ALEXANDRIA, Va.-After 18 years of service, CommonWealth One FCU President/CEO John Blair said he will retire in July. Mr. Blair was named CEO in 1994, and has overseen growth to $295 million in assets from $100 million. During his career he was very active in a number of CUSOs, a local CU managers roundtable, and more. Below, Mr. Blair talks about his career, lessons learned, and shares his thoughts on the future of credit unions.
CUJ: How did you come to be involved in credit unions?
Blair: Prior to becoming involved in credit unions, I had experience in a consumer finance company, a collection agency and a commercial bank. A family member alerted me to an open posting for a Senior Loan Officer position at Xerox Federal Credit Union in Rochester, N.Y. I liked what I saw! I worked for Xerox FCU (now Xceed FCU) for 17 years. In 1994, I joined CommonWealth One in Alexandria, Va. as their President/CEO. It's been a great 18 years!
CUJ: What lessons have you learned in your career about managing people and growth?
Blair: I think all leaders have a responsibility to foster a continuous learning environment to assist in employee growth and development. We must recognize that not all employees will take advantage of these opportunities and that some may fail to grow their competencies in line with the changing needs of the organization. You must be prepared to help shape the boundaries-responsibilities, authority levels and competency requirements for all positions within your changing organization. Once the boundaries are defined and the goals established, measure performance to the goals, provide regular feedback and recognition, hold staff accountable, and avoid surprises, but most importantly, get out of the way and let employees do their job.
CUJ: What have you learned about managing growth?
Blair: Today, it is essential that credit union leaders focus on controlled growth to preserve an adequate measure of capital. At CommonWealth One, we have done so by focusing on relationship development with our SEGs, the communities we serve, and improving member household penetration and profitability. We use a balanced scorecard to measure our success. Growth through merger may appear to some to be a quick solution to meeting growth objectives, however merger requires careful analysis to ensure a good cultural fit between the organizations merging and to ensure that the merger is in the best interests of both memberships.
CUJ: You have been active in your career in a number of CUSOs. What's the secret to making a CUSO work and why don't we see even greater use of CUSOs?
Blair: My experience has been that a credit union only gets out of a CUSO what it is willing to put into it. CUSOs can't be the cure-all, end-all to all of a credit union's business and member needs. Beyond the equity or loan investment in the CUSO, you must be willing to commit a certain amount of human capital to manage the CUSO relationship.
All of our CUSO investments are in multiple-CU-owned CUSOs. With these CUSOs it is important to recognize that each credit union may have different objectives for participating and varying degrees of internal resources to support the CUSO. It is important to choose partners wisely.
It is equally important for each owner of the CUSO to do a thorough due-diligence process on the CUSO operation, business plan, partners and related parties to the CUSO (business partners). Your due-diligence should include a thorough review of the CUSO operating agreements to include not only voting rights, sharing of profits/patronage dividends, but also provisions for capital calls, sharing expenses, and in the worst case, member withdrawal provisions.
CUJ:What advice would you have for a new CEO?
Blair: It is often said that the first six months as CEO is the honeymoon period and I would have to agree with that statement. A new CEO should use this time to assess the organization, management team, board, strategic plans, and the vision and mission of the organization. Use the time to develop the trust and respect between you and your management team and board. Don't be afraid to ask them what they feel needs to be changed in the organization. The honeymoon period is also the time to set the boundaries that you and your team will operate within. You want to push for clear delineation of responsibility and authority. Do you have a contract, job description, authority matrix in place and, when confronted with "gray areas," how would the board like you to operate? Is there a formal process in place for an annual CEO review? Does the board understand and operate within the framework that the CEO is their only employee?
This is also the time that the new CEO begins to build that all-important relationship with the board chair. Practice "surprise avoidance!" It is vital to respect the fact that your board members are volunteers. Your chairman can help ensure that their time is used wisely and that they keep focused on the desired method to help him/her and the board informed on issues affecting the industry and your credit union. I have found the CUES CEO/Chairman Exchange Conference to be an excellent program to kick-off the CEO/Chair relationship. Your monthly board package, board intranet and periodic board/executive sessions are other effective means of keeping your board informed.
I can't overestimate the value of networking both within the credit union as well as outside our industry. The CEO should seek opportunities through national industry organizations and on the local level, regional roundtables or other networking forums. It is also recommended to connect with the local Chamber of Commerce or Rotary Club.
What has worked well for us over the years and particularly now with the current regulatory environment, is our board-appointed committees. When the mission and boundaries are properly set, the committees work well to ensure that the board is fulfilling its fiduciary responsibility to members while keeping out of the day to day operational decisions that should be entrusted to the CEO.
CUJ: What is your view on the future of credit unions?
Blair: Given the outlook for the economy and the current regulatory environment, I think you are going to see continued consolidation within the credit union community as credit unions seek the scale necessary to compete and to deliver the financial needs of their members.
Tight interest margins, reductions in non-interest income and the cost of compliance will force CUs to improve their operating efficiency and to look for new revenue sources.
The negative press that many large banks have received lately due to the mortgage crisis and their attempts to modify fees to cover lost non-interest income revenue places credit unions in an enviable position. We need to take advantage of these opportunities.
Long term, credit unions need to have access to secondary capital to be able to grow and prosper.
While the industry has changed dramatically over the years, our guiding principles and cooperative spirit remains unchanged. If we stick to these principles, I believe there is a bright future ahead for credit unions.
