Wellner is president of Corporate America Family Credit Union, an organization founded by 15 employees in 1939 as the Automatic Credit Union, named for Automatic Electric Co. Later purchased by GTE Corp., the credit union that began with $75 in assets has seen, as Wellner terms it, “explosive growth” in the past few years and now boasts more than $575 million in total assets, serving nearly 100,000 members employed by more than 500 sponsor companies nationally.
Smart Business spoke with Wellner about how the industry has changed and how he plans to move a much larger organization forward.
How did you get involved in credit unions?
I fell in love with the concept. Isn’t this a wonderful thing to do for people? It’s been a labor of love for 30 years.
How has the industry changed during those three decades?
When I first started 30 years ago, credit unions tended to be very, very small, they tended to be inside a manufacturing facility, inside a telephone company headquarters or something like that. There used to be the feeling that this credit union is only for the people of (a specific company). Nobody else could use it.
The hours tended to be very limited. They tended to focus on small, signature loans they didn’t have a broad array of services. So the general public, unless they worked for that company, didn’t even know the credit union existed.
There was a time when people used to say credit unions are the best-held secret in the United States because they do such a wonderful job for the limited number of people they serve.
How has the organization grown so quickly?
The rapid growth is a function of our business plan, which is driven by our strategies and the mission as agreed to by the board of directors and our staff. One of the keys of that is diversification. Probably 20 years ago, we were pretty much a single-sponsor credit union that slowly, slowly was reducing its employment substantial layoffs.
The strategies that the staff and board agreed on were diversification of the membership base, diversification of a concentration of assets, members and loans in one geographic area, and because of that, we started to expand aggressively on a national level. And because of the type of products that credit unions offer, it is a business recipe that is very, very popular.
When we started to present it nationally, it was received extremely well.
In what other ways has the organization changed?
It’s changed remarkably, and mainly from the delivery of a product. It’s one thing to say you are a not-for-profit financial cooperative, but how do you create that service and get it to the marketplace?
Back in the ’80s, they had the deregulation of interest rates and savings rates, which offered great competitiveness in the marketplace.
The Internet and PC banking, telephone auto-response systems, ATMs all of these are service-providing methodologies. One of the reasons why our credit union is as successful as it is, we have been somewhat leading-edge when it comes to technology. We’ll embrace something that gives our members the very best service they can get without necessarily going to a branch office.
What is the ultimate goal for the credit union?
We are interested in becoming the primary financial institution. Equal to that is we’re interested in serving all of our members. And we’re very interested in working in an area where other financial institutions have been unwilling or don’t desire to work and that is serving the underserved.
We’ve a full range of products. In Chicagoland and many other places around the country, payday lending has become one of the evils that regulators are trying to counterbalance and regulate. Credit unions are well-positioned to work into that area and offer an alternative to the payday lenders.
When we get somebody who qualifies for a payday lender, we want to bring them in and we want to give them some educational opportunities to have a checking account and an ATM card.
Why do so few who have the opportunity fail to take advantage of what credit unions offer?
The percentage is very low for two reasons. The main reason is that from a community charter standpoint, the 25 miles (the radius inside which those residing may join the credit union if they do not match other membership criteria) that is somewhat new for us. If you look at just the Chicagoland area, there are 4 million people in Chicago. We’re just scratching the surface from that standpoint.
From a sponsor-company standpoint, which is our majority focus, we probably are in the area of 30 (percent) to 35 percent. In some places, it may be 80 percent. The selection opportunity is very broad.
What is the growth plan for CAFCU?
With the help of HeisleroGordon and our marketing department, we are constantly going to the sponsor companies, putting on employee orientations, talking to people about the opportunities credit unions offer from a financial services standpoint. We have a desire to improve our penetrations. We are constantly looking for ways to make ourselves more and more convenient for more and more people.
We have a department with 21 people in it whose only purpose is business development to communicate what we do, the values and purpose of credit unions, to employees that are currently in our field of membership, our sponsor companies and to future perspective sponsor companies.
How was the organization able to absorb so much growth in a one-year period?
