The organization selected for analysis and evaluation is American Lake Credit Union. This organization is composed of two main branches, both located in Tacoma, Washington. In contrast to banks, Credit Unions are smaller organizations and are directed by members who are selected via a vote to serve in an all-volunteer board of directors for the organization (Scott, and Johnston, p.2, 2011).
Specifically, this credit union was founded in 1948 and has grown since then. (C. Fitzer, personal communication April 7, 2014).
For instance, although the organization is small in size through a partnership with a credit union network, it is able to provide general financial services at diverse locations throughout the country (CO-OP Financial Services, 2013).
In addition, the active CEO Fantz (2013) asserted that the organization’s mission is to “provide a variety of quality services to a diversified membership while maintaining financial soundness”; additionally, they currently reported close to 50 billion dollars in assets on organization’s balance sheet.
Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis Arumugam, Chang, Ooi, and The (2008), emphasized that in order to facilitate the drive towards high performance, many companies are using self-assessment tools to measure their current position and develop strategy in order to asses where they are and where they want to be within their industry. (p.141).
SWOT analysis is one of this tools or processes. Boone and Kurtz (2006) defined the concept of SWOT analysis as a methodical approach to develop strategy as it compels managers to do an internal reality check, and an analysis of the external environment (p.274-275).
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This assertion is echoed by Blocher, Stout, Juras, and Cokins (2013) in which the scholars lectured the process of SWOT analysis as a process that provides the opportunity to methodologically examine internal and external factors in order to complete a self-assessment of the organization, and examine the environment in order to create a solid foundation for sound strategy for the organization (p. 36-38).
The general quadrants of a complete SWOT analysis are strengths, weakness, opportunities, and threats. These are listed in Table 1 for American Lake Credit Union. Table 1
Strengths
-High quality aggressive employee training programs parallel with organization high audit and regulatory compliance rates
-Membership to CO-OP Shared Branch Network 1
-Local Market Position/Community Relations Program
-Cost Advantage and Pricing compared to banks
-Physical Locations
-Strong and Experienced Managers
Weaknesses
-Employee Turn-Over
-Requirements to become a member
-Lack of Market Differentiation as it relate to financial Services2
-Only two physical branches
-Lack of a business/Market Development Section
-Technology, bad turn around in communications equipment repair, need to redo contract for local IT Support
Opportunities
-Online Market
-Branch Expansion
-External Training Program
-Rotating Customer Base in the local installation
-College population in nearby universities
-Available location for Branch at Air Force Location
Threats
-Military drawdown (long term), affect main target market
-More exposed to economic issues (recessions) than bigger organizations due to limited size
-Loss of one segment of the market with the deactivation of 4-2 Brigade Combat Team -Columbia Bank Plans to Open Facility in the immediate area 2 -Cyber Crimes
External
Note. Lists Adapted from (C. Fitzer, personal communication April 7, 2014) with the exception of: 1. CO-OP Financial Services. (2013).
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What is CO-OP ATM and CO-OP Shared Branch?. Retrieved from http://co-opsharedbranch.org/participating-cus/ 2. (C.H. Chapman, personal Communication April 8, 2014) This source is a marketing consultant for non-profit organizations, has worked closely with the American Lake Credit Union, and provided fresh feed back into the credit union during the interviews.
A brief discussion of Table 1 is provided below:
In the area of strengths the one of the most important strengths provided during the interview was their current training program for federal regulatory compliance, this put the organization at an advantage even with more developed organizations In the area of weaknesses, the biggest challenge was employee turnover. Even with the recession and the current job market good talent could and can be found, but it is hard to retain with the current compensation and benefit plans offered In the area of opportunities, the online market presents a strong market that the organization has not exploited as much as they could In the area of threats, the main target market of the American Lake Credit Union is the current drawdown within the Department of Defense structure, in the short term, the population have currently lost 1400 service members and their families, in the long term more loses in market are expected (C. Fitzer, personal communication April 7, 2014)
American Lake Credit Union Balanced Scorecard
Soderberg, Kalagnanam, Sheehan, and Vaidyanathan (2011) presented the balance scorecard as a strategic planning procedural tool used by organizations to balance financial concerns, customer concerns, process concerns, and innovation concerns with the main purpose of developing appropriate strategy in favor of a more favorable market position (p. 689-690).
