January 1979 - Enterprise Magazine

Transcription

IU
Their insurance needs are changing.
-ezn
Q
Everywhere, members ' needs are changing. ll 's the sign of
the times and CUM IS is right in step. We've worked with
credi t unions to extend coverages for Life Savings and
Group Real Estate insurance. To develop new insurance
plans, broaden underwriting lim its on others, or simply
find easier ways for members to participate.
"Doing it Right" means keeping in touch with changing
needs. Th eirs. Talk to your CUMIS Representative today.
-
HEAllOHICE
P.O. Box 2038, 1441 Creekside Drive
Vancouver, B. C. V6B 3R9
TELEPHONE NUMBERS
734-251 1
734-2511
734-25 11
736-291 1
734-251 1
734-25 1 t
J.C. Central Credit Union
:entral Counselling Ltd.
:entral Financial Corp. Ltd.
)ata Processing Division
>rinting & Supplies
:Jreentree Developments Ltd.
BOARD OF DIRECTORS
P. J. Heyming, chairman, Kelowna
J. Weremchuk, vice-chairman, Surrey
A. R. Glen, second vice-chairman, Nanaimo
E.T. Cross, Coquitlam
J. W. Darling, Burnaby
H. A. Down, Sidney
Ron Davies, North Vancouver
T. Sankey, Victoria
H . Krueger, White Rock
Lloyd Biech, P rince George
S. Raschdorf, Nelson
S. Sutherland, Vancouver
G. Viereck, Pri nce Rupert
Jo hn Quail, Vancouver
ENTERPRISE
Published by B.C. Central Cred it Un ion, in
the interest of its m ember-organizations .
Distribution is controlled and circulation is limited
on the following basis:
• one copy to the o ffice of each memberorganization of B.C. Central C redit U nion
• one to each credit union director and credit
committee member;
• mem ber-organizations may order additional
copies at the rate of S2 per year per subscription
payable in advance.
Opinions expressed in this publication are not
necessarily those of the publisher or editor. The
contents are covered by copyright and all rights
arc reserved.
No material in this publication may b e
reproduced in any form without permission.
For information concerning the publication
contact:
Communication s Department, B.C. Central
Credi t Union,
Publications Editor : Maxine G lover.
Associate Editor : P ixie McGeachic
ISSN 0319-8626
Credit Union Members' Insurance Societies
Cover design: Bruno Madsen
Vancounr. Kelson. Victoria. Calgary. Lcthbridgc. Ed monto n. Regina. Winnipeg.
Sudbury. Toronto, St. Cuharincs. ·London. Wind sor. 011awa. Mont real.
Cap-de-la-Madeleine. Quebec City, Arvida. Sydney, Halifax and Monccon
Htad Orrit:~: P.O. Rox 5065, Burlington. Ontario L7R 4C2 4 16• 632- 122 1
Vol. 39 No. 1 January/February/79
What do bankers think of credit unions?
Financ ial columnist Mike Grenby asked
several leading bankers how they view credit unions.
Their answers are sure to provoke some thought.
Credit Unions and Credit Cards
Canad ian author/lecturer Dr. Arthur Laidlaw,
takes a look at both sides of the card.
Banker delivers food for thought
Bank of B.C.'s senior vice-president
welcomes New Ban k Act challenges
TI@
All loans good when made
Some go sour later. Recognizing trouble
signs can often ward off total disaster.
TITI
Other features
Hearty discussions l iven session ___________ 7
Educat ion needs, or ...? - - -- -- - - -- - - - - 9
Group participation sparks enthusiasm
13
Credit Union Day promotion brings positive results
14
Payroll system cuts down drudgery
15
Co-op service station leads in low gas prices
18
600 canvassed to update study
20
Marketing packages · effective advertis ing tools
21
Statist ics and trends, yours for the asking
22
Departments
Forum
Aftershock _ _ __ _ __ _ _ _ __ __ _ _ __
Smal l Cred it Union News
The Economist
Marketing
The Way It Was
The Drawing Board
People and Places
Security
16
17
22
23
24
25
26
7
28
What do bankers
think of credit unions?
