LAS VEGAS—The equation for a successful credit union? It all comes down to (T+C+EMF) x DE= BE.
That’s according to business consultant and author John Spence broke down into pieces what he has learned from working with numerous companies and organizations, both the successful and the not-so-successful.
John Spence speaking to NACUSO meeting in Las Vegas.
In remarks to NACUSO’s annual conference, John Spence—who said he has read more than 100 business books every year since 1989—said the most impactful phrase he has heard lately is this: To be successful in the future, the rate of internal innovation must exceed the rate of external innovation.
“In other words, you have to be better, sharper, and more adaptable than every other bank and credit union that is trying to get your members’ money,” said Spence.
Spence said he ran manuscripts from his own books as well as numerous other business books representing more than 250,000 pages through the software solution Wordle, which in turn created a “word cloud” graphic that illustrates which words appear most frequently. Those words: Culture, Customer. People, Communication, Transparency, Focus, Talent, and several others.
From all that, combined with his own insights and experiences, Spence said he developed this formula: (T+C+EMF) x DE= BE. That equation for Talent plus Culture plus Extreme Member Focus times Disciplined Execution equals Business Excellence.
Here’s a look at each of the components as outlined by Spence:
Talent
“Pretty much, the only sustainable, competitive differentiators are the quality of the people you can get, grow and retain on your team, and the quality of the relationships they can create with your members,” said Spence. “It’s tough to differentiate yourself on money or buildings. What competitors can’t copy is awesome talent with tight relationships with members. You want people who are so good they are what I call ‘voluntary employees.’ If they quit, they can get another top job that same day.”
What does it take to attract top talent? Spence said he has asked 10,000 employees, “Why do you work where you work?” The findings:
- Fair pay that is 10% above or below what they would get somewhere else. “Top talent is not greedy. Greedy people are greedy.”
- Meaningful, challenging, purposeful work. “You are lucky that you are in an industry where you can do that. You’re not there to maximize profits.”
- Cool colleagues. “‘A’ players only want to play with other ‘A’ players. If they are with D players, they get frustrated and leave.”
- Winning Culture.
- Opportunity for personal and professional growth. “They want to look back at the end of the month and see they got better than they were at the beginning of the month. They also want to be able to look up and see a place for themselves five or seven years in the future.”
- A Leader I Respect and Admire. Although listed last, for many people this is first, Spence said.
“The main lesson here for you is money isn’t what it takes to get the best of the best,” said Spence. “If you give them fair pay, it’s these other five things that matter.”
Once those employees are on the payroll, how can a manager build them into a successful team? There are six factors to consider, said Spence:
- Direction. A shared direction that is vivid, clear and inspiring and exceedingly well-communicated vision for growth.
- Measurements. Measurable goals, specific and observable. “It must be binary, one or zero, no guessing. Ambiguity breeds mediocrity. That’s a big idea.”
- Competent people, who are very good at what they do.
- Communication that is open, honest, and transparent. “I’ve never had a company that scores extremely high on this, but the key here is transparency. The more information you share, the higher level of accountability you can create.”
- Mutual Accountability for all team members. “The idea here is three levels of accountability: personal, everyone else, and the tough one, everyone else holds me accountable.”
- Discipline. “You have to do every day. It’s very, very hard to achieve and sustain, but for organizations that can, it can be a huge competitive advantage.”
Culture
Spence said that “culture equals cash,” and that in most of the organizations with which he has worked, fixing the culture has been the biggest opportunity to increase revenues and cut costs.
“The secret to happy and satisfied members is happy and satisfied members,” he said. Adding, “The member’s experience will never exceed the employee’s experience. A recent Gallup Poll showed 50% or so of employees are disengaged. Every organization says ‘what differentiates us is our people.’ This is how you do it.”
Spence said there are nine key factors to a winning culture, according to employees:
- Fun place to work. “This doesn’t have to mean sushi and a climbing wall. I define it as people smile just as much coming to work as they do when they’re leaving. I can walk into a company when I’m doing training and tell in 10 seconds whether they have a good culture and a bad culture.”
- Family atmosphere. “That means people generally care about each other.”
- Friends. “What this says is I have a lot of people at the office I consider my friends, some my best friends. It doesn’t mean you have to like everyone.”
- Fair. “I’m treated fairly. Pay did not show up on list until #13.”
- Freedom. This means a person is given the training, support and resources needed to be successful without micromanagement.
- Pride. “I really am proud of where I work.”
- Praise. “This is some sort of genuine sincere praise every seven to 10 days. This doesn’t mean it goes into your Outlook calendar. It doesn’t have to come from the leader; it can come from anyone on the company. You want to create a culture of catching people doing something right. That means that all of your people when they drive to work in the morning know they have a chance to make someone’s day good.”