Similarly, Lawrence and Webber (2008) illustrated the process as a concoction of focused key quadrants, people and knowledge, internal, customer, and financial indicators with the main purpose of developing metrics to measure all areas of performance (p.79).
In the case of American Lake Credit Union, interview and analysis with C. Fitzer and C.H. Chapman provided enough data to produce the balanced scorecard depicted in Table 2 below.
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-Reduce Exposure to default Loans
-Cash Flow/Balance Sheet
-Selected cost savings in utilities and materials
-Reduction in days for accounts receivable
-Customer Service/Satisfaction
-Customer Loyalty
-Trend in Customers that transferred direct deposit accounts
-Customer Surveys (Measured Quarterly (QTLY))
-Mystery Shopper feedback to manager
-Trend in returning customers
– Number of Customer complaints
-10 new customers a week (Account Holding)
-10% increase in market share by end of fiscal year 2015
-95% Satisfaction on surveys per quarter
-100% satisfaction in mystery shopper experience
-Less than eight percent customer complaint rate quarterly
-Participate in community awareness events
-Sponsor small activities for customers
-Provide Western Union Services at discount to customers with direct deposit to the institution
-Open new Branch at local AF Base
-Implement Secret Shopper Program
-Implement Customer Service Training
Table 2 (continued)
General Quadrants
Critical Success Factors/Goals
Metrics/Measured Trends Towards Goals
Goal
Initiative
Internal Process
-Processes Efficiency and Quality
-Productivity when doing direct customer interactions
-Number of errors in financial processes
-Cycle time/customer wait time
-Time spent doing internal tasks
-Less than 5 errors per shift
-Less than 10 minutes from check in to check out for customers regarding of the time of the day
-Decrease time doing internal tasks by 25% without loss of quality
-Implement lean six sigma principles
-Sustain
compliance Training Program
-Integrate yearly refresher for all employees (training will be employee led) Learning and Growth
-Skill Development and Sustainment
-Competitive Benefits/Compensation
-Employee Access and Input in Strategic Planning
-Number of errors in financial processes
-Employee Surveys
-Employee Turn-over rates
-90% employee satisfaction rate in surveys
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-Minimize employee turnover rate by % by 50% FY 15
-Integrate yearly refresher for all employees (training will be employee led) -Implement a more comprehensive benefit package for employees, main target is well performing and those with longevity -Involved Employees in strategy development and asked for feedback on current decision
Note. Lists Adapted from (C. Fitzer, personal communication, April 7, 2014) with the exception of: 1. CO-OP Financial Services. (2013).
What is CO-OP ATM and CO-OP Shared Branch?. Retrieved from http://co-opsharedbranch.org/participating-cus/ 2. (C.H. Chapman, personal communication, April 8, 2014) This source is a marketing consultant for non-profit organizations, has worked closely with the American Lake Credit Union, and provided fresh feed back into the credit union during the interviews.
Discussion of Critical Success Factors (CSFs)
Blocher et al. (2013) defined critical success factors as “measures of the aspects of the firm’s performance that are essential to its competitive advantage and therefore to its success” (p. 898).
Tables 2 depicted the selected CSFs within the standard four quadrants of the balance score card,
and these are discussed in detail below.
Financial
The financial success factors are important because these defined the aspect of the main purpose of a business, to make a profit. The specific CSFs within the financial quadrant and the rational for their selection are explained below. Increase Gross Profit. This was selected by the interviewed organization representative because in her professional opinion it was the best way to determine the effectiveness and financial health of the organization (C. Fitzer, personal communication, April 7, 2014).
