Management

A Merger of Equals

Perhaps the most challenging merger involves two CUs of similar size.

August 01, 2012
KEYWORDS board , credit , merger , staff , trust
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Focus on the future

Bill and I were determined to build an organization based on tomorrow’s needs instead of trying to combine the best of both former organizations.

We ruled out operating as distinct organizations as some credit unions do. Instead, we developed a precise process to define expectations of each management position focusing on functions, not people.

We interviewed all members of the management team, and selected the new team based on the best choices for leading the newly restructured organization with a true member focus. We looked at ways to develop employees’ careers. We gave all employees equal chances, and we gave them the tools they needed to succeed.

We wanted to position Lake Trust with a long-term, strategic, organizational structure within two years that would lead to a smooth leadership transition when we retired. We made the tough decisions together and we believe we met that goal with the help of external consultants, internal champions, and a supportive board.

As planning progressed, I began to question the value of the trade-off. A group of NuUnion members who were opposed to the merger formed a campaign to stop it, and they were nearly successful.

At a special membership meeting, the final vote was very close, but the merger initiative prevailed. We knew we would experience some staffing changes, so we wanted to move as quickly as possible through the transition. 

It was challenging to implement a decision that affected so many members, staff, and the future of our credit unions. Of course, it was a board decision to move forward, but I knew I’d be on the front line.

Our accountant said something early in the process that really stuck with me: “If you don’t see the efficiencies you expected after two years, you’ve missed the big decisions.”

Bill and I were determined not to let that happen as we experienced painful staffing changes and difficult conversions. We couldn’t deal with every former vendor, and some stressful conversations and hard decisions followed.

Laura, our consultant, coached employees throughout the merger.

“Mergers can be difficult,” she reminded us. “Employees at all levels have to relinquish professional life as they knew it under their former organization. This massive change stirs up powerful feelings in a lot of people. Excitement and hope for a bright future are part of this, but there’s also resistance to change, disappointment, and anxiety about what the future might look like. All of these feelings are perfectly normal and can be anticipated.”

The door opens

On the first effective day of the merger, two important elements were in place:

1. Our combined board approved a full set of policies for the credit union. Those policies provided targets and boundaries. They clarified the roles of management and our board so we could move through the integration phase more efficiently. The policies also set the stage for future growth.

2. A complete, restructured management team. 

As part of the application process, we had to submit a five-year financial plan to our regulators. Only two years after the merger, we determined we were running a couple of years ahead of the plan. This confirmed we were finding the efficiencies we knew were there but were difficult to implement.

In a recent email, Bill wrote how “keeping the eye on the prize,” along with the confidence and trust we had developed in each other, made success possible. 

“Looking back, the decision to merge was absolutely correct,” he wrote, “and though I knew it would be difficult, the implementation was far more difficult than expected. But the rewards have been far greater than imagined.”

Resource

♦ CUNA’s Guide to Mergers: cuna.org, select “education & training”

Laura described the merger as “our finest hour.” Susan told me the project was her most successful organizational development plan she’s ever been involved with. But it all would have been impossible without the support of our respective boards, executive teams, and staff.

Now, several months into our retirements, Bill and I are proud of the successful launch of Lake Trust Credit Union.

We met our goal of creating more value for our members. We left Lake Trust in good shape and ready for the new leadership team to take it to higher levels.

 STEVE WINNINGER retired as CEO of Lake Trust Credit Union and now provides consulting services to boards and CEOs through the Michigan Credit Union League.  

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