In this issue
The question , Mr. Banker, is thi s:
"What do you think of the credit
This first issue of 1979 marks a change in the frequency
who in tum direct their individual member credit
unions here in B.C.? And what lies
of Enterprise. This year, the magazine will be published six
unions. .. ")
ahead fo r them?"
times, instead of ten. This will allow us the time to treat
While on the subject of bankers, Wayne Allen, senior
A survey of several of the province's
serious issues in depth, resulting in a more relevant
vice-president for the Bank of B.C. addressed the first
key bankers, many of whom have had
publication, one that we hope you will look forward to
meeting of the B. C. Council of the Credit Union Executive1 branch as well as regional head office
reading.
Society. His refreshing comments are also in this issue.
experience here, revealed the fo ll owing
Mike Grenby, Vancouver Sun writer and nationally
William Clark has written an excellent article in his
impressions:
syndicated financial columnist, asked several well-known
c?ntinuing series on business loans. He giv~s some danger • Credit unions provide real
bankers what they thought of credit unions. Some of their
signals to.loo~ for and act on before that first loan
competition to the banks, and have led
comments are complimentary, and others are sure to nettle.
payment ts missed.
· many retail banking areas - to the
(How's this: "You've got CCCS in Toronto acting as the
We are enjoy ing your letters to the editor, which you will ~oint that the banks have had to
head office. It sets the policy for the provincial centrals,
find in our "Aftershock" column. We hope that something follow suit.
in this issue will spark you to write to us.
f h
d"
·
,
• A part o t e ere 1t unions success
story can be attributed to the income
tax rules a nd reserve requiremen ts
under which the credit unions operate,
more favorable rules and requi rements
than the banks enjoy. Each banker
brought up this point.
• Credit unions will continue to grow
- a nd face increasing problems as a
result. Will there eventually be a
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - -- - - - - - - - - - - - - national credit union system as big as
Regional Executives
THE KOOTENAYS
J. Ouelle, Quesnel & District
•J. Harasin, Rossland
R. Leamy, Castlegar
C. Manson, Grand Forks
D. Zaremba, Kimberley
W. Finch, Cranbrook
K. Billingsley, Warfield
0. Almaas, Kootenay Savings
S. Raschdorf. Nelson
P. Fradette, Williams Lake
C. Tarr, Kaien Consumers
R. Bretherick, Terrace & District
D. Griffeth, Lake View
L. Biech, Prince George & District
G. Viereck, Kaien Consumers
THE OKANAGAN
•J. Taylor, Vernon & District
G. Bowie, Kelowna & District
M. DeNeef, Thompson Valley
A. Olson, Salmon Arm
L. Campana. Summerland & District
F. Noel, Salmon Arm
F. Olynyk, Revelstoke & District
P. Heyming, Kelowna & District
THE NORTHLINE
•D. Burdge, North Peace
4
ENTERPRISE JANUARY/FEBRUARY/79
WESTMINSTER & FRASER VALLEY
L.B. Berner, Alberni District
J. Grant , CP Telecom Employees
H. W. Eastland, Quadra
N. Hulshof, Lake Cowichan
0. Maxwell, Duncan & District
H. A. Down. Saanich Peninsula
A. R. Glen, Nanaimo District
J . Deelman
•R. Lewis, O.F.I.
GREATER VANCOUVER
B. Elliot, Maple Ridge
E. Wittal, Westminster
G. Loewen, Clearbrook
B. Voth, East Chilliwack
K. Sheaves, Delta
W. Carpenter, Surrey
W. Read, Dogwood
J . Weremchuk, Surrey
E. Cross, District of Coq ui tlam
H. Krueger, White Rock
•D. E. Gallagher, Compensation
Employees
B. Phillips, Richmond Savings
R. W. Slater, North Shore
G. T. McCulloc h, United Services
J. Duffie, Gr. Van Catholic
Charles H. Lee, Elco
R. E. Tyldsley, V.P.
H. Albrecht, Metro Services
P. Moore, Gr. Van. Catholic
E. J . Simpson, B.C. Teachers
J . W. Darling, Vanfed
D.G. Campbell, VanCity
VANCOUVER ISLAND
•V. Devries, Victoria Public Service
E. H. Kellow, Comox District
R. Philip, Courtenay
any ba nk? Will this size attract more
stringent regulations? W ill there be a
breakaway, "small is beautiful"
movement?
