In this week’s Principle 6 newsletter, Mike Mercer reconvenes three young cooperative leaders for a discussion on balancing business metrics like growth, efficiency and profit with member well-being.
Keep reading below to hear from Savanna Givens, Executive Coordinator at Hiway Credit Union; Sylandi Brown, Communications Manager of the U.S. Overseas Cooperative Development Council; and Damian Alarcon, Director of Community Relations at Travis Credit Union.
Read the full newsletter below, then consider how cooperatives across sectors can work together to achieve this balance. NCBA CLUSA is on a mission to document Principle 6 collaborations across the country so we can identify trends, document best practices and share this knowledge with you—our fellow cooperators!
Principle 6 Newsletter – Growth/Efficiency/Profit and Member Well-Being
November 9, 2022
Cooperatives are business entities. Those that try to live on subsidy or conceive themselves as charities don’t last long. So, business metrics matter. Among them, growth, efficiency and profitability are paramount. Regulators insist. Directors want to know… every month. CEOs get paid based on these KPIs. And CFOs track it all.
But cooperatives embrace purpose that revolves around improving some facet of well-being for members. The cooperative structure makes it possible to sustainably elevate member well-being to higher levels than other forms of business organization are willing to do. But it’s difficult to connect member well-being with daily operational priorities and tangible incentive arrangements.
This constructive tension lands where motivation matters most, at the points of member contact. This week, we ask three young co-op leaders to share their views about balancing the motivational incentives of finance/growth with member value creation. They receive marching orders from the C-suite and have responsibility for achieving premeditated results from the front line.
Let’s start by getting to know these amazing leaders:
Savanna Givens: Hello yet again! I’m thrilled to be working on the Principle 6 newsletter with two new, incredibly cooperative minds. The connections I make in the cooperative system continue to amaze me. If you don’t remember me from earlier letters, I am the Executive Coordinator at the Minnesota-based Hiway Credit Union. I work collaboratively with our senior leadership team in achieving their strategic objectives and maintaining operational efficiencies. As the “Executive Leatherman,” I serve as a liaison between them, our members and our associates, ensuring effective communication throughout the organization.
Sylandi Brown: Hi there! I’m excited to be joining these fellow cooperators! I’m Sylandi Brown, Communications Manager of the U.S. Overseas Cooperative Development Council’s International Cooperative Research Group (ICRG). In my role, I assist my team in advancing our mission of championing, advocating, and promoting international cooperative development. Working primarily with the ICRG, I help disseminate our research that provides evidence about the impact of cooperatives primarily in the developing world. Previously, I worked for my local electric co-op in middle Georgia!
Damian Alarcon: Hello everyone! As the Director of Community Relations, I am honored to work with the teams at Travis Credit Union in Central California building philanthropic and community development initiatives that align with our growth strategies. When Mike introduced me to Savanna and Sylandi, I jumped at the opportunity to learn about and discuss important cooperative topics. The Principle 6 newsletter can empower and inspire cooperative growth. I am looking forward to cooperating in the future!
Mike Mercer: Thanks to all three of you for the work that you do to advance co-ops. And I hope that the readers will appreciate your perspectives on this important topic—balancing the need to produce growth/efficiency/profit with the mission to improve well-being for the owners, the members.
Let’s begin—In your role of influencing the senior folks and motivating your colleagues on the front line, how do you contend with the constructive tensions that we identify above?
Damian: The question of striking a balance between growth and compassion is integral in my work. I spend a good portion of time thinking about how to convince executives of the profit in serving our community’s needs. I have found that mentorship and networking with like-minded individuals accompanied by training and educational programs from resources like the National Credit Union Foundation are integral to my proposals. I think there is a lot of opportunity for the next generation of cooperative executives to challenge themselves to find ways to measure the growth of compassionate business models.
