Archive

Go to:

October 2017
SMTWTFS
1234567
891011121314
15161718192021
22232425262728
293031
< Sep Nov >
Leaguer Email Subscription

You are not currently subscribed. Click Subscribe below to receive the Leaguer email.

The Value of Distributed Leadership
Tuesday, October 20, 2015 6:25 AM

JMFA

By: J. Keith Hughey, Senior Consultant, JMFA

Regulations, cybersecurity, EMV migration, low interest rates, technology, and competition. These are just a few of the issues concerning community-based financial institutions as they strive to be competitive or make the transition to becoming a larger institution. With all of that on their plates, I am nonetheless dismayed that one crucial area that lacks attention in a credit union’s quest for success is how to maintain a level of leadership that is capable of guiding it for the long term.

Don’t get me wrong, there are countless examples of credit unions that put a lot of time and effort into searching for and recruiting individuals with certain qualifications to fill specific roles when there is an opening due to a retirement or resignation. But when it comes to effectively distributing leadership throughout the organization consistently—and having a plan to ensure a legacy of long-term leadership—the anecdotes are more difficult to uncover.

The precedent begins at the top

In today’s rapidly changing business and regulatory environment, credit unions need strong board leadership that represents the membership, is knowledgeable about key issues that are concerning to regulators, and is committed to the credit union’s long-term strategic direction. While maintaining board membership with this level of expertise and involvement takes a commitment and on-going planning by both existing internal and external leadership, failure to do so can result in costly consequences.

My advice to credit unions of all sizes is to look at the existing board roster and determine if this important leadership segment reflects the current member profile or represents who the organization served 20 years ago. Do members have a thorough understanding of the technology and compliance issues facing the credit union? Do they have the financial knowledge and skill necessary to make prudent business decisions that can affect long-term viability? Do they have an appreciation for the next generation of members and the solutions they are likely to see as valuable?

Depending on how you answer these questions, it may be time to think about how board members are evaluated, what educational opportunities are available or need to be provided, and whether or not it may be time to think about instituting necessary changes in order to maintain strong leadership at the top.

Are the folks that “got you here” capable of “getting you there”?

A common dilemma I frequently see when counseling clients is when the leadership needs of an organization gradually exceed the capabilities of its current management. For instance, while an entrepreneurial CEO, budding CFO, or capable controller did an outstanding job of getting a new start-up on the map, as the organization grows, the skills that were effective in the beginning are no longer applicable or scalable as the challenges increase and the risks become greater. This can be especially troubling if existing leadership is entrenched in the idea that their way of doing business or their vision for the organization’s future is the only one that matters.

If allowed to continue, this situation prevents the creation of a more productive work environment, hinders talented staff from reaching their potential, and creates unnecessary attrition, which can ultimately lead to a loss of members if the level of service declines or the credit union fails to keep up with service options provided by competitors.

Strengthening the chain of command

Another, and perhaps longer-term, dimension of the equation is the need for leadership development beyond the C-Suite as a credit union grows. Maintaining a strong presence in the market or fulfilling a strategic goal of growth occurs more organically when leadership talent is developed internally with people who are familiar with the organization and its members. This includes people in middle management, along with others who possess leadership potential, who are working “in the trenches” every day, who are committed to the mission, vision, and values of the credit union, and who can effectively serve as examples to those employees who are in contact with members on a daily basis.

When working with clients who are interested in building collaborative environments, I tell them it is their responsibility to actively share what they know, communicate what they expect, and in every way possible instill their vision for the credit union’s future in the people who are likely to pass it along to their co-workers. Otherwise, management becomes the bottleneck that stifles leadership development, blocks the flow of ideas from the folks who are most connected to what members are saying, and slows the organization’s ability to be nimble in an ever-changing environment.

There will be times when allowing less experienced managers to make leadership decisions will lead to a mistake or two. However, you have to be able to trust your people to take actions based on the credit union’s mission, vision, and values to serve your members’ needs.

Two heads are better than one

So the next time you find yourself in a situation where a decision needs to be made, whether the situation is beyond your span of control or comfort zone or requires more time than you have available, I encourage you to consider involving others in the decision-making process. As the old saying goes, two heads are better than one; especially when both of them are well-informed.

About JMFA
JMFA is a leading provider of profitability and performance-improvement consulting. For more than 35 years, JMFA has been recognized as one of the most trusted names in the industry for earnings enhancement and expense control programs, training and development, and recruitment services, as well as product, service, pricing, and technology-improvement consulting. Simply stated, JMFA’s programs and services are designed to increase income or reduce expenses. JMFA is proud to be a preferred provider among many industry groups. To learn more about JMFA, please www.jmfa.com or call 800-809-2307.