Probably half to two-thirds of that growth came via merger (with three other credit unions). Along with the additional members, we got some pretty excellent staff people. A lot of that seed work, to build and develop relationships, was already done.
We received the mergers mainly because we have the economies of scale, we have invested in the future in terms of all of the service delivery aspects that we have, and so by merging with these three different credit unions, they were able to give their members all these services, which we have invested in without going through all that R&D.
What is the benefit of that growth?
There is a certain definite economy of scale. You only need one data processing system; you only need one president. The interest structure that backs up the services to the branches has a limited fixed cost.
Once you’ve covered that, the incremental advantage is enormous. You can grow and prosper based on that limited infrastructure.
What is your approach to strategic planning?
The strategies tend to be somewhat long-term. Our strategies tend to be 10 to 15 years out. These are not ‘I want to reach a certain asset size; I want to reach a certain income level.’ These tend to be strategies relative to diversification, in terms of where geographically the company wants and needs to go.
We deal with a strategy of service delivery. That strategy mainly is there so we are saying to ourselves continually, we constantly need to be leading edge technologically; therefore, our long-term strategy is to be at the highest level of technology.
What is the biggest business challenge you face?
I’m going to say to handle growth, to be very honest. We have had explosive growth. So we bring a lot of new people through merger or through new branches, and I want to make sure that every person knows why we are in business and how we are different than other financial institutions.
It’s an ongoing effort, and to reinforce that fact that when we are dealing and here’s another difference with a member, we are dealing with an owner; we’re not dealing with a customer. And we have to understand that our business is to do their business, not the other way around.
We even have signs that we post in every person’s workstation, in every branch, in hallways. It goes something like this: A member is the most important person in this office, whether in person, on phone or by mail.
HOW TO REACH: Corporate America Family Credit Union, (800) 359-1939 or http://www.cafcu.org
Before joining Citigate Sard Verbinnen, Wilks served as managing director and head of the Chicago office of Ogilvy Public Relations Worldwide for six years. He has more than 19 years of combined agency and corporate experience, with areas of expertise including strategic positioning and reputation management, investor road show development, crisis communications, annual report writing, IPOs, spin-offs and corporate restructuring communications.
Prior to joining Ogilvy, Wilks headed the investor relations and technology practices for Fleishman-Hillard, Chicago. Before that, he was head of investor relations for Ball Corp. for six years. During his tenure with Ball, Wilks was featured by Institutional Investor magazine as one of the leading investor relations professionals in the United States as selected by a poll of security analysts. Earlier in his career, he was at Ogilvy Adams & Rinehart in New York.
Citigate also announced that Ron Culp, who established the office in 2003, will continue as chairman, and Debbie Miller, a principal and 10-year veteran of the New York office, will relocate to Chicago and join Wilks’ team.
Eric D. Belcher joined InnerWorkings as executive vice president, operations. Belcher will oversee all service delivery functions, supply chain management and InnerWorkings certified supplier network. Previously, he was chief operating officer for MAN Roland Inc., where he oversaw sheetfed operations throughout North America. Prior to assuming that post, Belcher served as CFO.
Belcher holds an MBA from the University of Chicago Graduate School of Business and a bachelor’s degree from Bucknell University.
Patrick Cary joined Duane Morris LLP’s Chicago office as a partner in the firm’s Trial Practice Group. Cary previously worked at Wilson Elser Moskowitz Edelman and Dicker LLP.
He specializes in directors and officers insurance coverage work and litigation regarding claims of securities fraud, breach of fiduciary duties, antitrust violations, lender liability and wrongful employment practices. Cary has also represented individuals and organizations in securities arbitration.
Prior to joining Wilson Elser, he was an attorney for the National Association of Securities Dealers, the primary private-sector regulator of the securities industry, in its Chicago office. He holds a bachelor of arts degree in political science from the University of Notre Dame and a law degree from Marquette University.
HURON CONSULTING GROUP
Seth Palatnik, managing director of Huron Consulting Group, was named head of the company’s Valuation Practice. For more than 20 years, Palatnik has been actively involved in valuation and corporate finance matters. He has broad experience in valuing companies, partnerships and intangible assets.