When it came to crystal-ball gazing,
the ban kers' had various views, but
one thing they had in comm on: a
healthy respect for the credit union
movement, no matter what the future
brings.
Arnie Miles-Pickup vice-president,
investments, of the Ba nk of B.C. :
"Credit unions provide very good
competition in the term deposit area,
where interest rates are us ually higher
than those of banks. And credit unions
are also competitive in the consumer
lending area."
But, he said, whi le banks pay 50
percent income tax, the credit unions
are eligible for the small business 25per-cent rate. While banks pay a
capital tax, credit unions do not.
While credit unions may issue
dividends which qualify as taxable
expenses, the banks must pay their
dividends from after-tax profits .
"And banks must hold noninterest-bearing reserves with the Bank
of Canada," he added. " While credit
unions mus t also hold reserves with
B.C. Central or with banks, these
reserves do earn interest."
Miles-Pickup said he felt the credit
union movement as a whole "is
starting to look like a major bank."
" You 've got CCCS in Toronto
acting as the head office. It sets policy
for the provincial centrals, who in turn
direct their individual member credit
unions . .. not unlike the branches of a
major national bank.
"There is an obvious change in the
mo vement. Cred it unions used to be
groups of individuals with common
bon ds for specific purposes. But
increasing size and sophistication are
turning the credit union movement
into a banking movemen t.
"It's just possible you could see a
breakaway trend of credit unions who
refuse to join centrals, who will go
back to the basics, to serving the needs
of the few , who will seek to regain a
lost autonomy."
Gordon Ormston, senior vicepresident and regional manager of the
Canadian Imperial Bank of
Commerce:
"The credit unions make the biggest
gains in the cities, where they can
develop a stronger base and identity,
and so do a better job tha n the banks.
I fee l that in the small centres , the
banks grow faster because they have a
stronger base than any local credit
union could ever develop."
Ormston attributed much of "the
phenomena l growth" in B.C. to "the
labor-or iented climate" here. " Labor
finds it easy to identify with and
~up port the credit union movement,"
he said.
M. E. "Gene" Nesmith, senior
vice-president, B.C. division , of the
Bank of Montreal:
" Credit unions are doing an excellent
job, and are very strong competition
(for banks) in B.C. They seem to be
taking more and more of people's
discretionary savings.
" I feel much o f credit uni ons '
strength li es in their local nature, their
independence. On the other hand, I
kno w the future will bring a stronger
nati ona l credit union organ iza tion to
poo l resources and uni te the strong
movements which now operate fairly
independen tly in places like B.C.,
Saskatchewan and Ontario and
Quebec.
"It will take all the skills of the
excellent financial and management
people in the credit union movement
to solve the problems this growth will
bring. ''
Nesmith said it is possible there will
be two kinds of credit unions: small ,
local ones and large, national ones.
He added that although size will
bring increasing pressure from
government for d isclosure and
regulation, "I think that introducing
federal control would be politically
inopportune - like flying in the face of
motherhood. ''
Di ck Kavanagh, general manager,
B.C. , o f the Bank of Nova Scotia:
"Credit unions have used their
regional and personal appeal as an
effective ma rketing tool , and this is an
area in which ban ks should pull up
their socks and do a better j ob.
" There is a definite place in the
fi nancial community for credit unions,
and if they grow too big, who is going
to step into that gap? You don't
necessarily have to be big to a chieve,
for example , compu terization."
Bill Henry, vice-president and
general manager, B.C. for the Royal
Bank of Canada:
" B.C. Central has an impressive array
of skills, money management and
training capabiliti es, bu t all this tends
to provide the push toward bigness .
