Credit union mergers happen for a myriad of reasons. For example, a credit union may decide to merge so they can provide additional services to their members. Others may feel the need to merge due to declining membership or financial hardships. We even see credit unions merging as part of a succession plan for a retiring c-suite.
Regardless of the reason, credit union mergers are complex. As a result, the time and energy of the merged leadership teams is overwhelmingly spent on making sure a merger goes through - with a successful member vote, regulatory approval and operational, technology and staffing integrations.
But it’s not enough to just ensure that a merger goes through. We must also spend time and energy to ensure that the merger goes well. According to Forbes, between 70% and 90% of mergers fail. This happens because key people leave, teams don’t get along or demotivation sets in after the merger or acquisition. In other words, the absence of a strong, unified culture of the merged companies greatly increases the likelihood that their merger will fail.
We all know the impact that a poor culture can have on workplace performance. The Harvard Business Review states that poor workplace culture has a negative impact on staff wellbeing. This leads to low productivity, high turnover and a significant negative impact on the company’s bottom line. All of which are reasons why mergers fail.
So, what makes a merger go well, not just go through?
By contrast, people who work in companies with a positive culture are “healthier, happier, more productive and less likely to leave.” Beyond that, companies with a positive culture enjoy higher average annual returns.
A thriving culture is the key to ensuring your credit union merger goes well, not just goes through.
Culture is NOT some fancy slogan on the wall or a list of values you only dust off once a year at a leadership retreat. It’s the everyday vibe that keeps a great credit union going strong - built by the people who show up and give it their all, day after day. That’s what really makes the difference.
At the end of the day, culture is how your team feels about working at your credit union. It’s that energy that motivates them to step up, help out and go the extra mile for your members, just because they care. Unfortunately, during a credit union merger, culture often takes a back seat to the things required to make the merger “go through.”
Where do you start now that you’ve merged?
Yes, each culture is different, but you don’t need to build yours all alone. There are tried-and-true strategies and a proven path to creating a great culture that will allow your credit union to experience long-term rewards after the merger. We have worked side-by-side with hundreds of credit unions to shape an intentional culture around mission, purpose and core values. From our experience, here are five actions that credit unions should focus on after a merger has “gone through” to ensure their merger will also go well:
Establish and clearly communicate your new mission, purpose and core values.
Your two credit unions are now one. And as you lead your new credit union team, ask yourself this question: “What are we leading to?” Because if you’re a leader, then you’re leading to something, right? And if you’re not leading to your mission, then what are you leading to?
The answer is probably that you’re leading to your KPI’s – ROA, Net Income, Efficiency Ratio, etc. All of which are important to your business, but none of which are your reasons for existing. And while your KPI’s are important, they do not inspire your team at all. You can’t build a high-performing credit union culture if you don’t have a clear and compelling mission, purpose and core values. So, make sure those are established, and lead to them.
Don’t assume that just because the merged credit unions had a similar mission, purpose and core values that your employees know and believe in your reasons for being.
Establish and define behavioral standards.
Next, determine what behaviors align with your mission, purpose and core values. Behavior can be observed and measured. So, it’s not enough to say something like “we treat people with respect.” With five different generations in the workforce, your employees will have different notions of what “treating people with respect” looks like. You need to be specific.
A simple example of a behavioral standard can be that we answer every phone call, whether it’s from a member or a co-worker, by saying our department, our name and “how may I help you today?” At the end of the call, we ask “is there anything else I can do for you?” If they thank us, we respond with “my pleasure, thank you for letting me serve you.” These are behaviors that are in-line with the core value of treating people with respect. They’re also observable and you can measure how frequently people do them.
Align your culture through training and onboarding.
Once you’ve established and defined behavioral standards, you need to set clear expectations with employees through training. Do not underestimate the importance of training your new team. This is your time to get everyone from both merged credit unions on the same page, speaking the same language. You’ll have mission-specific behaviors and behaviors that align with your core values. So, there will be a lot to train employees on.
I’ve seen many instances where employees reflect on training as the time when they truly understood what was expected of them in their post-merger work. Onboarding new employees and training them on your behavioral standards is equally important. This puts new employees on a level playing field with their tenured counterparts and ensures they’re equipped to be successful from the beginning.
Reinforce your culture every day by catching people doing it right.
When you catch employees only doing it wrong, then they only learn what you don't want, they never learn what you do want. When employees are continually caught doing it wrong, they learn to begin to do less work, because that gives them fewer opportunities to be caught doing it wrong.
Every day, you should catch an employee doing something right that you want others to repeat.
If one of your behavioral standards is to call a member by their name, then what you should do is catch one of your employees doing it correctly, this way:
“Mary, that was a great job of calling that member by their name. That's such an important thing to do to make our members feel valuable. I really appreciate it. Thank you.”
Now, when you do that, and others hear it, the person that you recognized is going to repeat the behavior, and others are going to be drawn to the behavior, because they will want to be recognized. That’s how you reinforce your culture every day.
Sustain your culture through leadership development.
If you want to sustain a culture of excellence, you must invest in leadership development. Leadership behavior is about the only thing that’s been proven to have a positive impact on employee engagement. In fact, the Gallup group is very well recognized for their annual study on employee engagement. They report that 70% of an employee’s engagement is directly attributable to their immediate supervisor.
Unfortunately, many leaders are promoted to leadership positions based on their operational expertise and were never given the proper leadership development. This is especially true in credit unions. So, it’s probably no surprise that Gallup also reports that 65% of managers in the United States say they’re also disengaged in their work. And remember, 70% of an employee’s engagement is directly attributable to their direct supervisor. If you aren’t developing your leaders, your culture will slowly die from the inside.
Ensure Your Merger Goes Well With ServiStar Consulting
If you find yourself overwhelmed by all of this, you don’t have to be. For over 27 years, we have worked side-by-side with credit unions to build and sustain a culture of high-performance. To learn more about how we can partner with you to ensure your merger goes well, fill out our digital contact form or schedule a call today.