Prior to joining Huron in 2003, Palatnik was a partner and national director of the Valuation Services Practice at BDO Seidman LLP. Before BDO, he was a senior manager at KPMG Peat Marwick and spent several years in the industry as a financial analyst.
KNOCKOUT HOLDINGS INC.
David E. Malone was named COO of Knockout Holdings Inc., exclusive developer and marketer of the new George Foreman’s Knock-Out line of household and automotive cleaning products. He replaced Ahmed Shaikh, who had been serving as president and COO and will remain with the company during the transition.
Previously, Malone served as senior vice president of Mesirow Financial and project executive for Illinois Property Asset Management LLC, where he provided real estate strategy and consulting to the state of Illinois. Prior to that, Malone served as chief procurement officer for the city of Chicago from 2000 to 2004, where he was responsible for overseeing contract awards and purchases.
Malone has also served as director of worldwide procurement for RR Donnelley & Sons Co., director of purchasing and supplier development for Avery Dennison Corp. and commodity manager at Xerox Corp.
Doug Zell founded Intelligentsia Coffee in 1995 and focused on providing the highest-quality coffee possible.
Quality is how Zell has differentiated his business in a crowded market. He provides a product that has led Intelligentsia to become, according to CoffeeReview.com, the "highest-rated roaster in the world."
Quality is the focus of the entire coffee-brewing process. Zell chooses the finest growers from Mexico, Nicaragua and Rwanda, and requires an extensive six-month training program for employees before they become baristas.
Zell has also created a wholesale business, selling to the likes of Whole Foods, Frontera Grill and Charlie Trotter's. Intelligentsia also sells to other local coffee shops and is expanding its wholesale program to other parts of the country.
Zell says experience, talent and skill are the basis of his hiring campaign, but for Intelligentsia, talent outweighs experience. His baristas recently placed second, fourth and sixth in the U.S. Barista Championships.
Employees starting at all levels have a chance to move up in the company. They are encouraged to take part in community activities, and Intelligentsia makes monetary and in-kind donations to various charities.
Zell says that one of the greatest rewards is to economically help countries that are not as wealthy as the United States by doing business there. The company is able to help supplier countries by paying growers more than competitors do.
Growth is in the future, but Zell says the focus will always be on the quality of his product.
When Matt Moog joined CoolSavings Inc. as president and CEO, the company was solely focused on its branded desk station Web site that attracted consumers and businesses.
CoolSavings had developed an extraordinarily sophisticated, scalable and reliable technology and analytical infrastructure, allowing it to collect more than 6 billion data points on its more than 30 million registered U.S. households.
Beginning in 2002, Moog rethought the business to leverage this technology to create a distribution network. The growth strategy now encompasses providing best-in-class marketing in four key intertwined services: lead generation, e-mail, coupons and loyalty. The coupons business was enhanced when CoolSavings acquired a company with the technology to provide coupons that could be printed from a desktop.
In 2005, a separate brand -- freestylerewards.com -- was established for the loyalty business, and it is projected to generate exponential growth. The company continues to invest in flexible technology and targeting analytics.
One of Moog's biggest accomplishments was re-establishing employee moral and confidence after the Internet downturn. He accomplished this with open and honest communication with all of the employees.
Each month, Moog produces an internal newsletter that discusses the state of the business, current developments with the company, financial results and future goals and developments. Retention is high, and the continued growth of the company allows it to attract passionate, engaged and talented resources.
By using open communication, working with his team and reinforcing performance-based goals, Moog has made CoolSavings into a winning company.
Gian Fulgoni left his job as president and CEO of IRI Inc. in 1998 to co-found comScore Networks, the first market research company to provide services that continuously measure consumers' buying and browsing activity on the Internet and integrate that data with attitudinal information.
Because the percentage of visitors to a given Web site who actually make a purchase is small, the sample size requirement for reliable measurement of purchasing behavior was estimated to exceed 1 million consumers.
Currently, comScore has a panel of opt-in consumers that allows the company to provide timely insights into consumer behavior and attitudes that can be used to build successful marketing, sales and trading strategies.