Although it is difficult to escape the
connotati on of bigness - and the
accompanying loss of intimacy - I
think the movement will be able to
grow and still keep a local identity to a
degree."
Bill Scheidt, assistant general
manager of the Toront o Dominion
Bank:
continued on page 2 I
5
Provincial Advisory Council
Guest Editorial
Credit unions and credit cards
A report in this morning ' s
newspaper (Globe and M ail , Nov. 14)
informs us t hat agreement has been
reached for one of the largest trust
companies in Canada to join Master
Charge. T his will be the first non-bank
to join one of the big bank card
system s in Canada, the other being
C hargex-Visa. Together they have
about nine million Canadians carrying
credit cards.
F urther, the report says a number of
ot her financia l institutions will
probably be joining either of these
bank-card systems before long,
including the credit union
organization, now grown into one of
the major fi nancial groups in the
country. The Canadian Co-operative
Credit Society is studying the
ad visability of credit unions aligning
with one of the bank cards and
thereby extending another service to
credit union members across the
country. A CCCS technical committee
has been at work on the matter.
Some Questions
T he decision to introduce credit
cards into the credit union system is
not to be taken lig htly . It is one thing
for a n individua l to carry a credit card
for convenience, especially when
travelling, but quite another for a
credit union to sponsor the use of
credit cards. It raises a whole range of
questions reaching into t he very heart
of the co-operative idea.
J. Credit cards tend to push up
prices. Some oil companies, I am told ,
estimate that a credit card system adds
as much as three cents a gallon to the
price of gasoline. Should credit uni ons
become party to such an inflationary
device?
2. C redit cards are discriminatory, a
convenience for those who use them
but an added cost as well to t hose who
pay cash. In fact, federal legisla tion
has been considered to require those
6
who supply a service through credit
cards to allow a discount to customers
paying cash.
3. T here is a lso the ethical q uestion
of affluence a nd poverty. T he poor do
not no rma lly carry credit cards. Cash
is their only credit card. W ill there not
be a horrendo us problem deciding
which members will get credit cards
and which will not? And what will this
do to the solidarity of the
membership? The CCCS estimates that
perhaps a quarter o f credit union
members would use a credit card.
4 . In forme r days, great stress was
placed o n the principle that credit
union loans were to be used for
" provident and productive" purposes
only. How can this precaution be
continued when credit is granted by a
card?
5. W hat about the effect on interest
rates generally, since bank card rates
are much higher tha n those for
conventiona l loans?
6. What of th e danger to the uni ty
of the movement if different cred it
uni o ns are persuaded to jo in ri val
bank card sys tem s?
7. Having in m ind t ha t co-operatives
of various kinds pla n and operate with
the genera l obj ective o f building
together a co-operative sector of the
economy, what will be the likely effect
of credit unions sharing with banks the
ownership of a credit card system? It
can hardly serve to enhance the image
of credit unions as a distinctively
different financia l instituti on. If credit
unions as a movement have a ny vision
of reform a nd democratization of the
money system, we may wonder
whether a joint venture with the
existing banking establishm ent is likely
to increase their fervour.
8. Finally, at a time when several
Canadian banks are under severe
criticism for their financial support of
exploitive business and political
suppression in T hird World countries,
especially Latin A merica and South
Africa, how are credit u nion members
in Canada likely to feel about sharing
Hearty discussions liven session
Credit Unions Act review
an enterprise with the banking sys tem·
The proposed Credit Unions Act
amendments had been circulated to
What to do?
credit uni ons prio r to the Provincial
But this piece was not begu n fo r thi Advisory Council meeting. Of the ten
pu rpose of discussing banks o r
proposed am~ndments, only one drew
condemn ing c redi t cards. Indeed, t he heavy d1scuss1on, and t hat was the
wr it er carries several such cards
amendment m respect to the
es pecially for convenience in tra,vel, composition of the C redit Union
and uses them occas ionally, ma inl y lo Reserve ~oar d. The pr~s and cons of
the purpose of identification rather interlockmg representati on on
than getting credit. An individ ual mai Central's and CURB 's boards resulted
ca rry a credi t card wit hou t personal ·in an amendment to the proposed
. .