Savanna: Incentives should be balanced between traditional financial metrics and metrics that strengthen the member experience. From where I sit, I see a trend toward focusing incentive programs primarily on growth-efficiency-profit metrics. These are important for measuring overall business performance, but they lack the nuance required when we consider that we are member-centric organizations. The established relationship between KPIs and incentives may unintentionally reward subpar service when it’s focusing only on the number being achieved. No matter how many calls you answer in an hour—five or thirty—the quality of service you offer to each caller, while important, isn’t considered in the typical metrics. This preference for data over human experience creates a conflict of interest that runs counter to the cooperative values we’re founded on.
Sylandi: Co-ops are businesses that were first formed to meet the needs of their community. While traditional business metrics have their place, it should never tell the full story of how your co-op is doing. Instead, metrics surrounding member satisfaction and community well-being can be used to paint a picture that aligns closer to your central purpose. Realistically, though, not everyone at your co-op may agree with this sentiment, so I have found that contending with these tensions is best done when everyone is reminded of why we were formed and why we continue to exist.
Mike: In your opinions, how do you know when the dual objectives of member well-being and the well-being of the co-op are out of balance? If you can, use examples.
Sylandi: Imbalance occurs when innovation for the betterment of the community stops. As our membership changes, we should be responsive to their evolving needs. If your co-op is thriving, but your members are barely surviving, there is something wrong. We should make sure we fulfill our economic responsibilities while remembering we have discretionary responsibilities to elevate the well-being of the community and improve quality of life.
Savanna: When we always prioritize quantitative data over qualitative data, the member experience suffers and an imbalance develops. Assume we decided as a credit union never to lend to anyone with a low credit score; while this may ensure we have an extremely low risk of loss, it is also a loss to the community and their financial well-being. Is our mission to prevent losses or to empower the community to improve their quality of life? We must be willing to look beyond the numbers alone in order to see the life that underlies the data.
Damian: I think examples of imbalance can be found in the mergers and acquisitions cycle. Cooperatives that believe in serving their mission before their bottom line end up with no capital because it has been spent solving people’s issues without considering the long-term financial success of their membership. They soon end up being acquired by larger organizations. Alternatively, the cooperatives that only seek profit eventually leave the cooperative fold altogether to become a for-profit and end up creating customers instead of members.
Mike: CEOs and their C-suite confidants arguably have the largest impact on the culture of an organization. What advice would you have for the existing generation of senior leaders as they prepare you and other young leaders to get the culture right?
Savanna: Qualitative data starts with active listening and asking questions. Evaluate your metrics and incentive programs to determine if financial data is being over prioritized and decisions are being made with mainly the bottom line in mind. Employee satisfaction is equally important; focus on the onboarding and offboarding experience rather than solely on retention rates. Set an example for the next generation of workers by making decisions that prioritize balancing between what’s right for the business and what’s right for the member.
Damian: The C-suite carries the weight of leading by example. We see in the news today that many people will no longer work for the model of “just do it because I said so.” Senior leaders in the cooperative industry have a unique opportunity. It is important for leaders to know that most people choose to work in the cooperative sector because they believe in a cause. Instead of just talking to us about financial success for the company or the formula for raises, spend more time talking to us about developing expertise around community impact.
Sylandi: I encourage senior leaders to lean into our roots and remember that at the end of the day, it always goes back to bettering our members—even if doing so requires a financial risk or significant investment that doesn’t make sense on paper first. This leads to enhanced credibility and reputation not only among your members, but among our next generation of workers who are looking for more fulfillment in their work and more authenticity in their employer’s contributions to society.
Mike: I think the readers will agree that these are three impactful leaders that will help chart a course for the cooperative system in the years ahead. If you have read to this point, the thought will certainly have occurred that you have future co-op leaders like Savanna, Sylandi and Damian in your organization. Ask them for their opinions. You will be impressed at their grasp of situations and opportunities. And soon, you will learn from them. No work is more important for the cooperative system than building purpose-driven leadership for the future.
And the art of balancing growth/efficiency/profit with attention to members’ well-being is at the heart of co-op leadership development. It would be hard to read the contributions above without wondering whether fulfilling mission has been somewhat obscured in practice by signals and incentives from the growth/efficiency/profit camp.