Successfully Forging a New Path; After a split with its sponsor, Alliant Credit Union learns how to be successful on its own terms

Gallup Management Journal, July 12, 2007 by Jennifer Robison

Byline: Jennifer Robison

Synopsis: When its sponsor, United Airlines, was facing bankruptcy, Alliant Credit Union had to break out on its own -- there was no other option. Here's how the company learned to be successful on its own terms.

Four years ago, Alliant Credit Union faced an extraordinary challenge. The credit union was deeply tied to -- in fact sponsored by -- United Airlines. Its customer base was made up of employees and, since the 1990s, retirees and family members of United. Its employees were on the airline's payroll and leased back by the credit union.

But in 2002, United was facing bankruptcy, and Alliant -- which was then known as the United Airlines Employees' Credit Union -- was limited in its market. Ultimately, there was no other option: Alliant had to leave home to thrive, maybe even simply survive, in the competitive banking industry.

The separation was congenial, and in October 2003, Alliant found itself independent in the big world. It had 168,643 members, $4.3 billion in total assets, and almost $3.7 billion in deposits -- which was not a bad way to begin. On the other hand, the credit union had to figure out quickly how to maintain its assets and reach outside its historical client base. It also had to develop its own management systems with brand new employees and former United employees.

This was a critical juncture and required making serious decisions. Company leaders needed to chart a new path. But how much of what they took from the past -- the policies, processes, and people -- was useful for what they wanted to accomplish in the future?

"We were not a low-performing organization trying to turn around. We are an organization that for decades had among the highest returns, the best efficiency ratios, and relatively high and improving member satisfaction," says Lee Schafer, senior vice president of corporate affairs. "But we were facing a big and fundamental change in the condition of our sponsor and some significant marketplace changes too. In the past, we could ride out cycles with the sponsor, [but] that was not going to be the case anymore. We had to make some changes."

A new breed of managers

All real and lasting changes start from the top down, then come to life from the bottom up. Leaders may create the vision, but the energy to make it happen must come from everyone in the organization. And both vision and energy can be diluted if leaders don't gain employee support.

After the split, Alliant's leaders realized that some of what had worked before wouldn't work anymore. And what they wanted to achieve -- more members, more loans, more value to members -- depended on a new breed of managers.

"We came from a management culture that was very task oriented; management was really just supervising people performing tasks," says Alliant CEO David W. Mooney, who came to the credit union in 2003. "Managers had very little responsibility beyond organizing and monitoring tasks, and their development responsibilities were largely limited to technical improvement. We [needed] to change that ethic to create true managers responsible for planning and organizing and for performance management and development."

Mooney and the other executives knew they had to hit the ground running with a staff that was capable of excelling at the best competitive advantages a credit union has -- low interest rates on loans, efficiency, and exceptional service. The company needed engaged employees to execute these advantages, but Alliant had no idea how engaged its employees were. So Alliant brought in Gallup to conduct an engagement audit. In a few months, Alliant discovered exactly what it needed to fix -- information that otherwise may have come piecemeal over the course of years when it would be too late to be useful.

Low score

Alliant first measured employee engagement in 2003 using the Q12, a 12-item survey with proven linkages to performance and profit. (See "Feedback for Real" and "Taking Feedback to the Bottom Line" in the "See Also" area on this page.) As a whole, the company's engagement percentile ranking, which is determined by comparing a company's overall employee engagement level to all other companies Gallup has studied in that industry, was in the bottom quarter of the database.

The research also revealed that only 21% of Alliant's employees were engaged, while a significant percentage were actively disengaged. (See graphic "The Three Types of Employees.") Gallup analysis indicates that companies with a ratio of four engaged employees to one actively disengaged employee significantly outperform companies with low engagement ratios. (See "Building a World-Class Sales Force" in the "See Also" area of this page.) With an engagement ratio of 0.8:1, Alliant's numbers were nowhere near the 4:1 level.

The heart of productivity

Alliant was facing some difficult days, but it was armed with an accurate reflection of employee engagement. And there was a hidden benefit to Alliant's engagement reports: a map of engagement variation.