research at the society for Human Resource Management) 

MEMBERS

Industry has discovered the value of loyal customers: they buy more, buy more often, are cheaper to serve, have higher retention rates, and are more profitable than newly acquired customers. (Aruthur Middleton Hughes, “How Customer Service Builds Loyalty and Profits”)

The cost of acquiring new customers is five times the cost of servicing established ones. (referencing analysis by Reichheld, The Gallup Management Journal, “The Constant Customer”) 


When a brand inspires both rational loyalty and emotional attachment, customers will continually reward it with their business. (The Gallup Management Journal, “The Constant Customer”)


FINANCIAL PERFORMANCE

Sustained success has to do with managing culture. Organizations change without an awareness of what drives the organization’s culture may be the reason close to 90% of all projects fail. (Toby Elwin, “The Cost of Culture, a 50% turnover of the Fortune 500”)

Examples from an 11 year Harvard Business School study show a variety of areas in which companies with the “right” culture outperformed their counterparts: revenues were 4.1 times higher, stock price was 12.2 times higher and return on investment was 15 times higher. (www.renovacorp.com, “The Impact of Corporate Culture on Economic Performance”)

According to a study by the Hay Group, failure to consider cultural integration is a common and often disastrous mistake made by merging firms. (Jesse James, “The Importance of Corporate Culture to Merger Success”)

Principle #3: Member's Economic Participation

The third of the 7 Cooperative Principles for Credit Unions is the principle of members’ economic participation.

“Economic participation” might sound like a mouthful, but it’s pretty simple. Basically, a credit union gets money from its members and then loans the money out to other members.  The more members participate, the more there is to go around.  It’s kind of like the idea that the whole is greater than the sum of its individual parts, or like how the chemistry of a team can make it even better than the skill level of the players individually. Credit unions follow a “people helping people” philosophy from the way they treat members to the way rates are decided.

Member participation leads to better rates and fees than a bank typically offers.  Plus, when there’s a surplus it often gets returned to member in the form of a dividend after appropriate reserves have been set aside - because members are owners rather than just customers. Credit unions don’t have any outside stockholders; they exist because of and for the benefit of their members. That’s a unique position in the financial industry, and a story your employees should know how to tell.

Most credit unions are pretty good at communicating about their rates and service, but it may help your employees do their jobs more effectively if they understand the “why” as well.

Get Active: Revive your Single-Service Sleepers

When you review your credit union’s unprofitable accounts, how many of them are inactive? Many credit unions find themselves with a segment of members who joined the credit union for a specific purpose (often a loan offer), and remain members with inactive low-balance savings accounts after they have finished using the product that enticed them to join.  These single-service households can become burdensome.  As you look for ways to expand your share of wallet among all members, a special focus on reinvigorating these single-service sleepers may help improve your profitability.

GET OUT YOUR MAGNIFYING GLASS
Examine.  Try to determine why these members are inactive and unprofitable by looking at vulnerability, profitability, and demographic details.  FIS (http://www.fisglobal.com/AboutFIS/index.htm) has tips on using analytics to help increase opportunities to leverage and expand customer relationships to improve your profitability. 1

KNOWLEDGE IS POWER
Educate.  There’s a good chance that when these members joined, they didn’t know a whole lot about your credit union – just that for a particular product, you had the best option at that time.  A targeted marketing effort can help you educate these members about what makes credit unions unique, as well as update them on current rates and offers that are available to them. The more tailored your cross-sell approach (What do they not have that they might need? Can you offer a better-than-market rate on another product?), the more likely you are to improve the relationship.

A LITTLE GOES A LONG WAY
Encourage. Involve your staff in seeking ways to improve relationships with members.  A recent CUNA study shows a more member satisfied means more loyalty and activity—both in using your products and recommending you to others. 2  Each time your employees have an opportunity to interact with a member, it’s an opportunity to build loyalty and prevent members from wandering into that inactive single-service category.  Develop and encourage an internal culture that supports loyalty—inspiring attitudes and behaviors.

ARE YOUR MEMBERS SEATED IN THE EXIT ROW?
Exit.  If you have made an ongoing effort to revitalize a non-performing member with no response, it might be time to consider an exit strategy for the relationship. You may want to consider charging inactivity fees or find other subtle ways of encouraging the member to move on rather than passively draining your resources.
It tends to be more cost effective to retain and develop an existing customer relationship than to acquire a new customer.   A strong service-oriented internal culture and targeted marketing efforts may just be the right prescription for your comatose single-service accounts.


1 Moed, Joyce. “Marketing and Sales Culture Target Inactive Accounts.” CU Times, 12/15/2010.
2 Credit Union Member Satisfaction, Growth, and Loyalty Report, CUNA 2010.