How an Emphasis on Human Capital Can Pay Off for CUs

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Few would argue that the financial services industry is facing a very difficult business environment for the foreseeable future. A lethargic global economy, depressed interest rates, volatility in the markets and increased regulatory requirements events have and will continue to put pressure on credit unions.

Many companies are searching for the next big idea, such as "Big Data," breakthrough products or untapped channel partners to achieve a competitive advantage. These and other options are all worthwhile pursuits.

There is, however, a "bread and butter" option that is routinely overlooked or under-executed and readily available that can not only provide short-term results, but also create a foundation for long-term competitive advantage. This option is sometimes referred to as "me-engineering." It involves an investment in human capital to expand the skills, capacity, flexibility and adaptability of the workforce.


Some Findings To Consider

Consider these findings which have been developed over 16,000 performance improvement engagements;

* Front-line supervisors or team leaders are not proficient at supervising and/or leading. Less than 50% of this group routinely engages in the seven active management behaviors that universally define their position. Of this group, less than 50% have a demonstrated competence. This equates to their respective employee groups being actively supervised 25% or less of the time.

* Most workforces are self-directed. If the workforce is not being actively supervised 75% of the day, they will take it upon themselves to set their own agenda. In other words, they will do what they want, when they want, how they want and if they want. This is not to suggest that the workforce is incapable, incompetent or unwilling; quite the contrary. Most individuals believe they are doing their best under the circumstances, working hard, etc. Unfortunately, the level of process variability that results from dozens of personal agendas is simply too complex to manage.

* Planning at the departmental level is primarily based on hindsight, not foresight. Planning at the departmental level becomes very difficult, if not impossible, if there is limited, useful real-time feedback that flows from the workforce to the first-line supervisor to the department manager and back. As a result, departmental planning decisions are typically made on a historical basis, typically using work standards that were developed at some point in the past. It often turns into a forced exercise in tweaking the suboptimal.

Certainly one of the major root causes of the above findings is that most performance improvement initiatives focus primarily on the "what" and the "how," but don't pay enough attention to the "who," "when," "where" and "why." The best plan is only as good as its execution, so it's not sufficient to simply map the processes (the "what") and align the technologies (the "how"). You must also take into account your credit union's ability to adapt, embrace and execute the change.


What is Required

At the very minimum, creating the appropriate environment for change requires that you:

* Define the future state roles and skill requirements.

* Conduct a current state skills inventory analysis and identify gaps.

* Identify the training and coaching requirements needed to fill the gaps.

* Populate the future CU and work through the logistics.

* Implement a Management Operating System to ensure that the correct operating metrics needed to manage and measure the improvements on a real time basis are embedded into the operating culture.

Additionally, you must actively and aggressively market the desired change to the affected employee group by:

* Creatively interpreting complex business issues to accelerate understanding, acceptance, and action.

* Creating a series of "Aha!" moments that help people "get-it" and further spur them to action.

* Providing the support, skills and reinforcement for people to behave differently

* Actively coaching and providing real-time feedback, guidance in a non-threatening manner.

* Anticipating areas where future slippage may occur and applying solutions to promote sustainability.


Addressing The Skeptics

Most senior executives would be skeptical if told that they could improve operating performance (as measured by revenue, cost, quality and service levels) by 10% to 30% in less than 12 months and sustain and improve on that performance for years to come, but it is nonetheless true.

Even in cases where companies have gone through a series of performance improvement initiatives, there is a persistent failure to institutionalize the improvements at the workforce level and provide the tools and coaching necessary to manage and maintain the improvements.

Optimizing human capital is a strategic imperative that is available to all, but overlooked by most. Executed correctly, it can provide a significant competitive advantage for many years to come.

John Bogush is EVP with Alexander Proudfoot. Mr. Bogush can be reached at 201-401-1765, or at

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