Musings from the NAFCU CU Suite

Welcome!

Written by Anthony Demangone

As a newbie executive for the National Association of Federal Credit Unions, I learned one important thing very, very quickly.

There were a lot of important things I needed to learn.  And very, very quickly.

With that in mind, I started to read.  Books.  Magazines.  Blogs.  Newspapers.  If there was an idea on how to be a better employee, colleague, manager, or executive, I added it to my reading pile.

This blog is an attempt to share the best of my reading pile with credit union executives and managers.  Nothing more, and nothing less.  But please keep the following in mind:

• I do not pretend to be a management expert or "guru."  I just like good ideas, and I like sharing them even more.
• If you have a good idea, comment, or critique, please join the conversation. 
• I'll occasionally write about my twins, college football, and other things that consume my life. 
• If I can successfully twist some arms, my NAFCU colleagues will share their thoughts on management, leadership, and the like. 

If this sounds like your cup of tea...

1. Consider registering to have the blog emailed to you. 
2. Or why not add this blog's "feed" to an RSS reader? This wonderful "how-to" video discusses the power of RSS feeds and how to use them.  

Below, you'll find the blog's posts, starting with the most recent.  I look forward to hearing from you, and thanks for reading.

Is Brainpower Overrated?

Written by Anthony Demangone

By now, I'm sure many of you know the story of Billy Beane, Moneyball and the Oakland A's. 

In short, the cash-strapped Oakland A's needed to find a different way to compete against the big guns of New York, Boston, Anaheim, and Chicago.  Beane turned to Sabremetrics, which studies baseball using cold-hard facts.  

Bill James, perhaps the Godfather of Sabremetrics had a theory - most baseball teams overvalued some statistics (batting average, defense, speed) and greatly undervalued others (on-base-percentage, and slugging percentage). 

Beane leaned heavily on James and Sabremetrics to take advantage of market imbalances.  He refused to pay for speed.  All he wanted were players who could get on base.  And many of them came cheaply.

Enter Hollywood, stage left. 

This got me thinking, though.  Do we, as organizations, value prospective employees accurately?  Don't answer that question yet.  Read this article first: Intelligence is Overrated: What You Really Need to Succeed. (Forbes.com)

The author, Keld Jensen, highlights some interesting data.  Here's what got my attention.

***

IQ tests are used as an indicator of logical reasoning ability and technical intelligence. A high IQ is often a prerequisite for rising to the top ranks of business today. It is necessary, but it is not adequate to predict executive competence and corporate success. By itself, a high IQ does not guarantee that you will stand out and rise above everyone else.

Research carried out by the Carnegie Institute of Technology shows that 85 percent of your financial success is due to skills in “human engineering,” your personality and ability to communicate, negotiate, and lead. Shockingly, only 15 percent is due to technical knowledge. Additionally, Nobel Prize winning Israeli-American psychologist, Daniel Kahneman, found that people would rather do business with a person they like and trust rather than someone they don’t, even if the likeable person is offering a lower quality product or service at a higher price.

***

The article goes on to provide a brief summary of those important "human engineering" skills.  It is a great read.  

So, back to my question.  Do we accurately measure the worth of prospective employees?  Do we focus on degrees, schools, technical skills, or do we have ways to measure those "human engineering" skills?  I think we've all worked with someone who was technically proficient, but who was also terrible with people.  People skills, go a long, long way.  

Eighty-five percent of the way, or so it seems. 

***

Here are a few other interesting reads from this week.

• A ray of hope?  Young Americans Still Aspire to be Home-owners. (Boston.com)
• Hmmm.  Congressional Speech Drops a Full Grade Level. (Sunlight Foundation)
• Bank Fee Whack-A-Mole. Wells Fargo to End All Free Checking Accounts by August. (Huffington Post.)
• Facebook beware.  The Rise and Inglorious Fall of Myspace. (Businessweek)
• American manufacturing can't compete?   ArcelorMittal Steel Mill in Indiana Revived by Lessons from Abroad. (Wall Street Journal.)

Have a great, long weekend, everyone. But don't forget the reason!  Thanks and prayers to all those servicemen who gave their lives for the Flag. 

My goal is to sit in the bleachers  and enjoy friends and family.  Kate and Briggs hope you do much of the same!

***

Just Who Is To Blame?; Save, Save, Save!

Written by Anthony Demangone

I should stop watching television.

Not long ago, I sat on the sofa, long after a much-smarter man would have gone to bed.  Scanning the channels to check on my Nationals, I saw that commercial.

