When The Going Gets Tough, The Tough Need Better Training

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In a demanding, rapidly changing, competitive financial services environment, credit union managers are strapped for time, diminishing their opportunities to supervise lending staff or review credit applications. Because of the pressure cooker environment, lenders rarely have the time to attend lengthy training sessions that can help improve their lending competencies. As a result, there is potential for too many poor lending decisions and this pattern is likely to increase as the economy turns around and borrowing needs expand.

Since a non-performing loan can cost credit unions hundreds or even thousands of dollars, it is critical for managers to find a way to assess the skill level of their staff. By identifying members of the lending team who can benefit from training, managers can tap into appropriate programs that target specific needs. Blended learning strategies that use technology, such as e-learning self-study courses, reduce the time employees are away from their jobs while accelerating their skill development. By maintaining a disciplined approach to ensuring lender proficiency, credit unions will be in a position to benefit from the dynamics that exist in the marketplace.

Lenders with astute skills and knowledge of credit are a powerful asset for credit unions. Lender proficiency extends beyond the first member contact. It is also measured in areas such as the quality of the loan, depth of the financial information obtained and the loan acceptance rate. For example, write-ups may be incomplete and missing pertinent financial information. Or an analysis may be incorrect or not strong enough to make an informed credit judgment. Reliance on automated systems to determine credit risk also may lead to lending errors. Efficient lenders capable of performing non-automated, judgment-based financial analysis are required to manage risks and opportunities. And a lender cannot just secure everything with real estate with the same assurance that they once had.

Equally important is the performance of the loan portfolio over time. If the loan portfolio is not performing as expected, there may be an issue with the underwriting skills of the lender. Additionally, it's vital to observe the lender's interactions with members to determine if there is a lack of assertiveness in seeking new business opportunities or if the lender is reluctant to engage in reciprocal credit dialogue with members. All of these indicate areas where training may be needed.

Training and Re-Certification Programs
Lenders with strong business development, underwriting and member relations skills are essential for successful credit union operations. To develop high-level skills in these areas, it is important to include these key components in training and re-certification programs:

• Comprehensive assessment of current skill level. This objective tool allows managers to determine skill gaps and then target the specific areas of need for each lender.

• Assessment review and skill remediation. Before training occurs, managers use this component to reconcile any instances where assessments fail to indicate that lenders do or do not need (re)training on a particular topic.

• Targeted training on skill and knowledge gaps. Inform lenders what the benefits of the training are to both the organization and to the lenders themselves. It is important for management to support and present training as a consistent and continuous improvement process rather than an event where once the staff is trained, it's over and forgotten.

• Repeat assessment. Follow all training with another assessment to ensure learning has occurred and lenders are able to apply the new level of knowledge and skills on their jobs. There is a difference between merely attending training and truly understanding it to the point where the knowledge, skills and behaviors are absorbed and used immediately after training.

Unlike in the past, there are more options for training than just attending a seminar in a classroom. Blended learning through technology, such as online self-study, allows the learning experience to be tailored to the lender's individual needs, preferences and time requirements. Thriving in today's world requires investing in and using specialized technology to streamline credit risk management processes while balancing them with individual skills and knowledge to achieve effective lending decisions.

Improve Lender Skills and Knowledge
Employees may become worried about their job security, especially when being assessed. Managers sensitive to their employees' concerns position these assessment tools in a way to emphasize what they truly are-identification of learning opportunities to help lending personnel enhance their job performance.

It doesn't take much in the way of poor instruction to adversely affect an organization. Management also can assist lending professionals to retain their skills and knowledge. They accomplish this by ensuring that there is consistency across the organization through the use of a disciplined decision-making lending strategy. This stability in the assessment of members' credit risks quickly eliminates many common lending errors. Finally, managers can sustain this increased level of training through a robust coaching process. In this way, performance will improve continuously, even as lending rules and regulations constantly change.

Defeat the Competition
The present economic environment has reduced the number and in some cases the quality of lending opportunities. That means there is more competition today for the loans that are out there, which will only increase when the market returns to a robust state.

Now is the time to ensure that lending personnel have all the skills and knowledge required to make sound, profitable lending decisions and that managers are ready and capable to sustain this higher level of performance through affirming, constructive coaching. This will improve individual and organizational performance now and allow the institutions to take the necessary step to compete for loan business in the future.

Joseph A. Sparacino is SVP & Managing Director for the Americas at Omega Performance Corp., a provider of credit/risk management and sales performance improvement solutions. Mr. Sparacino can be reached at 704-672-1400 or www.omega-performance.com.

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