Furthermore, in accordance to Bloomsbury Information (2009), this an important factor to consider because a high gross profit margin ratio, high gross profit margin ratio indicates that a business can make a reasonable profit on sales, as long as overheads do not increase. Investors pay attention to the gross profit margin ratio because it tells them how efficient your business is compared to competitors.
It is sensible to track gross profit margin ratios over a number of years to see if company earnings are consistent, growing, or declining. For businesses, knowing your gross profit margin ratio is important because it tells you whether your business is pricing goods and services effectively. Reduce exposure to default loans. The concept implies reduction of credit risk. The term credit risk is illustrated by He and Xiong (2012), as the risk the organization takes when issuing a loan; furthermore, if the organization’s loan or debt market deteriorates, and loans go into default the organization would take loses in its investment (p. 391).
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This is important because if this risk is identified and mitigated in an effective way the organization will not be as exposed to financial loses.
Customer Factors
This specific quadrant addresses the customer and objectives to increase or develop value and differentiation from the point of view of the customer (Beard, 2009, p. 279).
Specific CSFs for the organization in this specific quadrant are as follows. Prospective customer perspective towards the organization- This refers specifically for that segment of the market that are not customers of the organization yet. Lautenslager (2003) reported that aachieving a good perspective from this outer segment will allow the organization to attract new customers, expand its market, and build the organization as an attractive brand which can translate in to new business and profits. Customer Service/Satisfaction- This term refers to the extent that the clientele is pleased with the product line or service provided by the organization.
As a general concept this is important because if the customer is unhappy is likely that he would not comeback; furthermore, it is likely that he will walk away, repel other prospective customers, or even existing customers (Naik, 2011).
Customer Loyalty- This objective is one of the fundaments of many business organizations. This is extremely important for any organization because once customer loyalty is achieved, these customers will purchase the organization’s products and services repetitively, the more loyal the customer, the harder it will be for a competitor to draw him, and they can provide a good source of advertising and new customers by word of mouth. (C.H. Chapman, personal Communication April 8, 2014).
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Internal Process
Internal processes are another part of the quadrant that when disregarded can cost the organization in terms of effectives, quality, gross margin, and revenue. It refers to those processes that are internal to the organization, like appraisals, self-audits, customer interactions, and quality checks for example. Processes Efficiency and Quality- This area refers to the internal processes of the organization, for example, it was mentioned during the interviews that that one employee on the organization creates a weekly balance sheet, and that job usually takes about one hour. Streamlining this and similar other processes save the organization on employee hours that could be used for customer care or employee training (C. Fitzer, personal communication, April 8, 2014).
Productivity when doing direct customer interactions- This refers to the amount of time that it takes to do a customer transaction from the moment that they enter the facility until they are complete. It may take a customer about 20 minutes during the busy time of the day to perform the transaction due to crowding. Altering the way the organization conduct some of this processes will allow for the “line” to move faster, and affecting the customer satisfaction factor.
Learning and Growth
The quadrant of learning and growth is fundamental to the American Lake Credit Union because of the environment in which financial organizations operate in our time. Constant changes to the financial regulations at the state, and federal levels, added to the technological advances call for continuous organizational development in order to remain relevant with the environment. Therefore, developing a learning collective workforce and retaining this work force is fundamental to any business organization today. The specific CSFs on this quadrant are discussed below. Skill Development and Sustainment- Currently, the organization has a very strong training program in the areas of federal compliance. The intent is to sustain this strong program, and enhanced it by adding employee training in new technologies, internal processes, and customer service; moreover, ensuring the program is employee led and centric, thus, giving a sense of ownership to the workforce (C. Fitzer, personal communication, April 8, 2014).
Competitive Benefits/Compensation- C. Fitzer (personal communication, April 8, 2014) mentioned that this was one of the main employee complaints in regards to the employee programs within the organization. Implementing, a more comprehensive benefits/compensation plan will ensure that employee turnover rate is minimized and allow the organization to retain the experienced employees. Employee Access and Input in Strategic Planning- Allowing employees to have more impute on the decision making process for the organization will give management a fresher perspective that can be valuable when making those decisions. Plus, it will give sense of ownership to the workforce constraining any resistance to strategic changes.
