3. CEO Compensation. “But I know it when I see it.”
There may be a credit union CEO compensation variation of the famous Supreme Court Justice Potter Stewart quote from 1964 about pornography, but a few rules for boards of directors, CEOs, and credit union compensation consultants might help us avoid that kind of comparison:
4. Business lending. Some in our industry, including some regulators, have a deep fear of credit union business lending. Indeed, we’ve had a number of headlines over the years about failures specifically linked to business lending.
Statistically, I think credit unions’ loss numbers are as good as or better than community banks’ numbers, but I do understand the objections and the concerns (lending does have risks).
Our job is to do the underwriting, pricing, and monitoring in a manner that mitigates those risks (or pays for them).
Credit union business lending is extremely important for a couple reasons:
In addition to the above benefits, business lending represents multiple lenders (credit unions and banks) in a community looking for good loans that will help finance business growth.
And, the U.S. needs good jobs and employment, and federal, state, and local governments need the tax receipts from successful businesses and their employees. That’s the principle on which to base the case for expansion of credit union member business lending.
And as a tangential benefit—as credit unions become more active business lenders—banks will become more competitive and business-friendly lenders as well.
5. Leadership. Be present, engaged, and passionate.
Years ago, participating senior executives in a group working with a consultant were each asked to pick from a list of descriptions of their leadership style. It was interesting, but not surprising, that no one in the group described himself or herself as “warm and fuzzy.”
In a way, that was disappointing because they had potentially eliminated the father figure, someone who is a good friend, someone with empathy, or perhaps leaders who sincerely care about the lives and welfare of those who work in their organizations.
I would not in any way de-emphasize core leadership requirements—technical competency, financial acumen, judgment, self-confidence, and communication skills. But I’d also want to see personality traits that would include warm and fuzzy, love, and enthusiasm.
Those soft and very positive motivating skills are particularly desirable, especially in a member-owned, not-for-profit entity. Our mission is to help people improve their lives, to have cars to get to work, to have homes and to improve them to meet their tastes and needs, to save and send their children to college, and to save and invest for retirement.
With that kind of mission, we should have a genuine passion for what we do, we can be caring and kind with co-workers, and we can have love for the member/owners we serve.
6. Do your absolute best! As a UCLA student in the 1960s, one of my heroes then—and since—has been UCLA’s legendary basketball coach John Wooden.
At the top of Wooden’s Pyramid of Success is “competitive greatness,” which he defined as “Perform at your best when your best is required. Your best is required each day.”
JOHN TIPPETS is president/CEO of North Island Credit Union in San Diego.