After nine months of listening to credit unionists tell him what's wrong-and right-with CUNA Mutual Group, CEO Jeff Post is finally ready to do a little talking of his own.
"What we've heard loud and clear is that we do have a lot of good products, but we tend to be expensive and too hard to do business with," Post told The Credit Union Journal in an exclusive interview. "We also have a number of one-off products that don't do so well, and we have too many silos. There were also comments about the arrogance of CUNA Mutual Group. We need to address all of these things."
As he promised to do when he took the helm upon the departure of former CEO Mike Kitchen, Post spent months surveying his own employees and talking with various people in credit union land "ad infinitem." Now, with nine months under his belt, he's ready to talk about how he's going to retool CUNA Mutual.
To start with, Post said the company is reevaluating its stable of products-both top performers and underperformers.
"Our top 12 products represent almost 90% of our revenue," Post explained. "Those go under review to ask how can we modernize those or improve them to ensure that we are delivering what credit unions need."
The products that make up the last 10% of revenue will be looked at from a perspective of whether there might be any partnership opportunities that could strengthen these offerings. "Our asset/liability matching product is an example. I'd be surprised if that touches many of our customers at all," he noted. "These are very small, we're talking about something less than 200 products that deliver less than 10% of our revenue. We're not going to abandon the credit union space, but we'll either find a way to manufacture these better or help credit unions find access to them."
The last thing any company wants to hear is that it's making it too difficult for its clients to business with them, so Post has made a priority of eliminating silos that require CUs with multiple CMG products to juggle multiple CMG contacts-an effort that will also mean streamlining within the organization, as well. "There are number of things you can do to eliminate silos. You can move to a backroom-shared-services model, and that, by definition, breaks down silos because suddenly each aspect of your business has to interact with the others to get things done," Post related. "For example, today each silo has its own HR department. Tomorrow, HR will be a corporate function. We're also putting together new leadership structures so that each product leader reports to a product chief. That eliminates silos because you have operating units that have to rely on each other to operate."
A cynic, Post said, might point out that he hasn't actually "eliminated" silos-he's "merely" reduced the number from 17 to five, but even that, he suggested, is a big step in the right direction.
The idea is to get alignment throughout the organization, but changing the silo mentality brings challenges. "It's a difficult mindset to change, but not impossible," he observed. "To change mindset you impact the pocketbook. We are going to a pay-for-performance structure with cascading goals throughout the company. There will be corporate results, business unit results and individual results, and the performance of each of these aspects will have a direct impact on salary. When salary is determined by results, you immediately get alignment."
What will this mean to credit unions? "One guy I talked with told me, 'I always know when CUNA Mutual Group is at the office, I just look for the five Chevy Impalas in the parking lot,'" Post related. "These credit unions that have multiple products with us have multiple people calling on them, multiple call centers, multiple toll-free numbers. That's what they meant that we make it difficult for them to business with us. There will be a single point of contact for our credit unions. That's going to make it a whole lot easier for our customers."
Elimination of those silos has also meant the elimination of some jobs within the company, and Post has had to deal with labor issues almost from the outset. Non-union jobs are also being pared back.
Easily one of the most disturbing comments Post heard from credit unions-and he heard it more than once-is that CUNA Mutual Group is arrogant. "CUNA Mutual has a reputation that we think we know better than credit unions do. Well if we do, then we ought to be a credit union, and I absolutely do not believe that," Post commented. "I do understand where the arrogance comments come from. I have talked with staff that appeared arrogant in front of me. Some have looked at me like I've grown horns, and some have said, 'You're right.' But it's simple, they can change their ways or they can change jobs."
Factors Driving Change At The Company
Although the advent of change at CUNA Mutual has been the advent of Jeff Post, he is quick to point out that these changes were needed regardless of who was at the helm, because the credit union market is changing, so one of its premiere vendor partners cannot afford to be stagnant.
In a presentation that Post has taken on the road to a variety of credit unions, CUNA Mutual points out some of the primary factors that are driving the need for change at CMG:
* CU market is mature with real asset growth projected at only 4.3% per year through 2010 and "eligible" loan growth at 1% per year through 2010.
* CUNA Mutual revenues and profits becoming more concentrated in fewer customers who have increasing negotiating power, as the top 3% of CUs control 50% of CU assets.
* CUs require "best of breed" products and have outgrown the need for a single-source provider.
* Consolidation of CUs: there were 18,000 CUs in 1985, down to 9,200 today. Forecasts call for the number of CUs to fall to 7,242 by 2010, with the number of CUs with fewer than $100 million in assets dropping from 8,143 to 5,639; membership will be 93.3 million in 2010.
In addition to some of the changes Post outlined that are designed to strengthen the company's core disciplines and more to a performance-driven culture, expect to see a transformation in CMG's back-office, representing a $100-million investment in technology and infrastructure.
"We've begun the process of change, but we know it's never really done, it's never really over," Post said. "A good company never stops changing."