When a consumer agrees to join the comScore panel, his or her PC is configured to surf the Web through comScore's network of nearly 700 high-performance data collection servers. This allows comScore to capture data from millions of PCs, without the burden of updating changes in software functionality across such a large population.
Consumers benefit as well, with panelists' Web connection speeds increasing by as much as 100 percent. This innovation is now part of the offering of most major ISPs, three years after comScore offered it to its customers.
Fulgoni strives to increase the depth and quality of data to help clients develop marketing strategies and tactics that deliver superior ROI and provide the marketplace with the only accurate means of measuring the success of e-commerce ventures.
When Dick Blaudow decided to leave his job at Caterpillar in 1985 because of an uncertain future, he left with an idea to provide IT and infrastructure support for factories.
His idea and leadership were so compelling, 35 others from Caterpillar left to join him at his venture, Advanced Technology Services.
Blaudow says three key strategies have led to the growth of the company.
* Outsourced factory maintenance. From inception, he focused the company's strategy on providing IT and infrastructure support for his customers' factories. The company has grown substantially and has the potential for significant future growth by selling outsourced factory maintenance services.
* Service quality initiative. During 2003, the company invested in a service quality initiative that aligned the company's employees with the strategic goals of the business. A continuous improvement mindset was implemented in all the company's activities.
This has proven successful because the company brings on a significant number of employees when an outsourcing project begins. These new employees are trained in methods that Blaudow has practiced since the company's inception.
* Reinforcing the company's mission. Every new employee attends a detailed, two-day orientation that focuses on the company's history and future. Blaudow attends each orientation meeting and speaks to the new employees.
Employees are also encouraged to participate in charitable organizations. The continuous improvement initiatives are ongoing to ensure employees not only improve relative to job performance but also in regard to life-balance considerations.
Dale Smith Jr. joined his father's company, H.D. Smith Wholesale Drug Co., in 1974, and worked virtually every job in the organization, learning the business from the ground up.
In 1984, Smith Jr. became president and CEO of the company, and under his leadership, it went through significant growth in the 1990s. From 1995 to 2000, Smith acquired or started up operations in Texas, Chicago, Los Angeles, New York and New Jersey, focusing on improving operations, integrating the acquired businesses and improving margins.
Two techniques illustrate Smith's entrepreneurial spirit.
* Expansion philosophy. H.D. Smith expanded to establish independent distribution centers in each major metro area. A key aspect was to establish sales forces and customer relationships in an area prior to locating a distribution center there. This provided for profitable operations immediately - an important concept in a business where margins are very thin.
* Customer initiatives. Dale Smith Jr. has led several programs to make customers successful in a world where the vast majority of drug purchases are at the major chains. The idea is to have loyal, profitable customers as the backbone of Smith's growth and expansion plans.
Smith's vision has made the company the fourth-largest national drug wholesaler.
Meryl Squires founded Merix Pharmaceutical Corp. in 1998 after developing Releev, a cold sore treatment.
Despite being a small player in a market dominated by huge, multinational corporations, Squires has succeeded by focusing on two strategies.
* Product and company integrity. Squires has gone to great lengths to protect the integrity of her product and her company. She has maintained the integrity of her product by using only the highest-quality vendors and packaging despite pressure to make changes in order to generate higher profits.
Squires only conducts business with corporate customers that share her ideas of fair and ethical business practices. She holds a strong belief that by keeping her word and negotiating fair deals, profits will follow. By maintaining a high level of integrity, Squires has been able to build strong relationships and loyalty with her vendors and her customers.
* Effective advertising. When putting her product on the market, Squires placed herself in the position of consumer. The most effective strategy she used was to advertise her product on the radio just before the weather and traffic report.
As a seasoned commuter, Squires knew she could reach a significant number of consumers during that time slot, and the sales resulting from the radio advertising well surpassed the costs of the advertisement. She has used strategic advertising methods to generate significant returns from relatively low costs.
American Chartered Bank grew its assets 20 percent from 2003 to 2004.
Those numbers are even more impressive when you consider that it did it all organically, with no acquisitions.
