By Frank J. Diekmann
While digging through some beach bags, here are a few slightly suntan-oiled notes I found stuck to the bottom:
‘Let’s Get a Coke Habit’
Economists are typically as dry as a West Texas tanning bed when it comes to making presentations to credit union audiences. So it’s always refreshing as summer rain to hear from someone like Dr. Elliott Eisenberg, who in the process of interpreting the same number pretty much every other economist has in their respective PowerPoints, was able to do so with the kind metaphors and humor the profession is not exactly known for.
Eisenberg, who described the run-up to the recession years as a time when “Everyone said ‘Let’s get a coke habit, a mistress and a penthouse apartment,” noted there are “catches to the improvement” in the consumer piece of the economy, particularly in jobs—which he observed at the CUNA CFO Council’s recent meeting a good month ahead of the recent anemic jobs report.
“Part-time jobs have peaked and started to go down, that’s a good sign,” said Eisenberg, who runs graphsandlaughs.net. “Computers and technology are eliminating a lot of jobs, especially in middle management. People now getting lower-paid job. It’s a real problem that is not going away. We are creating lots of higher paying jobs, but also lots of lower paying jobs. We have to have better education and have to have (the earned income tax credit). We to get a lot of people out of college and into vocational training. There are a lot of great jobs out there that have vacancies.”
Who’s Doing the Math Here?
Much has been made of how much more complex the world has become—often needlessly—and that seems to apply to the simplest of things, as well. For instance, it used to be that if you were in a hotel in room 2247, you were on the 22nd floor. Yet as I discovered recently in Anaheim, my room with that number was on the fourth floor. Just a week later in Las Vegas I was not only given a room number that began with 55, I was told by the desk clerk my room was on the 55th floor. Unless there were 46 floors below ground, it was actually on the ninth
Nostradamus Remains Safe
Actual transcript of conversation between a flight attendant and a young woman who initially would not remove her headphones to listen to the exit row instructions.
Flight Attendant: You’re an only child, aren’t you?
Passenger: No.
Flight attendant: Then you’re the youngest child.
Passenger: No, I’m actually in the middle.
Flight attendant: I knew it!
The Best Case? A Worst Case
Observed by Bob Colvin, chief strategist and senior advisor with CNBS in Overland Park, Kan., during the recent CUNA CFO Council annual meeting: “Regulators wake up each morning and plan for rate increase of 300 basis points as a worst case scenario.
I’d be delighted if we woke up and rates were up 300 points. The worst case is the near zero. Half the world is at negative interest rates. Let’s face it, the Fed doesn’t have any bullets in its holster anymore. Still regulators want you to look at what happen to your shares if rates go back up. Worst nightmare of a regulator today is rates go up rapidly, lot of your deposits have switched to non-maturity deposits and theoretically it could walk out and we’re going to have this huge liquidity problem. I just don’t see it. We see an awful lot of stability in credit union deposit bases.”
Who Could Have Seen This Question Coming?
Speaking of the recent CFO Council meeting, you will be shocked and awed to learn this. John Best of Best Innovation Group had just finished a presentation in which he talked about a number of new technologies. First audience question from a CFO: “Where’s the ROI?"
Where Do CFOs Add Value?
At that same meeting, a survey asked CFOs, “Where you you as a CFO add additional value to your credit union?” The overwhelming response was “assisting other business areas in realizing true value potential.”
Earnings Left on Table
Tony Ferris, managing partner of Overland Park, Kan.-based Rochdale Paragon Group, offered this observation to CFOs as something to chew on for a bit.
“Would you believe you are leaving four times earnings on the table every year? Most of you are probably skeptical of that. Why? The risk gap lies in not giving people license to try and fail. There is only reward if we succeed. Incentive plans do drive activities.”
Citing research done by Harvard, Ferris said, “CEOs become ineffective at 4.8 years. So if you have been in your job for more than that we are just dead horses that the staff is trying to beat to move along, because now we have the ‘expert bias’.”
