In the corporate world, it is said that bigger is often better. Over the years, mergers have over the years have been associated with one stigma or the other. Whether it is a strategic decision to stay afloat or just two companies desiring to create dynamic synergies, some will be successful and other times others will not. Many testify that the key to merging successfully boils down to how well companies are able to plan ahead for impending storms, how good the strategy is and how well a firm deals with unforeseen challenges.
Jamaica has seen its share of mergers and interestingly so, the financial sector has seen the most mergers in Jamaica in recent years with Scotia DBG, CIBC First Caribbean International Bank and now First Heritage Co-operative Credit Union. Rarely do you find a report about how post-merger performance has been. It was for this reason that we recently sat down with CEO of First Heritage Co-operative Credit Union, Basil Naar, to assess FHC’s post-merger performance.
CBS: Having merged, how has FHC measured the success of its brand awareness efforts?
Naar: At FHC we understand that a good brand DELIVERS our message in a clear and concise manner, where we connect and motivate our members to continue doing business with us, and to convince others to do so. As a result, we have strategically created a brand that does just that. Our brand has a significant name, our logo is simple but memorable, our tagline is short and effective, and our advertising and PR activities have been focused on delivering the message of stability and security. We know this from the feedback that we constantly receive from our members and business partners, and they have largely been positive.
CBS: How, if at all, is FHC encouraging member feedback?
Naar: We continually advertise our communication channels that are available and are constantly finding new ways to reach our members. Presently we get members’ feedback from: our website, Facebook page, personal interface through sales force, 24 hour Call Centre, in-Branch suggestion boxes and email.
CBS: How has FHC used this feedback to guide its development to be as responsive as possible to members whilst meeting their needs?
Naar: There is a system in place where Branches are monitored by our Compliance Department as it relates to member feedback and the follow through of relevant responses. Additionally, we have a Quality Control function managed by the Operations and IT Systems Department and a Manager for Retail & Customer Service whose function it is to ensure that open dialogue is kept with our members and that our service standards are in line with our members’ needs. Our constant aim is to reiterate a customer service ethos of excellence.
CBS: Since the merger, has FHC’s performance aligned to the expectations?
Naar: YES. Since we have merged, we have met our main financial objectives but most importantly, we have met our target dates for effective changes as planned. We are particularly proud of this feat as we are aware that in a merger process, most times these are not met. But we met them because our pre-merger process was very thorough.
CBS: Based on your current trajectory, has FHC performed according to the company’s mission/vision?
Naar: Our Mission & Vision defines our expectations, but we also understand that the full buy in into a mission and vision is a work in progress. As such, FHC has put a strategic structure in place to obtain this buy in within 12 months by instituting the FHC core values which is regularly enforced by daily credo activity within all departments. The credo is the core principle or belief system that we operate under.
These core values are as follows:
Reliability, Teamwork, Mutual Respect, Integrity & trust, Responsiveness, Professionalism & Technical competence and Continuous Improvement.
CBS: Mergers are infamous for losing their best people, how has FHC fared in this regard?
Naar: Our strategic decision was not to lose our best employees. We have learned through past merger experiences of other businesses, that redundancies came too early, leading to a dysfunctional and an unsettled and unproductive work environment. We had decided that any redundancy would be as a result of non- performance. We regard a strong sales force as important, as such, we encourage employees to go into sales to increase business. As a result, we achieved our goal of no redundancies except for non-performance and unproductivity.
CBS: What has been the feedback from your employees since the merger?
Naar: We have seen where the response has moved from that of tentativeness and apprehension to focus and productivity. As with every merger, there will be misunderstanding and miscommunications, but overall, the general feedback is that we are handling the process well to the satisfaction of the majority.
CBS: What measures did you implement to lessen tension that accompanies any merger exercise?
Naar: Early in the process, we met with the staff and made it clear that separation would only come as a result of individual performance. Also, as it relates to staffing, we ensured that all Branches had a near 50/50 mix of former Churches and GSB staff.
CBS: In life, nothing always goes according to plan. How true is this well-known statement in light of FHC’s performance to date?
Naar: We have put in a proactive structure by examining possible eventualities and implemented solutions to soften the blows of such occurrences.
CBS: It has been six months since the merger, what would you say were some major turning points, breakthroughs and lessons for the newly formed entity?
Naar: A breakthrough for us I would say, is the achievement of an early establishment of the new brand in the market. Additionally, we revamped policies that hindered efficient customer service, instituted new service standards to improve turn-around times for loan processing, launched a more interactive website and a 24 hr Call Centre, embarked on leadership training and initiated a new customer service ethos by introducing an online training programme in professional development.
CBS: As CEO, what was your role in ensuring the smooth transitioning of the merger?
Naar: I made sure that the pre-merger planning was complete and that the execution was according to plan and within the time frame specified.
CBS: Typically, Credit Unions are considered to be the ‘poor man’s bank’. How would you say FHC is trying to address this perception?
Naar: Let me say that the Credit Union is not a “ poor man’s bank” but rather an “every man’s bank” where individuals who want to be a part of a co-operative effort in which the relationship is far superior than any other financial relationship, are welcomed to join. The Co-operative experience is far better as we offer highly competitive rates on loans as well as deposits. FHC underscores this fact by the strategies that we pursue.
CBS: At the official launch event, August 2, you spoke to the fact that FHC would eventually become venture capitalists. Please speak to that.
Naar: As a Credit Union, we believe that we should always assist people to go into business. We decided to form a Venture Capital operation under the Credit Union to assist people with capital for which they would have no obligation to pay back as in a loan. We do not intend to be permanent owners but intend to sell our holdings to the owner as soon as the business is stable. We intend to start this operation early 2014. The seed input for this operation will come from our net surplus as realized at the end of 2013 and from outside sources.
CBS: What is your vision of cutting-edge financial services for FHC?
Naar: Cutting edge means to me, offering an array of products and financial services that meet our members needs. At present, we have an Investment company that offers various investment options in local or US dollars. We also offer a Retirement Scheme designed for individuals who are presently not under a pension plan and enhanced services delivery channels such as the Internet, the 24 hr Call Centre, ATM, and a pending launch of a Mobile Application that will facilitate easier transactions with us.
We are also soon to implement an online loan application approval system through the use of electronic signatures.
CBS: With the current economic crisis, how will FHC position itself to achieve a sustainable competitive advantage?
Naar: We will do this by ensuring that all our products and services are forefront in the minds of our members and prospective members by offering the best price and ensuring that our operation ratios are in keeping with our expectations.