"My credit card debt was out of control!" cried out one young woman.  She was soon followed by a spokesperson who promised that his clients often see 90% of their credit card debt wiped clean! 

Grrrrr.

People talk about credit card debt as if it is an independent, self-sustaining, money-eating monster - in no way tied to their personal spending.  It always makes me shake my head.

But then I caught myself doing the same thing.

As I spoke with someone at a conference, I noted how NAFCU struggled historically to manage costs on a particular project. "We've always struggled with expenses on that one." 

The gentlemen seated next to me smiled.  And said this..."It isn't that complicated.  Just spend less. You don't struggle with expenses.  You struggle with controls.  Or saying no. Or with becoming efficient. Or making tough choices."

He was right.

How often do we talk about our company's problems as if we are powerless to solve them?  

Our meetings are terrible.  Employee morale is awful.  Emails are killing us!  

We have control over all these things, to a degree. We can improve meetings.  We can find out why employees are bummed out, and try to turn things around.  We can look for ways to improve communication.  

Everything is fixable.  Few fixes, though, are easy.

So this week, think about this: What are the big problems at your credit union? What's your battle plan to make things better?

***

A month or so ago, I asked everyone for some cost-savings ideas.   Here are some more responses from readers...

• VP and department heads coordinated trips to distant branches, instead of 3 VP making 3 separate trips we would have one trip with all of them together.

• We had a contract with Enterprise for discount car rental.  When a trip was necessary we would calculate which was cheaper, paying mileage or renting a car.

• watch out for auto-pilot or evergreen contracts! When you do your annual vendor review renewal terms should be reviewed to make sure you don’t renew the buggy whip contract for 5 more years.

• Annually review all products and services and though it is painful, end the ones that only a few members are using, especially if that is all they are using.

• Monitor dormant accounts, they cost you money and your software vendor loves them.  Put in a quarterly fee, if a member complains gladly refund the fee and educate them on how great your services are and turn them into an active member.  If no response, fee account to zero (depending on your state laws), close the account and stop paying your processor for nothing.

 

Lottery, Free Will and Motivation

Written by Anthony Demangone

Why do housing cooperatives often require all units to be owner-occupied?

Why do people treat rental cars differently than their own rides?

Why do some people trash hotel rooms?

The answer to all these questions is ownership.  If you own it, you treat it better.  You shine it up.  You cherish it.  You maintain it. 

With this in mind, please read this blog post from the Harvard Business Review. In it, Scott Keller discusses a fantastic study that shows the power of personal choice and ownership.  Here's a snippet:

***

In a famous experiment, researchers ran a lottery with a twist. Half the participants were randomly assigned a lottery number. The remaining half were given a blank piece of paper and a pen and asked to write down any number they would like as their lottery number. Just before drawing the winning number, the researchers offered to buy back the tickets. The question researchers wanted to answer is, "How much more do you have to pay someone who 'wrote their own number' versus someone who was handed a number randomly?" The rational answer would be that there is no difference (given that a lottery is pure chance and therefore every ticket number, chosen or assigned, should have the same value). A more savvy answer would be that you would have to pay less for the tickets where the participant chose the number, given the possibility of duplicate numbers in the population who wrote their own number. The real answer? No matter what location or demographic the experiment has taken place in, researchers have always found that they have to pay at least five times more to those who wrote their own number.

This result reveals an inconvenient truth about human nature: When we choose for ourselves, we are far more committed to the outcome — by a factor of five to one.

***

This study may get to the very core of why managing people is so difficult.  On one hand, managers give guidance and direction.  But on the other hand, employees are much more committed to ideas and projects when they have ownership.  It is a very difficult balancing act.  

Marshall Goldsmith talks about this issue in his book, What Got You Here, Won't Get You There.  On his list of the 20 Annoying Habits, "adding too much value" is number 2.  This annoying habit robs ownership of ideas.  An employee comes to you with an idea, and you say...Great, but it would be even better if we did THIS or THAT!  

You've stolen the idea.  You've taken away ownership.  And as noted above, you've de-motivated someone by a factor of 5 to 1. 

***

Here are some other "good reads" that caught my eye this week.

1. Sure, gas is expensive.  But it could be worse. (Bloomberg, via The Big Picture.)
2. Uh-oh.  76% of employees would leave their job if the right opportunity presented itself.  (Fiscal Times.)
3. Degrees of Debt.  A Generation Hobbled by The Soaring Cost of College. (The New York Times.)
4. How Hewlett-Packard Lost its Way. (CNN Money.)
5. What's the unemployment rate without government cuts? (Wall Street Journal.)

