Overcoming The Fear Of Merger

If your credit union has never been through a merger before, the entire idea can be frightening for everyone involved, from the C-suite to the newest employees. There are a lot of unknown aspects, and credit union leaders are often reluctant to address the issues revolving around mergers. Part of a board of directors’ responsibilities, however, is to ensure everyone understands the benefits to be obtained from the transaction, rather than allowing fear to run rampant.

It’s not uncommon for leaders’ self-concerns to overcome the best interests of the membership when the possibility of a merger arises. When this happens, boards may choose to avoid potential suitors for fear of losing their positions. After all, board members take pride in their positions; they’ve developed friendships because of the roles they hold, and they’re typically afforded certain benefits— such as attendance at conferences— which may seem unlikely, should a merger take place.

As part of the NCUA’s regulations, board of directors’ responsibilities require leaders to carry out their duties in good faith, taking care to put the best interests of the membership before their own. This means making decisions fairly and impartially, without regard to their own fears and hesitations, which could otherwise hinder the successful growth of the organization.

Rest assured, credit union mergers come with far more benefits than drawbacks. When procured properly, everyone wins, but this isn’t a process you’ll want to go through alone. With the help of a third-party facilitator, whose sole job is to ensure the success and well-being of your organization, your entire community will realize success.

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As a credit union leader, what are your fears? Which elements are prohibiting you from taking the next step forward?

Here’s a look at a few common misconceptions involving credit union mergers:

1. People Will Lose Their Jobs

Generally speaking, when one credit union merges with another, it becomes stronger, larger, and able to service more members. This means most employees, including the CEO, will likely have a position within the new company.

Most CEOs get a say in their new role, and most employees will comfortably have places awaiting them under the new umbrella.

Part of your board of directors’ responsibilities is reassuring people that your decision to merge means growth. Growth means new possibilities, including new responsibilities, higher status, and better benefits—even if people voluntarily choose a severance or retirement package over the merger.

In many cases we have seen new positions established as part of the merger.  Additionally, more resources dedicated to growing the credit union in a market area can generate further increases in employment.  Some credit unions are also looking to diversify their employment across multiple markets opening opportunities for great gains in employment for back office positions.

2. The CEO’s Salary Will Decrease

Contrary to somewhat popular belief, mergers are positive for leaders’ wallets. When you agree upon on a merger, you’re converting a smaller credit union into a larger one. With that growth, more cash flow is available for salaries.

Most CEOs on merging credit unions will experience increases in salaries and benefits as well as rectifying deficiencies in their retirement funding.

The staff often benefits from mergers, as well. Larger credit unions are able to offer benefits and higher salaries that smaller credit unions simply can’t justify.

3. Tlhe Board Will Lose Its Ability to Impact the Community

There are a number of options for board members to continue with the continuing credit union. As part of the merger deal points, board positions may be offered or an advisory board may be established. Most board members can work together to plan the future of the new credit union while providing valuable feedback about the nuances of their individual communities.

The board is a key element in connecting current customers with future changes; these voices reassure the members, staff, and leaders that the upcoming merger will be a positive one, enabling favorable community and employee morale in the face of change.

Communication isn’t always easy, but it is necessary.

The easy path is to just maintain the current course of business, but if you truly have your members’ interests at heart being open to merger conversations can be best way to improve members’ financial lives. Mergers are about People Helping people.