Solving the leaderless vacuum - is there anything to lead ?

Leaderless vacuum - nothing to lead ?

Take a journey back in time. Ireland 1975 when few people owned their own car. Televisions were rented or bought on the HP. Few if any went abroad on holidays. It was a time when most people had just enough to get by and a little left over.

Most people were workers paid weekly having no need for bank services. Banks just didn’t provide financial services to them simply because most people had no need for them. No one invested with insurance companies. Investment Funds etc were unheard of. Life insurance was bought and paid for weekly on the door step. If we borrowed we did so “on the tick or slate”. Chalky was a common nickname.

If you owned your home you were middle class, a second property you were a landlord. We saved what little we had with our local credit union so that we could borrow.

In the 80’s we opened bank accounts so employers could pay us electronically and moved from being paid a wage to a salary. Convenient on the hoof tick became available – the ubiquitous credit card. Then the banks took on the building societies and property ownership became a right for everyone. People didn’t have to queue for mortgages or wait for loans. They had access to cash 24 hours a day through a “hole in the wall”. Still times were tough as we continued to save with our credit union so that we could borrow if the bank didn't lend us the money. We were paying most of what we earned in tax.

Fast forward through the Tiger years. Almost overnight the little money we had became a lot more. We became consumers moving from near impoverished workers to comfortable middle class. We buy financial services because we can afford them. Today, we can shop physically or online 24/7. We buy foreign holiday homes in far away places like South Africa.

We are no longer largely poor. We don’t need to go cap in hand to the credit union and demean ourselves by answering our neighbours all too curious questions. We no longer need to go to what we now see as the "poor mans bank".

Thing is it never was a poor mans bank. It was a people’s bank, a bank for the right time and situation. And it did wonders. A generation financed college education for their children and other meaningful things.

But now many credit unions have become backwaters, remnants’ of what were once vibrant communities that have passed on or grown up and moved away. These are the small cosy savings clubs that open three evenings a week and still staffed by volunteers. Few people borrow anymore as they don’t need to. They are quite literally dying off.

In other cases people have stopped borrowing and continued saving as the demographic profile shifted getting older. These are also savings clubs where for example one well known national employer credit union lends only 18% of its savings base.

Some others have grown as their local communities expanded where they are now dominant providers of loans to a new impoverished working class. Some show signs of exploitation with high loan rates to pay high dividends to their middle class savers. More than a few can be justifiably accused of knowingly exploiting the new poor working class.

Still others have hidden “private banks” for a few local wealthy people. The local man made good who still uses his credit union but for purposes credit unions were not designed for like commercial business lending and speculative building developments.

Many have become the modern Irish mattress where money is hidden from the tax man in non-DIRT share accounts. If this deisgnation were ever renoved there would be a flight of savings!

Our growing wealth has it seems solved for the designs of the credit unions founders.

Yet you can’t help thinking that there is something missing here. Why were credit unions founded, what greater good do these co-operatives represent and why have they lost their way ?

One thing is for sure. They were not founded as social finance vehicles. They couldn’t have been as the concept had yet to be articulated.

Lately and unfortunately credit union leaders have hijacked social finance, twisting its meaning to substantiate special treatment. The Irish credit union is not and never was designed as a vehicle for social finance. To claim it is, is but fresh ideological baggage or argument deflecting people away from the core purpose. Or worse still a “feel good” logic that prevents facing the brutal facts that Irish credit unions have lost their way and are stuck moribund in the mud facing an onrushing tide.

Nor were credit unions designed for the unbanked, the financially excluded, although this is an admirable social need fulfilled by some credit unions.

The core purpose of credit unions is to provide affordable financial services to ordinary people and educate them in the wise use of money. Irish credit unions must re-invent themselves to deliver on this purpose and deal with the brutal business facts facing them today.

Leaderless vacuum - nothing to lead!
One of these brutal facts is credit unions have no leadership. There is, it appears an aspect of national leadership, but this is merely clever messaging where rhetoric replaces thoughtful, purposeful leadership.

Credit union people are it seems incapable of being leaders or followers within the structures they have created for themselves. This structure when viewed is both a control command hierarchy and a democratic process. It has spawned an autocracy that only volunteers could create. An autocracy of the masses, that can only agree on collective actions through complicated voting on endless stream of minor changes to hundreds of arcane rules.

Yet the paradox is that credit union leaders object to rules based regulation when their own rules are the very reason why innovation and creativity have been stifled. In an attempt to deal with this stultifying process the mass voted to have meetings every two years which meant of course that critical decisions would have to wait two years or more ! What business could survive of all its members were required to vote on anything of value and then only every two years? Yet this is how the system works.

Of course aside from leaders there is another requirement of followership - “committing to be led”. Collaboration stops at the main door of the credit union. Beyond it is a structure designed to ensure its continuing local “independence”. The entire system is designed bottom up to ensuring there is no personal accountability …thus there are no leaders for there is nothing to lead.

Boards are off the hook because of their democratic mandate, managers are off the hook because the boards won’t let them lead and the ILCU is off the hook because the boards won’t accept its leadership. It is in fact a leaderless vacuum.

At the heart of the problem too is a failure to create a professional cadre around which the amateur volunteer can coalesce. Credit union professionalism matches the state of development of the sector.

In as much as there are a few good directors there are also good managers. One of the necessary conditions to transformation is having the right people involved. Unfortunately one of the brutal facts is there aren’t enough in place at this time and under current conditions are hardly likely to emerge.

In a sense there is a need to create something out of which change and transformation has the best chance of happening. We know in our bones that this is not the ILCU. Nor is it a CUDA.

Change will require new forms of collaborative enterprise structures that will need to be much more commercial in focus, governed properly and staffed by professionals.

The starting point is to get the right people on board. But who are they ? They are those who can face the brutal facts, are challenged by them and figure out a way to collaborate in co-creating great credit unions. Those who would want their legacy to be “I helped build great credit unions with others”.

There is something in this thought that focuses the mind on what could be rather be than what is. This is the shift people must make if they are to truly lead credit unions in the right direction.

Deciding on this right direction is less important than it might appear at first. Things will start to happen when the right people are engaged. Get them on the bus first and create the environment through which they will begin to define what might be, agree with them and then get out of their way and support them as they build it.