Have a great weekend, everyone!

Please, Let Me Fix You...

Written by Anthony Demangone

So much of management is communication.  What you say often takes a back seat to how you say it.

With that in mind, I urge you to read Why Fixers Often Fail. (IdeaArchitects.org.)  The author argues this: The last thing you should do when fixing a problem is to infer that the person or process is broken. Here's a snippet.

***

Very few individuals or organizations want to be talked about as if they need to be fixed.

Doing so implies that we're broken or I'm broken.  Doing so turns us into the objects of attention or effort from someone else who presumably is whole … someone fixin' to do some fixing.  Something is going to be done to us, instead of with us.

That never feels good even if the assessment that change is needed may indeed be right.  And this is why such efforts are resisted.

Change agents too easily forget that you can't expect people to respect your ideas if those same people feel you don't respect them—not necessarily their ideas even—but them as capable, caring human beings.  This is true whether you are trying to reform schools in your community, foster more innovation in your association, or affect public policy in government. 

***

Similarly, Dale Carnegie makes a similar point in How to Win Friends and Influence People.   Try not to tell someone they are wrong, especially in public.  (Even if it is true!)  They'll get defensive and dig in their heels.  Rather, ask them if they have considered this issue or that issue, and then give them enough room to change course and come to your way of thinking.

Communication styles that boil down to "I'm right, and you're wrong," may be wonderful in the debate club, but they often do more harm than good in a meeting. 

Good Reads

Written by Anthony Demangone

If you are reading this blog, you likely are a person who seeks out information.  I bet you read a ton of blogs, magazines, newspapers, etc.

With that in mind, here are some of my favorite sources of "good reads."

(First things first. You'll need a way to gather and organize web-based materials.  I've always been a huge of of RSS readers.  This wonderful "how-to" video discusses the power of RSS feeds and how to use them.)  Now, on to the list.

1.  The Big Picture.  This blog tries to put you in the mind of a Wall Street trader. The information you get from this blog regarding Wall Street, politics, and the economy is top-notch.  Managed by Barry Ritholtz, this blog provides a great service - the AM and PM reads.  In short, Barry scans things that he wants to read on his train ride into NYC (AM reads) and he does the same for his ride home in the evening (PM reads).  Here's a link to a recent AM reads.  It is one great way to key abreast of the major, major stories.

2. Counterparties.com.  This is another news aggregator that focuses on finance, politics and the like. Edited by Felix Salmon of Reuters, this "newsletter" links to dozens of fantastic stories.  Here's a recent version.  In it, was this scary story pointing out that in the past 15 years, the average American's expected retirement age has gone up 7 years. 

3.  Calculated Risk.  This blog hammers away at finance and economics, but with a focus on the housing market. It is very, very good.  

4.  HBR.org.  There is enough management information and thought here to choke a horse.  

I could go on, my guess is that these three sites will give you a good start. But my question to you is this...what are you guys reading?

Have a great weekend, everyone!

Priorities

Written by Anthony Demangone

I'm on my way to State College, Pennsylvania today to give a talk at the Big 10 Credit Union Conference. After that, I'm off to West Chester for one of my best friend's wedding.  All-in-all, I had one full day in the office this week.

I'll take my laptop with me, and I'll do my best while on the road.  But my productivity will drop off a good deal while I'm away.  But I can tell you this...

I got a heck of a lot of things done on Monday.

And why is that?  With the trip looming and the clock ticking, I focused on what had to get done.  I cut out the rest. In other words, I prioritized. 

There are a number of books and articles on prioritizing.  Such as...

First Things First: Prioritizing Production. (Processimpact.com)
How to Prioritize When Everything is Important. (Lifehacker.com) 
No is the New Yes: 4 Practices to Prioritize Your Life (HBR.org) 
The Problem with Priorities. (HBR.org)

The articles seem to strike a common theme.  What is critically important to your members?  Unless you have spare time, focus on those "mission critical" issues.  Learn to say no to everything else.

Sometime, it takes a major economic or business disaster to spur many companies to prioritize.  Non-critical functions were allowed to take up valuable resources and time while times were good.  When good times turned to bad, those companies suddenly were faced with a choice: prioritize or go away.

With that in mind, let me ask you a few questions.

1. What are your credit union's absolute priorities?  What must you deliver/accomplish? 
2. What percentage of your credit union's time is spent focused on those key issues?  
3. On a personal level, what must you absolutely accomplish?  What is most important for you as a manager/executive?  
4. Are there things that you do that take you away from your important priorities?  

