KEY WEST, Fla.–Two CEOs and one senior executive from three large credit unions shared their views and experiences in steering their organizations through everything from recruiting and retaining talent, to the use of incentives, to attracting deposits, to where they want to be a few years from now among other issues during an interactive discussion here.
Participating in the Q&A session during NAFCU’s CEOs and Senior Executives Conference here were Lisa Schlehuber, president and CEO with the $1.5-billion Elements Financial Credit Union in Indianapolis; Mike Schnably, SVP-member experience and sales with the $3.3-billion Citadel FCU in Exton, Penn., and Dave Mooney, president and CEO of the $11.6-billion Alliant Credit Union in Chicago.
The session was moderated by Anthony Demangone, EVP and COO with NAFCU. Here’s a look at how each responded to questions, most of which were provided by the audience through the conference app:
Demangone: What are you doing in human capital that you didn’t have to do five years ago, and what do you think you might be doing five years from now?
Schlehuber explained that until 2008, what is now Elements Financial FCU was a single-sponsor CU serving Eli Lilly. It has since expanded its FOM to include approximately 130 SEGs. “Indianapolis is not the hot spot people want to move to,” said Schlehuber. “We try to be very creative and our most successful method is barstool recruiting. We have literally hired people we have met where there is a spark. We are not branch-based, we are all digital. People who work in digital and enjoy that space is who we are trying to attract. There aren’t many 20-year-olds saying I want to work at a credit union, so we try to make sure they understand who we are.”
Schnably explained Citadel FCU has five branches (a network it is expanding) and is a strong indirect auto lender in its markets. “We are looking for people who have skills we haven’t typically had in our organization, such as analytics and member journey mapping. Some of our employees saw what was coming and went and got the skills, and that maybe happens half the time. But we have also gone out and found people. We are paying a fair wage, but we are not competitive with the high tech corridor companies. But people like the idea of a credit union and the culture. We can bemoan that we don’t pay enough or we are an industry thought of in certain ways, but we do have advantages.”
Mooney explained Alliant Credit Union’s roots are also as a single sponsor credit union chartered to serve United Airlines. “Our employee value proposition used to revolve around the airline and flight benefits. Our new employee proposition consists number of things; one is pay. We employ very few people. We have $12 billion in assets and just over 600 people with one small, no-cash branch. So we pay up for talent and pay in the top-third in all financial services. The other part is committing to high employee engagement. We drank the Gallup Kool Aid and their strength-based approach to management and development and we have consistently been in the 80thpercentile and higher in employee engagement. We work that hard and there is no finish line in that. You have to constantly refresh it. We have very high Glass Door ratings. But it didn’t come easy or overnight.”
Schlehuber: I didn’t initially get the whole Glass Door thing. But we have even had members look at that. We have an internal campaign where we try to make sure to understand why it’s really important. We looked at every single job description. One of our current employees laid out three other job descriptions and said, ‘These are the places where I want to go work.’ Then we read ours and thought, ‘That’s a real dud.’ We really think about what a job description looks like and what it says. That has made a difference.
Demangone: Are there any industries that are sources of good talent?
Mooney: We’re getting a lot of talent from banks in the Chicago area, people who want to get off that grind and into a smaller organization. Interestingly, in our contact center, we are finding a lot of people coming out of mobile phone retailers who find that is not very compelling work and who want a better career path.
Demangone: How do you attract excellent IT talent into a boring banking job?
Schlehuber: We allow people to work remotely. We have a couple of IT people I think I’ve met once in the last two to three years. They are very content. To me, it’s strange, as I like to interact with people, but they do a fabulous job for us. It’s allowing them to be creative in what they are doing. That keeps people engaged and allows us to think in different ways than we have in the past.
Demangone: How do you communicate your succession plan to your employees?
Mooney: Ours is an interesting situation. For years, we discussed annually with the board an executive talent review. A couple of years ago our board worked up the courage to ask me, ‘When do you think you might retire?’ My board decided to conduct a very public process. They said anybody who is interested on the executive team can raise their hand. We put them through a rigorous process with an outside firm, and then provided feedback to those individuals about their prospects. Now we have an individual auditioning for the role, and they are working to close the gaps in their business maturity.
