CHARLESTON, W.Va.-Sometimes the best thing for a struggling credit union is to start over.
That was the difficult choice the board of Pioneer West Virginia FCU faced as it watched the CU slide from 2006 through much of 2010. Loan growth had declined for 13 straight months, delinquencies spiked sharply, ROA plummeted, and membership declined. So the board made the tough choice to "reboot" the $140-million credit union, start over, bring in new leadership, and make big changes.
Board Chairman Terry Richardson said such a move tends to go against the grain of the credit union community, as many institutions choose to try to ride out their difficulties with the existing leadership. "And it went against our tradition at Pioneer. We tended to stay with who we had. You want to hope for the best. But we knew that would not solve our problems."
It has now put many of those problems behind it.
The credit union is profitable now, moving from $500,000 in the red to adding more than $1 million to the bottom line by year's end. Richardson said the board realized the previous leadership was not what the credit union needed. "We were going in the wrong direction, losing members, we had problems with staff morale, and loans were way down."
Richardson acknowledged Pioneer West Virginia stayed with the previous leadership longer than it should have. But in February of 2010 the board began its search for a new CEO. The fresh start began by hiring Dana Rawlings as CEO in July 2010; Rawlings then hired SVP/CFO Dan McGowan two months later.
A 180-Degree Change
The new leadership has instituted dramatic operational changes, including flipping the internal culture 180 degrees, from one that did not value employees to one that sees employees as the credit union's most valuable asset.
Richardson said the board sought a CEO who was innovative and could lead Pioneer into the future. The board also wanted someone who could turn around staff morale and grow the credit union. "We had been highly regarded in this state and region. We wanted to get back to that."
Behind Rawlings, PWVFCU instituted a daily dashboard of performance metrics (see related story), shored up delinquencies, started growing loans with new programs such as a 10-year first mortgage, improved its investment strategies, and began valuing its staff-rewarding them for their performance, recognizing accomplishments, and encouraging their feedback straight to the top of the CU. Pioneer also significantly improved the employee benefits package.
But what Rawlings sees as important as any element of the turnaround, is improving communications with staff. "One thing I told the board from the start is that you can excuse me for over-communicating. Once a month, right after our board meeting, we have a meeting with all of our employees. They hear everything that we told the board-our month-end numbers, what comments were made, what projects we are working on . . ."
Not A BS Session
Rawlings also has regular lunch meetings with his direct reports, who bring with them a list of all their projects. "This is not a BS session. I hold it so every manager can see what is going on throughout the organization. I have found at times that two or even three managers are working on the same thing. So this stops a lot of wasted staff hours."
What has helped, too, is how the credit union has viewed the turnaround, Rawlings added. "In my first interview with the board I asked them if they were more interested in being the biggest credit union in West Virginia or the best CU in the state. Unanimously they said they wanted to be the best. Size is irrelevant. Because you can be big and still be bad. But if you be as good as you can possibly be your size will follow because people will want to come to you."