Please understand me - I won't even pretend that NAFCU has cornered the market on always being able to prioritize.  Nearly every organization struggles with this issue.  The more, however, we can eliminate the unnecessary and focus on the "must haves," the better off we'll be.

I need to start treating every day like my Monday.  Just imagine...

When can more be less?

Written by Anthony Demangone

We Americans are a productive lot.  Very productive.  According to this chart (Nationmaster.com), we're the second most productive nation in the world. Second only to the mighty Luxembourgers. 

But wait...it gets better.

Not only are we productive, but Americans use (or get) less vacation time when compared to other countries. This study puts us at the bottom of the pile. 

So let's do the math.  Work hard + paltry vacation = potential burn out. That shouldn't shock anyone. Burn out and work-related stress are common themes in management books, blogs, and magazines. Based on my conversations with other executives and managers, I'd bet that many of you see burn out as a problem within your credit union.

A recent article from Salon.com, makes the case for sticking to a 40-hour workweek. The article makes a strong case that the average worker has roughly 8 hours of good work a day.  Beyond that, quality of work drops off.  And "thought workers?"  (Accountants, writers, attorneys, etc.)  They have six good hours a day on average.  The author has an agenda, so take that into account as you read.  The studies and data, however, are thought-provoking.  

So, back to the title of this posting. When can more be less?  When does getting a bit more work out of your team actually backfire? For example...

A call-center representative processes a change of address request.  They forget, however, to update the credit card address which is on a different system.  The card is then denied, as the member enters his or her new address online.  The angry member calls, and now someone has to research the issue.  A day later, the address is updated.  At some level, the member's view of your credit union has dimmed.  

How do you measure the cost of that interaction? Was that error due to understaffing, poor training, or because the employee stayed up too late watching a Big Bang Theory marathon?

I've argued in the past that additional investments in compliance might actually benefit the credit union in the long run due to increased capabilities, efficiencies, and output.   My theory is this: You can have one compliance officer work 80 hours, or 2 compliance officers work 40 hours each week.  Which scenario produces more utility?

That simple equation is there to make a point.  At some point, asking the same person or group of persons for "more" just won't work.  At some point you'll need to adjust your expectations, improve their resources and tools, or increase the FTE count.  (Or some combination.)

But it still begs the question...when?

So, faithful readers, I humbly ask for your help.  Just when is asking for more going to get you less? 

Great Bosses

Written by Anthony Demangone

As I squeezed into my seat during a recent plane ride, I began eavesdropping.  The gentleman next to me was discussing how much he loved his current boss.

"I can easily say that he's the best boss I ever worked for.  In fact, I told him last week that if he ever left, I'd follow him to his new job - no questions asked."

Wow.  

I waited for a lull in his conversation and tapped his arm.  After fessing up to my eavesdropping, I asked him what made his boss so special.  He didn't hesitate for a nano-second.

"He backs us up, no matter what.  He's very supportive of our work and our personal lives.  I mean, he really cares that we're productive and happy.  Oh, and he doesn't tolerate (********).  They don't last long where I work."  

Let's just substitute "jerk" for that censored word. I asked him whether that was all.  Again, he didn't hesitate.

"That's it?  What else is there?"

With that conversation mind, here's an article I came across - 8 Core Beliefs of Extraordinary Bosses. (Inc.com).  As always, I urge you to read the whole article.  But here's a snippet.

***

3. Management is service, not control.

Average bosses want employees to do exactly what they're told. They're hyper-aware of anything that smacks of insubordination and create environments where individual initiative is squelched by the "wait and see what the boss says" mentality.

Extraordinary bosses set a general direction and then commit themselves to obtaining the resources that their employees need to get the job done. They push decision making downward, allowing teams form their own rules and intervening only in emergencies.

***

And a question to you, readers.  Look back over your career and picture your favorite boss.  What qualities made him or her your favorite?  Feel free to share.  Have a great week, guys. 

Staff Concentration Risk; Save! Save! Save!

Written by Anthony Demangone

NCUA and other financial regulators now focus on "concentration risk." The following guidance comes from NCUA Letter to Credit Union 10-03. (Enclosure.)

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"A risk concentration is any single exposure or group of exposures with the potential to produce losses large enough (relative to capital, total assets, or overall risk level) to threaten a financial institution’s health or ability to maintain its core operations."