Schnably: For us, it’s embedded in the annual review process. Every employee is asked, “What would you like to do” and then have a nonconfrontational dialogue around how they would like to develop? Where we struggle is most people look at their boss’ job and think that’s my next stop. We want them to think laterally, too, and that can make people uncomfortable.
Schlehuber: We killed annual reviews about a year-and-a-half ago. We have ongoing development. We ask, what are you interested in? What do you really think? We use Gallup and uncover skills and have people job shadow others. We do ongoing cross-training among our 480 employees. We have to continue to think differently--anything we can do to help build that curiosity.
Demangone: What about incentives?
Mooney: We intentionally have a relatively high variable pay component for all employees. Most employees are in the same plan, including me. It’s mostly enterprise metrics, both financial and non-financial, with a modifier for individual contribution. And our sales people have more plans for them. My view is incentives are appropriate, but they are just one component. With proper design and proper oversight, I think they can be very effective.
Schnably: I believe variable pay can be healthy for people. We want people to go out and want to succeed. But member satisfaction is most highly weighted within our organization. There is a balance.
Schlehuber: We instituted incentives to help us change our culture, 10, 11 years ago. After being a single SEG credit union, we were very sleepy. There were basic things we weren’t doing. It has been successful in changing our culture, but we look at them every year to make sure we are doing it for the right reasons and that we are focused on the things we need to be focused on.
Demangone: Are you chasing loans or deposits?
Schlehuber: We are unique in that being tied to a large employer; we have just gotten $130 million all in one day that came out of a bonus paid by Lilly. We have always paid a nice rate and been leaders, but now we are seeing our bank competitors move and even exceed what we do. It’s a challenge on a daily basis. A lot of our members bank with BofA, Chase, and we have to be aware of what they are doing.
Schnably: We came into the year with a plan to chase deposits, as we were 110% loan-to-share. But things changed quickly. Auto lending in the Northeast slowed, then housing slowed, and now we’re at 95% loan-to-share. I think you have to be prepared, not to whipsaw your organization, but to pivot.
Mooney: We all know that depending on economic conditions, deposits and loans ebb and flow We focus first and foremost on driving healthy membership growth, because deposits and loans will come. This isn’t gratuitous membership, and we believe over time the balance sheet will more or less take care of itself. We are currently paying over 2% on savings, which has always been a strong proposition. We don’t do promotions because we feel it creates temporary relevance and you tend to attract mercenaries. We believe in everyday great pricing.
Demangone: What about the experience or building trust with the member?
Schnably: We put experience in my title recently, and I don’t think any member or consumer cares. It was more of a message internally, that we want to control the experience. It’s our most valuable asset.
Mooney: Our primary competitors are the so-called direct banks. In that field everybody brings price, and we don’t want to be out on the frontier on price. Our strategy is to compete on price but to differentiate on experience. That’s aspirational and we have a long way to go on that. One thing we identified years ago and are trying to build in the organization is consumer-centered design competency. We have a team of designers that work on product and process, but importantly, we’re trying to distribute the mindset and skills throughout the organization and propagate it as a way to flip the lens and think about what we do from the standpoint of what the consumer thinks and feels and build that more into how we operate.
Schlehuber: The challenge is flipping this and thinking about from the member perspective. We tend to just talk about it. I received a two-page letter from one member who detailed everything that had happened to him on a two-week trip. It led to a very healthy discussion about what do we really think about member experience. Do we have a strategy? Are we just throwing words at it? Our teams will tell you we do that, but we look at it with our credit union blinders on. Our teams will raise their hands and say what we do this great, but we suck at it sometimes. In this case, the member was trying to alert us that he was traveling. I went to our website and punched ‘Travel Alert,’ and nothing came up. You want to have someone who is not the marketing/website guru see if they can go find it.
Mooney: Similarly, our principle is we want to own the member interface. What happens under the sheets is less important, but in some cases, we have to compromise and use, for cost reasons, outside third parties.
Demangone: Looking to 2021, if there were one thing to knock off your plate, what would it be?
Schlehuber: For us, I do think it’s back to this member experience piece and to ‘stop the stupid.’ If we could really get the basics—we’re good, don’t get me wrong—and get to the next level and be consistent, that’s the key for us.
Schnably: We use the phrase ‘electronic hug.’ We have a great brand and experience in person, but with everything going mobile, how do we make for a great experience there?
Mooney: I’d love by 2021 to see us have a consumer-centered design competency and deliver a consistently reliable digital experience.