- Meaning. Huge for Millennials, who really want to do meaningful work.
- Results. Also huge for Millennials.
“These are all atmosphere issues that don’t cost any money,” observed Spence. “What do employers say they are looking for? Employees with an ownership mentality. They want to do everything in the world to make the credit union the best in the world, as if they were the CEO.”
Keys To Great Corporate Culture
Based on research involving more than 1.3-million respondents, Spence said other keys to building a great corporate culture are:
- Measurable goals.
- Trust. “No honesty, no trust. No trust, no leadership. No leadership, no organization.”
- Communications. “You have to focus intensely on great communication. When you get to the point where if you say something one more time you will get sick to your stomach, that’s when the lowest person in your organization hears it for the first time.”
- Accountability.
- Recognition.” Celebrating both large and small wins is essential.”
What is often called “wow service,” said Spence, must be delivered externally and internally. “If you can’t deliver internally, you can’t deliver externally.”
The issue of trust was raised during several presentations at the NACUSO meeting. For Spence, it comes down to “four C’s”:
“You must consistently communicate that you’re competent and you care,” he said. “Where I see a lot of people in leadership and management, especially in space as member focused as CUs, is people who are really really nice and sweet--and they are incompetent. What we want to go for is high competence, high concern. I wrote a book on leadership that can be boiled down to, ‘I’m good at what I do, and I do it because I care about you.’ This is about serving my fellow employees, the people in the credit union, the members. It can take up to years to build that trust and nano-seconds to lose it. People who work for you go home and sit around their dinner table and they talk about you and how they are treated.”
EMF: Extreme Member Focus.
Spence said excelling at the following three-letter acronyms will contribute vastly to a credit union performing better.
VOM. Voice of the Member. “Whoever owns the VOM owns the marketplace. Consumers want to know that you get me. And they will be extremely loyal and even willing to trade price. Ninety percent of the organizations I deal with are pathetic at this. They don’t do nearly enough to really capture the voice of the member.”
MOT. Moment of Truth. “An organization needs to know the three or four things it must do flawlessly to turn people into member evangelists. At your credit union, you have four to six things you have to do well if you want to keep members and grow them: Accuracy, doing what you say you will do, friendliness, good product mix. I don’t like process, but if you want flawless delivery, you have to have a process.”
WOM. Word of Mouth. Spence said 48% of 74% of all purchasing decisions are made by word of mouth or word of thumb (social media). “This is unbelievably important, and has to be a major strategy in your credit union.”
The Final Component
The final component, said Spence, is the ability of a leader and credit union to create accountability. He said there are five ways to that:
- 100% clarity + appropriate authority and resources. “If I’m going to hold someone accountable, I have to clearly explain to them exactly what I want them to do. And they need the authority and resources to get it done.”
- 100% agreement. “They need to understand the metrics, know they have the resources, etc., and they accept 100% accountability. It’s the only way to have high accountability.”
- Track and post. “People need to know where they stand against their goal. Make it highly visible and easy to understand. Let everyone in the credit union see it. About 70% to 80% of people will freak out and 10% of people will fall down and cry. What you do is lean over and say ‘It’s been a pleasure working with you.’”
- Coach, Mentor, Train & Support. “This is for all the people in the middle. They need more resources, coaching, more help. People then make the paradigm shift that tracking does not equal punishment. They realize you’re trying to help them and within a year they want more tracking.”
- Reward Success/Punish Failure. “You must reward success lavishly, such as employee of the month, dinner out, member satisfaction award, or a check to favorite charity. The reverse is if someone is consistently yellow/red and you’re coaching and supporting and they don’t make it, everyone else in the organization knows it’s fair to let them go.”
As noted, Spence is an avid reader who said his new favorite book is “The Truth About Leadership.” That book is based on two-million respondents being asked, “What are the characteristics of a leader whom you would readily follow?”
Those characteristics:
- 89% of people surveyed had same first answer: honesty.
- Forward looking, or visionary.
- Competent. “You’ve got to be competent in two areas: exceedingly competent in whatever your job area is, and be highly competent in your leadership skills.
- Inspiring. If you’re not excited or passionate, no one on your team will be, either. It can be a humble, quite passion.
Over the past five years, driven by Millennials, Spence said two more characteristics are also now frequently mentioned:
- Fair.
- Supportive.
“To boil this all down: To be a leader that people will willingly follow, you need to tell me the truth, have a clear vision for where we are going, have the skills to get us there successfully, be excited about going with me, and treat me fairly and support me along the way,” said Spence.