***

The guidance focuses on investments and products.  What about people?  I'd bet you my last dollar that employee concentration risk can be just as dangerous.  Let me ask you a few questions.

• Do you overwork your talented people, because they'll "get it done?"
• Have you ever uttered the following?  "If we lose (him or her), we're in deep trouble."
• Are there divisions within your credit union where a star player keeps saving the day?
• Do you expect more out of your talented employees while accepting less from others?

Clearly, talented staff is a scarce commodity.  Many businesses struggle to attract and retain high-performing employees.  That is no excuse, however. I'd recommend the following:

1. Look for employee concentration risk within your credit union.  Try to put a finger on whether talented employees are hired and retained at your credit union.  Or whether you constantly lose your star players.
2. Once you've identified your key players, let them know how important they are.  Treat them like key partners on your road to success. Because that's what they are. If your credit union started driving away your best members, you'd investigate the cause immediately. Treat your key employees the same way.  When one departs, find out why. 
3. Deepen your bench.  Look at your job descriptions and advertisements.  Do they truly describe the person that you want to attract?  Work with your HR team to find ways to attract and keep the best employees.  Be patient during the hiring process.  Study where it has broken down in the past, and try to improve it moving forward.  But be honest with yourself.  If you are describing your workplace as fun and dynamic, is it true?

No organization can eliminate all employee concentration risk.  The good ones, however, effectively manage it.  I have much to learn about management.  The more I learn and experience, however, the more this becomes clear: Behind every successful organization is a team of fantastic, motivated employees.

 ***

Not that long ago, I asked for some cost-savings ideas.  Here are some of the responses...

• I’m saving money this year by (hopefully) getting my NCCO by studying at home using the brand new GPS manual and taking my tests here, instead of attending a NAFCU or CUNA compliance conference.
• Although I don’t have the budget numbers to back this up we are presumably saving money by utilizing our fleet of company vehicles for all work related travel.  The purchase price and maintenance of these vehicles is less than the cost of mileage for all of our staff using their own cars, plus we get the added benefit of marketing rolling down the highway throughout our field of membership (and in some cases, beyond).  
• When I joined the Credit Union six years ago, I noticed that there was over six thousand dollars in funds due the organization on hold in Tallahassee that had been escheated over the years.  Quite often, the money was in the form of official checks payable to the Credit Union that had been lost in the mail or misdirected.  The credit union never had simply applied to get the cash back.  Every state has an escheatment department, usually located in the state Treasurer's office.  On-line searches are easy and the redemption process very doable.  Look periodically, as the listing refreshes every now and then and new stuff appears as it cycles through the five year process.
• A few years ago we started a recycling program where our local recycling center would come pick up the various papers, leftover boxes, etc. that they could use.  We discovered that not only could we reduce the size of our trash dumpster by 50%, but we could reduce the number of pick-ups in half!.  Annual savings = $6,000 and it is good for the environment.  We encourage our staff to bring their home recyclables on Wednesdays and we have Members days for the same purpose.  This also makes our local recycling center more profitable as they have more material to process.  

Thanks for sharing these tips.  (I still have some more in reserve.) By all means, if you have other cost savings tips, please share them!

Have a great weekend, guys. 

Recap; Grab a Mop; Heavy Hearts

Written by Anthony Demangone

NAFCU's CEOs and Senior Executive's Conference was a huge hit.  And John Spence did a fantastic job.  I was going to recap John's talk, but he went ahead and did that for me already!

Watch this video - it will be well worth your time.  Many thanks, John.  You were a pleasure to work with, and our members are better off having heard your words of wisdom!

***

Jim Blaine pens this fantastic story (CreditUnions.com) about management and leadership.  All I can say is this: pick up the mop, folks.  Pick it up!

***

It has been a sad week.  First, I learned of the passing of Joe Melchione.  I had the pleasure of meeting Joe perhaps a half-dozen times.  A larger force in credit union law you could not meet.  It was 2004 when I first met him.  As a young attorney at NAFCU, I whispered to the guy next to me as Joe spoke, "Who is that guy?" Luckily for me, I got to know Joe a bit over the years.  He will be missed.

I also just learned that my friend Chris Gerow finally lost his battle with cancer.  All our love and prayers go to his wife, Jo.  I first met Chris at a NAFCU compliance conference in 2005.  You will never meet a finer person. If an alien landed and said, show me your best, I'd point him toward Chris, along with a few others who have touched me throughout my life.  He will be missed. 

For those researchers working to cure cancer - thank you for your work.  God's speed, folks.  God's speed.