Evaluation of American Lake Credit Union in Achieving its CSFs Financial
Any for profit organization is always on the look to increase its profit and solidify or expand its market position. Firstly, the risk reduction initiatives of education and member involvement combined with market expansion should facilitate the current goal of 10% increase in gross profit margin by the end of FY 15 (personal communication, April 8, 2014).
Examining the balance Sheet quarterly will allow the organization to follow up and address trends that would constrain this goal. Currently, on the last quarter they were down by 2% from the quarter before, but on this quarter they are up 4% (personal communication, April 8, 2014).
This may sound like a wave of percentages, but taking other factors into consideration as the proposed expansion to the local AFB, cutting unnecessary costs on internal processes and supplies, initiatives to reduce cycle time for accounts receivable, and other initiatives within Table 2 an increase of 10% gross margin by the end of FY 15 is a realistic and achievable goal for this organization.
Customer Satisfaction
Customer satisfaction will be measured monthly, analyzed and evaluated quarterly, taking in to consideration trends in customers that transferred direct deposit accounts, customer surveys, mystery shopper feedback, and trends in returning customers (C. Fitzer, personal communication, April 8, 2014).
Currently’ the organization have a high customer satisfaction rate with survey results depicting up to 88% on all customer surveys and only three formal complaints last quarter (C. H. Chapman, personal communication, April 8, 2014).
This fact combined with the implementation of the secret shopper program on the first quarter of FY 15, and the customer care training program initiatives will give a customer care advantage to the organization over other local competitors (C. Fitzer, personal communication, April 8, 2014).
On the other hand, although the process for customer complaints seemed to be effective at the collection and solving states, there was no current intent on adding these as part of the customer care training program. This was recommended by this author to the manager under interview. Using an objective approach, after taking into consideration the current customer satisfaction trends and rates, the upcoming initiatives, it can be assessed that the goal of 95% customer satisfaction rate will be achieved and likely surpassed by the end of FY 15.
Internal Process
American Credit Union is looking to reduce errors in internal processes, increase effectiveness in customer processes, and decrease the time doing internal tasks. The current goals of less than five errors per shift, less than 10 minutes from check in to check out for customers regarding of the time of the day, decrease time doing internal tasks by 25% without loss of quality are achievable, but will require commitment of the leadership and the workforce. For instance, sustaining the current regulatory compliance training program, and implementing lean six sigma principles should provide the tools to succeed in this area. However, with all the other initiatives on the horizon, and the plans for expansion in to the local AFB it will require extra effort for the organization as a collective to achieve those goals without de-prioritizing other initiatives.
Learning and Growth
In the case of American Lake Credit Union a robust education and training program, a more comprehensive concoction of compensation and benefits will translate into the development of a better and brighter workforce, and the retaining of this work force. This will be measure by taking into consideration the number of errors in financial processes, employee Surveys, and employee turn-over rates. Some of the initiatives on this area such as consider input from employees in strategic decisions and sustainment training will sharply motivate employees within this area.
Moreover, the current goal of 90% employee satisfaction rate in surveys and to minimize employee turnover rate by 50% by FY 15 is very achievable if this area is somewhat prioritized by management. However, as reported in the article Putting People First (2011), management must keep in mind that newly trained and educated employees will take their knowledge and new skill sets somewhere else for better pay and or benefits, if the proposed compensation and benefit packets are implemented (p.25-26).
Final Thoughts
The purpose of this document was to provide a short description of American Credit Union along with a SWOT Analysis, Balanced Score card, and discussion of these. It can be assessed with the information provided that although there are challenges ahead, the current financial status of the organization selected is healthy and the ambitions for the future achievable as they exploit their strengths, their environment, and address their weaknesses. Lastly, as long as the management remained focused, committed, and is able to maintain the workforce motivated it is likely that the organization will achieve its goals.
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