Bob Riter, who started the bank in 1987, has never made an acquisition and focuses on customer service in his niche, which he defines as small and mid-sized companies with an emphasis on the family-owned business.
The bank places heavy emphasis on close interaction with customers. As a result, it has experienced lower than industry norms in failures because of its ability to quickly identify problems and work with customers on those issues. Riter says this helps the bank stand apart from larger national banks.
The low employee turnover is because of how the bank approaches compensation and performance incentives. And it requires all commercial bankers and other senior officers to purchase shares in the bank. In addition, each banker is required to develop his or her own book of business; bankers are not restricted by territories or customer lists.
Riter says he focuses resources on those who best utilize them, and rewards are based purely on performance.
One of the important roles of the bank is to give back to the community, he says, and American Chartered contributes to childcare services for lower income people and to Boys and Girls Club in Chicago. Riter says the bank will contact the club and ask what needs have not been met through other means and will help in those areas.
Why are corporate executives seduced by the siren's song of an entrepreneurial venture?
A sample of more than 300 "C-Suite" corporate executives between the ages of 48 and 58 in the midst of a career transition shows that more than half of these executives were interested in pursuing entrepreneurial rather than corporate roles.
Yet, these executives will tell you that despite the highs and lows, they had fun in their previous positions, enjoyed the prestige of their jobs and were well-rewarded financially. So why are they interested in pursuing other ventures when they could sit back and enjoy life?
Although many issues are at play, two appear to be dominant -- an executive's age and how long he or she always intended to work. These issues function in tandem but also work independently to "push" or "pull" executives in an entrepreneurial direction.
If you think of "push" factors as negative experiences, or circumstances that senior executives want to avoid, there are a number of themes that emerge.
Age discrimination remains a factor in hiring. After the age of 50, the length of time it takes to find a new corporate position lengthens significantly. CEOs age 55 and older who want to remain engaged in challenging work recognize that they probably won't find it in the traditional job market.
An increasingly hostile business environment. Corporate leaders are pressured to focus on short-term growth and performance targets that may have a negative impact on long-term profitability.
Job scarcity at the executive level. Executives who want to get back in the game often run out of time and patience, and pursue entrepreneurial activities as a "default" strategy.
The need to have an impact on the organization. Change in large organizations is often painfully slow. Senior executives may recognize that they have less time to make something happen, and they view entrepreneurial ventures as faster-paced and more agile in changing markets.
With the growing awareness of age and the end of one's career, executives also have pull factors that will increase their enjoyment of work.
Senior executives want greater control over their lives. They may have sacrificed their family, friends and personal lives for their careers, and they admit that they enjoyed it. But now, they want to build something that meets their needs.
They want to make things happen quickly. They want to see cause and effect. They want to develop the culture, set the strategy and drive results. It doesn't hurt that they can also generate additional wealth.
Significant net worth eliminates short-term financial concerns. These executives aren't concerned about mortgage payments, so they are less concerned with base compensation, and more interested in the potential for wealth generation represented by an equity stake.
There is higher risk acceptance. Top executives have racked up many accomplishments. They trust their own instincts and business judgment, and want to do what they think is right without being constrained by policies or tradition.
They want to leave a legacy. Senior executives often talk about how quickly corporate accomplishments are forgotten. At this time in their lives, they want to build something as a lasting testament to their ability. They also think about businesses where their children could someday be involved.
Strong work ethic. Top executives have exceptional work ethics. They routinely work 70-hour weeks, and are driven by the need to lead teams, build organizations and create value.
For these reasons and others, when successful senior executives have the opportunity, almost half want to consider a new path. Their age, combined with the length of time they planned to work, fueled by push and pull factors, make the siren's song of entrepreneurial adventure almost irresistible.
[Editor's note: This is the first article in a two-part series. Next month, find out what makes a successful entrepreneur.]
Gail R. Meneley is a principal in Shields Meneley Partners, a firm that provides confidential career and life-transition services to senior executives. Reach her at 312.994.9500 or at email@example.com. To learn more about Shields Meneley Partners, visit www.shieldsmeneley.com.