For CEOs who say, “I’ve never failed,” Ferris said the question is, “Have you ever reached? You don’t want to be the last one to know you are irrelevant. Be the one to ask the questions. Question why you do things in your organization. Ask why you do them at all."
Cycle of Stagnation?
CUToday.info has reported extensively on the performance differences between large and small credit unions. No doubt part of that is due to the inability of smaller CUs to attend industry events in order to grow professionally and to learn from best practices. Ferris said the average asset size of credit unions attending the CFO Council meeting was $672.6 million, with average net income of $5.29 million.”
New To The CU Lingo
Get ready for a new abbreviation, if you haven’t heard it already: GRC, for Governance, Risk Management, and Compliance. I’ve heard from several people that some regulators are already asking about various aspects of GRC—especially the governance piece—during exams. I was also told CUNA plans to introduce a GRC Institute later this year.
Credit Unions? Or Future ‘Mobility Unions?’
One of the most fascinating--and it has far-reaching implications for credit unions–discussions right now is around self-driving and driverless automobiles. Once a novelty, the technology is one of those when, not if, propositions.
Larry Burns, who previously was corporate VP of R&D at General Motors and who now is working with Google on its driverless vehicles, had some interesting observations on what’s coming and how soon it will get here, as CUToday.info reported here. Among the provocative ideas he offered to credit unions—for which auto loans are the proverbial bread and butter—is that their future might lie in becoming “mobility unions.”
In remarks to CU Direct’s DRIVE 16 meeting, Burns offered up a future in which most people don’t own vehicles, but instead simply pay for the time or distance they use a car that belongs to giant fleets of vehicles. While unsure of how all that is going to play out, Burns sees a world in which far fewer vehicles are on the road.
He used the city of Ann Arbor, Mich., as an example, noting there are 120,000 vehicles currently in the market. “We need just 15% of that number,” said Burns. “Eighteen-thousands cars can provide the same mobility. This could reduce out-of-pocket costs by 75% and respond to trip requests in two minutes.”
In other words, you’ll use an app to order up a ride, a driverless vehicle will arrive and take you where you want to go, and then it will leave.
And where do CU car loans fit in that picture? That’s the SUV-sized question.
Preaching To The Deaf Choir
Not that anyone in the audience ever seems to hear the message, but another person from outside credit unions preached to an assembly of CU execs that they have a big advantage in the market. And in this case it was someone whose actual job title is “culture evangelist.”
Jon Wolske of Zappos, the online purveyor of shoes and apparel, told credit unions at CU Direct’s DRIVE meeting that “Your cause is so much more noble than mine. We sell shoes on a website. Do you talk about how you make families’ lives better? Do you coach people to that message?If you coach just to the business side of things, people get really turned off by that. When people see the purpose piece in you, they will react in kind.”
Three other observations by Wolske:
- “When you hire a lot of people and have no dress code, there is a lot of gray area. So we ask that you not offend other people.”
- One Zappos employee made a coding mistake that led to every item on Zappos.com being priced at $19.99. “It was a $16 million lesson. And that person kept his job. The lesson was why was one person making a change that can affect us that much. I will tell you when you do that you do get $16 million in PR.”
- Wolske said when he became a “culture evangelist” at the company he was the “most hated person. But now everyone hates HR; yes!”
Good Luck, Kid
At a Chicago hotel recently, a man seeking to stop an elevator door from closing opted to use, instead of the traditional hand or leg, his baby in a stroller, whom he jammed between the doors. To that child CUToday.info sends its best wishes for the future.
From The Author of “Me, Myself and Irony”
Finally, at one recent meeting I heard a speaker talking about a book, and then he quickly ad-lipped “Oh, wait, no one reads print anymore.” And that seemed kind of ironic to me, seeing that after his remarks concluded he was scheduled to do a book signing.
Frank J. Diekmann is Cooperator in Chief at CUToday.info and can be reached at Frank@CUToday.info or followed at @FrankCUToday