AUSTIN, Texas—For a credit union to be successful and overcome challenges–such as having the mortgage department all resign on one day–one CEO says it first must find its “true north.”
That was one of a number of key messages Jane Dobbs delivered during the CUTomorrow Conference here. Dobbs is now CEO of the $201-million Canyon State CU in Phoenix, where she has also led a turnaround.
She outlined for attendees what she has learned about what needs to done for any credit union to find its way forward—whether the situation is a turnaround or simply competing effectively in the current competitive market.
Prior to joining Canyon State, Dobbs worked on NCUA conservatorship teams to turn around CAMEL 4 credit unions.
“Your true north is determining your true direction, where you are headed…your real goals,” said Dobbs.
‘Not Good News’
Yet finding that true north can be challenging, as was the case at Canyon State when Dobbs took over in 2013, Dobbs told the meeting.
“I walked into a credit union that was presented to me as one that was healthy, and it ended up being a turnaround,” Dobbs said.
Dobbs recalled her very first day on the job at Canyon State when the former CEO, who stayed on in an advisory capacity for months, informed her that she had a meeting with three EVPs.
“I should have known this was not good news,” said Dobbs. “The ex-CEO brought the three EVPs into the room, and then walked out and closed the door. The three ladies immediately told me, ‘We have a problem.’”
Dobbs was told that on the previous Friday the entire mortgage department had resigned. “The whole department resigning is not a problem, it is a symptom of something,” she said.
Dobbs said she immediately went into her “assessment mode.”
“I found out a lot of things in the next 60 days that the board did not disclose to me, and it’s likely that they did not know,” she said.
Common Warning Signs
Dobbs said that during her careful assessment of Canyon State, which took some time, she found many of the signs she had seen at other struggling credit unions. Some of those red flags were declining membership—the CU had been steadily losing members monthly for years, going from 23,000 in 2005 to 15,000 when she took over. She also found outdated technology, vendor performance and billing issues and a pullback from community involvement.
But the biggest issue, Dobbs said, was the culture of the credit union—it needed changing, she told the CUTomorrow Conference.
“The most important step in the assessment phase is understanding your people,” Dobbs said.
Culture, Culture, Culture
“There is a saying, culture eats strategy all day long,” said Dobbs. “What that means is that I can implement as much strategy as I want, but if no one in the organization is following me, if the culture stinks, you will not be successful in turning things around. If you are not investing your time in understanding the current culture and making sure the culture is right for the credit union, you are wasting your time.
“If the credit union is not performing, it’s often because a culture of apathy exists,” Dobbs continued. “There has not been any investment in the people, and there are ‘sacred cows’ no one is talking about.
Examples of sacred cows in credit unions, according to Dobbs, can be an underperforming employee who has been at the credit union for 30 years and vendors that are allowed to underperform.
“Since these issues have been around for so long, staff simply don’t talk about them. They won’t say, ‘Let’s address them. Let’s get the vendor in here and talk about how their solution can be improved.’ People avoid sacred cows; they just don’t go there because these things have become engrained in the business—longstanding relationships well protected—and people think ‘we’ve always done it this way.’ They don’t question vendor relationships and decisions that have been in place for a long time. That hurts the business.”
Strong Rebound
Canyon State had suffered through a number of unprofitable years prior to Dobbs’ arrival. But in her first three full years the credit union has posted net income gains of $969,666 in 2014, $587,330 in 2015 and $545,774 in 2016. The CU now is back to 18,000 members, deposit growth has increased from $137 million in 2013 to $200 million today, and the CU’s one-time 26.5 Net Promoter Score is back to a very solid place.
“We are consistently now above 75,” said Dobbs. “And that has taken a lot of time and effort. Turnarounds are not simple and they take time, but to get there you have to find your true north.”