Common Traps For New Leaders

Many obstacles block the road to successful leadership, especially for new leaders. Too often, new CEOs alienate staff, misread the organization's political climate, promote products members simply don't want, or venture forth without a plan.

VETERAN EXECUTIVES offer a variety of advice for getting through those initial years as CEO. Louis Jimenez, for example, recommends that new CEOs learn from their employees and not impose new plans without their input. Jimenez, CEO of Montauk Credit Union in New York, says the key to successful leadership is twofold: establishing strong relationships and working with staff to build a solid strategic plan.

He says the $51 million asset credit union was in decline when he took over as CEO 12 years ago. "There were a lot of organizational things we had to address," Jimenez says, namely technology, space, and service offerings.

He began by getting to know the staff-"Let the people know who you are and what you represent"-and involving them in the credit union's strategic plan. "They knew the organization better than I did. To this day, we still have folks working for us because we involved them in creating a plan for the credit union. Gaining staff support is critical."

Big changes followed the plan's implementation. "Within two years we moved," Jimenez relates. "We bought a new computer system and began offering services we never offered before."

Before Jimenez arrived, the credit union offered only shares and loans. Under his leadership, Montauk Credit Union has grown five times larger, serving 5,500 members today. "Now we have home banking and electronic bill payment," he says. "We've been able to keep up with the Joneses so to speak."

In November, the credit union celebrated the grand opening of its new 8,000-square-foot headquarters.

Phyllis Moore, CEO of the $35 million asset Atlanta City Employees Credit Union, also stresses the importance of a good strategic plan. "My advice to a new leader would be to delve into all aspects of the organization to see how it's positioned. Early on, develop a strategic plan and let it become your road map so you don't go off in a lot of different directions. Involve employees, and make sure they buy into the plan."

Clint Elsom, CEO of King County Credit Union in Seattle, has led his institution for 22 years, increasing assets from $7 million in the early 1980s to $155 million today. Elsom advises leaders to ask themselves several important questions: "Where do you want this credit union to be five years from now? What will it look like, and how will you get there? Credit unions no longer have the luxury of sitting back and letting members come to them. You have to go out and find ways to bring members to you, and then be able to sell them products and services to maintain your financial institution."

How can leaders find the right path? Listen to members, says Moore. "Check with your members via surveys and get a feel for what they want. Always put members at the forefront."

Today's challenges

Elsom says the challenges facing new CEOs today differ in important ways from the challenges he faced starting out. "Today, you don't manage a credit union. You manage a financial institution. There's a big difference."

In today's environment, he explains, CEOs have to deal with complex issues such as asset/liability management, investments, and broadening membership. "You're doing a composite of financial duties and responsibilities on a much broader and deeper schedule," Elsom says. "You're accountable not simply to your field of membership, but to the board of directors and to regulators."

Elsom served on the credit union's board of directors before becoming CEO. When the previous CEO left without a replacement, Elsom approached state regulators, proposing he lead the credit union. "I said, 'Give me a one-year contract. If I fail, you can fire me.' And 22 years later, here I am."

Still, Elsom admits he faced bumps in the road along the way. "Originally, I thought it would be easy to take exactly what the credit union had and offer that in a better mode-with more employees to answer the phones and meet members' needs. I quickly found out that wasn't the answer. The answer was coming up with better products and better ways to present them."

Doing things differently

As everyone knows, hindsight is 20/20. Would these leaders do anything differently in retrospect?

Moore, a former vice president of operations for a bank before joining Atlanta City Employees, admits she wasn't as politically savvy when she came on board as she is today. "I've always been direct, someone who thrives on the cliche 'Say what you mean and mean what you say.' But I've learned that things aren't always black and white. You have to be open-minded."

Moore says the organization wasn't doing well when she took over 10 years ago. Regulators had outlined a number of issues that had to be fixed within a specific time frame. Initially a challenge, her relationship with regulators became a source of support.

"Feel free to question your regulators," she advises, "but build a rapport with them." Today, regulators grade Atlanta City Employees highly, and membership has grown from 8,000 a decade ago to 11,000 today.

And while Moore is pleased to see membership growth, she stresses that new leaders shouldn't focus only on the number of new members but on the number of services current members use. "That's something I'd do differently: I'd focus more on increasing the number of services per household for current members, while working to increase membership."

Handling growth

Elsom says determining how to grow is one of the most complex issues new credit union leaders face today. "You need to go to your board and ask, 'Do you want to be a credit union that simply stays where it is? Do you want to become a merger candidate? Do you want to become a $500 million or $1 billion credit union through strategic growth?'

"Every credit union can become a billion-dollar institution," he continues. "The problem is that credit unions and banks offer the same products. So what makes you unique? What makes a person say, 'Wow, that's the credit union I want to belong to.' [One key differentiator] is the level of service credit unions provide."

During Elsom's tenure, King County has merged with six credit unions.

There's no shortage of pitfalls for new leaders, but Jimenez reminds new CEOs that at the end of the day, one issue rises to the forefront in importance. "Make sure you thoroughly review your credit union's financial health. Having adequate capital is very important.

"You can get to know employees all you want, you can set up strategic plans, and you can get the board and management together on a number of issues. But if you're struggling in a certain area, whether it's capital, asset quality, earnings, or liquidity, it's imperative to review the previous regulatory exam and attack your weaknesses."

Copyright Credit Union National Association, Inc. Feb 2004
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