Guest post by John Tippets, retired CEO of American Airlines Federal Credit Union
This article originally ran in TCUL's Lonestar Perspectives Summer 2009 Issue.
I earned my first paycheck over 50 years ago and have
enjoyed a great career, from sales to marketing; from the mail room to the board
room; from an accounting clerk to vice president; finally as the president and
CEO of American Airlines Credit Union.
It has been a wonderful career and in a variety of ways, it still
continues.
Over the years, I have learned that while there are no magic
formulas, there are critical principles that I believe all credit union leaders
should keep at the forefront of their minds as they lead their institutions.
Encourage Habits of Thrift
If there would be one singular purpose of a credit union, it
would be to encourage habits of thrift. I
believe we must incent and reward our members to “pay themselves first” – that
is to save, save for a raining day, for a down payment on a home or a car, and
save for their children’s education. The
virtues of saving and of living within one’s means are the cornerstones of
financial welfare for our member/owners.
Encouraging, teaching and rewarding such should be a credit union’s top
priority.
Fair, Reasonably-priced Credit
Fair and reasonably-priced credit is accomplished in today’s
world by the letter and spirit of laws and policies, and with the benefits of
tools, technology, credit scores and bankruptcy predictor models. However, nothing has replaced the core
principles of lending – that is the four “Cs”: character, credit history,
collateral and capacity. Lending also
still requires the good judgment of loan officers and their understanding of
their members’ needs and circumstances, and their compassion.
It’s the Members’ Money
Be prudent in actions and expenditures. Think soundness and payback, and return to
the members in all decisions, whether it is in spending, investing, lending,
setting dividend levels, and setting aside earnings for capital. The saddest and greatest violations of this
stewardship that I saw in my years as a credit union leader has been the
exploitation of members’ capital by executives and boards who have steered
their credit unions into for-profit banks to the benefit of themselves and at
the expense of the credit union’s members/owners.
Philia
Philia is a Greek word for the kind of love, mutual respect,
trust and caring that we usually associate with family. We spend 40 plus hours every week with our
credit union co-workers and much of our days are spent in dialogue with
member/owners. No amount of policy,
product knowledge or economic incentive can match the importance of brotherly
(and sisterly) love and kindness in our branches, on the phones and in our
executive offices.
Your Brand is Your Lifeboat
Your brand is your lifeboat and you should never abandon
your lifeboat. Understand what your brand is and how it fits into your market,
and set strategies appropriate to it. Avoid
making the mistake that a well-known and respected company made when it decided
to change dramatically the packaging of their product - apparently unaware of
the backlash they would get from their loyal customers who had an emotional
bond with the traditional packaging.
Know Your Members
Although this can be a challenge, it is an important
principle. Face to face interactions;
rewarding repeat and multi-product using members; being present in and near
their workplace; being proactive in and with their communities so as to have
interactions beyond financial transactions is an essential element of our
model.
If It’s Too Good to be True
If it’s too good to be true, then you probably shouldn’t be
doing it. This pretty simple rule, if
followed in recent years by some corporate executives, might have protected our
system better than any new laws or regulations, and perhaps today’s economic
mess might have been much less severe.
Beware of Peer Pressures and Herd Mentality
If it doesn’t seem right, don’t do something just because
others appear to be successful. For many
years, MCI seemed to be the most creative of the phone companies and Enron
seemed to be a leader in the energy business.
Of course we all soon learned that things aren’t always as they
appear.
Beware of ‘Greeks Bearing Gifts’
There are often
hidden downsides and negatives of the seemingly “greatest thing since sliced
bread.” Unfortunately, some folks are
enamored with the idea of getting something for free. Keep in mind that often these “gifts” carry a
hefty price tag and come with strings attached. In every decision that you
make, it’s imperative that you keep your members’ best interest at the
forefront of your mind and focus on protecting their welfare.
Do the Right Thing
In most cases, deep in our gut we know what is right, and
what we should do. Whether it is in
matters of personnel, finance, lending, spending or any other aspects of our
job…trying to do the right thing pays the greatest of dividends. We will still make mistakes sometimes, forget
something important or inadvertently offend, but if we genuinely try and do the
right thing, we will sleep well in the night.
