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Connexus : Issue 38
and talked about beforehand.” and governance structures must be thrashed out in advance. “I’ve seen plenty of announcements of mergers where people have said we’ll go into committee and talk about these things later, and they fall over because there’s no clear path of leadership. you must have the key board make-up and chair role determined before you announce it, as well as the ongoing CEO. The rest can fall into place.” Eggert says such forward planning can smooth the merger path and help avoid personality and ego clashes. “Sometimes mergers get a bit derailed because the personality aspects come into consideration. Things like the size of the board and who’s going to be on it, who’s going to be the general manager and who’s going to be on the management team.” likewise, clarifying general staffing issues is a must to ensure employees understand their future roles and are supportive of changes. Never forget, Eggert says, that most members’ contact point with their mutual is through one or two staff members. “If they go to a branch, they’ll know the local staff very well. So they’re always concerned about what’s going to happen with the staff.” My Credit Union, which now has more than 60 staff, has been very conscious of personnel issues. “We spent a lot of energy prior to the merger in making sure that people had their job descriptions, had their positions,” says azzi. “People knew exactly what roles they were going to do from day one.” Culture must be king, he says. Management must “get both sides on board really early and say there is no ‘us’ and ‘them’ – you are one unit now”. azzi agrees that mergers for the sake of mergers are dangerous, but adds that institutions shouldn’t procrastinate over the future of the business and ignore growth opportunities. “I have a philosophy where I say the worst thing we can do for our members is go broke. We make sure it’s not so much about growth for the sake of growth. In every merger, it’s about what value we add back into the organisation. We have knocked back mergers before where we felt it really adds no value. I look at it in terms of the balance sheet. If the balance sheet is going to weaken after the merger... [forget it].” The outlook reg Elliott, one of the father figures of modern credit unions, forecast two decades ago that the number of australian credit unions would eventually drop to about 50 or 60. The prediction is still close to the mark, says Eggert. “It’s a trend that’s being driven by the outside world, by more competition and heavier regulations and costs.” Schesser says it’s undeniable that small to medium-size credit unions operating in a congested community environment such as a capital city may face a tough future. “I’d imagine there are a whole bunch of credit unions operating in that congested metropolitan space that would be strategising around merging as an option in the short to medium term. and a positive side is that industry mergers do keep the assets within the mutual sector.” Evers agrees that mergers will continue, although to what extent he is not sure. “People have to be careful about making a decision to merge, because they give up their independence. It’s easy to say you’re a credit union, therefore you’re the same [as a possible merger partner], but that’s not true. you must have a commitment to your membership, and your future growth and strategic risk profile must be similar.” In the case of People’s Choice, he is confident the recent merger has been pursued for the right reasons and will help foster a growing and successful business that can compete against the might of the major banks. “There are a number of larger mutuals doing that and it’s one of the key drivers behind this merger. We could be very good as separate parts, but we can do better as one.” – Cameron Cooper is a freelance writer. 42 connexus www.abacus.org.au connexus www.abacus.org.au 42 FEATURE MERGERS “ We make sure it’s not so much about growth for the sake of growth. In every merger, it’s about what value we add back into the organisation. We have knocked back mergers before where we felt it really adds no value. I look at it in terms of the balance sheet. If the balance sheet is going to weaken after the merger... [forget it].” My Credit Union CEO Joe Azzi