Make Sure The Legacy You Leave Behind Serves Your Members

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Several years ago I was with a client who mentioned that he would be retiring in six to seven years and was thinking about a legacy he could leave for his credit union. He had been the CEO for many years and reflected on how he could best leave an imprint and ensure a better position for his membership. He concluded that the most important legacy he could leave as his forward-looking contribution was a new building.

Knowing that buildings increase costs and reduce the bottom line, I cautioned him about falling into the trap of chasing after the rewards of an attractive outward legacy, which is simple to imagine but hard to realize. My suggestion was to think beyond “bricks and mortar” and not about how he wanted to be remembered, but rather critically consider how his legacy could best serve the credit union long after he was gone.

Many times the “non-concrete” legacies, although less visible, leave the most lasting mark on a credit union. I suggested he strive for a legacy that would aid the institution in its long-term goal of being competitive in the market place, and that a strong financial position might be the best target for his legacy. He immediately saw the light and we then discussed a strategy to financially strengthen the credit union for the future.

When legacies become personal they can lead a credit union away from plans that are the most strategically beneficial. Directors, and not just executives, are also susceptible to this. I have witnessed numerous situations where a director’s imprint from 20 years ago was still being enforced because of his desire to legitimize his “place” despite its detriment to operations. When legacies embody the aura of the man or woman, it becomes difficult to put the benefits and costs into perspective. As boards deal with a vast breadth of retirements in the next five to ten years due to the baby boomers, how should they address the notion of legacy?

As they tell baseball pitchers: leave your emotions in the dugout; for us, check them at the door before you enter the board room. That’s easier said than done, but a rule that must be followed. Step back and look at the long term costs and benefits and evaluate them in light of the credit union’s five year strategic plan. If office growth is needed in the future, establish the criteria for expansion. Keep these guidelines in play as all capital plans are evaluated. And at the end of the day, answer the question, “Is this the best use of our resources to service our membership?”

For the case in point, it was easy to set aside emotions and go forward. John was open-minded and willing to see all sides and readily look to other ideas. This is not to say that John doesn’t have a strong ego or that he doesn’t have a driver personality; he has both of these. But he found a logical approach and balanced his emotions with thoughtfulness. As we discussed ways to strengthen the organization, I pointed toward the need to increase the credit union’s size to benefit the economies of scale. And I suggested a straightforward merger plan over five years that mirrored the existing segments of his credit union. Within two years, three mergers took place (a manageable pace) and his growth is on schedule.

For sure, the challenge of legacies will always be with us. Let’s make sure we understand the emotional and financial components. What begins with innocent intentions may potentially affect a credit union’s long-term strategic goals adversely. Whatever your legacy plans are, as difficult as it may be, take the “person” out of the equation and determine whether the plans going forward will benefit your members for years to come.

Ron Schmidt is president of CBS Certified Public Accountants, LLC and Credit Union Business Solutions, LLC, Solon, Ohio. He can be reached at rschmidt 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.

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