cost by paying bills wi thin t hi rty dayi. provision_ as follows:
but a cred it union is in a different
" T hat m respect to the compos1t1on
posi tion sini:e it ca n hardly sponsor a of the Cred it Unio~ Reserve Board:
credit i:ard and a c the same time adv~ ... c) the maJOn ty of CURB
against t he use of credit.
members s~ould be cred_it union
The whole purpose here is to
representatives and Section 160 of the
recommend a different approach to Credit ~nions Act ~h?uld be amended
the question of bank cards by using to provide tha t a mm_1mu~ of three
the subject for massive study by credil members of the Cre~lt Um on Reserve
union members in local and
Board sha ll be appointed from among
communi ty groups. This could be a th~ nominees of t~e central credit
widespread and g igantic study by the umons and a maximum of two shall be
gove~n ment represent~t i ves. ".
credi t union sys tem, a democratic
exam ination by untold thousands of . This a~pear.s to def1?e the issue o f
people looki ng into the mysterious
mterlockmg directorships ~etwe~n
world o f money and financial power. B.C. Central and t he Credit Umon
If cred it u nion leaders are loo king for Reserve Board.
a subject to spark an ed ucational
program , here is one readymade, and Commond Bonds and Branching
indeed waiting to burst.
The Legislative Committee presented
Above a ll, credit union members a generally well-received report on the
who are not "in the know" about
sensitive issues of commo n bonds and
plans for introduction of credit cards branching. (The Committee members
must not be presented with a decision are B. C. Central directors Wes
which is a "fait accompli" . The final Darling, Sandra Sutherland and
decision should come from the people Helmut Krueger, with L. Van der
en masse as a result of study a nd
Gracht of Richmond Savings Credit
discussion; and t he information
Union serving as an ex officio
assembled by the CCCS technical
member. )
·
committee should be widely d istributer The report set ou t specific ,
as educational materia l, along with objective, easily determ ined criteria for
guidance on the vari ous a lternatives allowing a credit union to open a
open t o credit unions .
branch. The proposed cri teria are
Maybe credit unions shou ld include intended to m inimize d iscretionary
credit car ds in their package of
powers. T he three key factors are:
services; may be credit unions can
- the proxi mity o f the proposed
improve on the present use of credit branch to a lready existing credit union
cards; maybe the credit unions and offices
· I soundness of the
continued on page/, - th
. e f manc1a
applicant credit union
- market protection versus member
service and convenience.
George Viereck (standing), secretary-treasurer of Prince Rupert Fishermen's Credit
Union, joins in the discussion of interlocking directorships. A t left is Lloyd Biech,
general manager of Prince George and District Credit Union. Wayne Carpenter,
general manager of Surrey Credit Union is pictured at right.
The concerns expressed dwelt mainly
on the details rather than the
substance and purpose of the proposed
legislation:
- some opposition to the
superintendent being the approving
authority
- need for regional input
- a distinction between a location
and a reloca t ion of a credit union
office
- timely openi ngs (for branching)
and time frames for application and
appeal
- restrictions on branching for credit
unions under supervisio n or recently
released.
Retained Earnings Study - CURB
Maybe the implications of this stud y
and CURB General Manager R oss
Montgomery's presentation did not
register on the Provincial Advisory
Council. At any rate, in spite of
Montgomery's warning that credit
unions must deal with the problem of
declining percentages of retained
earnings or the government may act
unilaterally, no discussion ensued. He
also raised the spectre of the
possibility of a larger Provincial Credit
Union Share and Deposit Guarantee
Fund if credit union retained earnings
remain low.
Montgomery a lso took the
opportunity to cite what he sees a s a
continuing problem in the credit union
system - that credit unions are not
talking to each other, to Central, or to
anyone else before embarking on
independent ventures.
B.C . Central - Internal Planning
Bob H ornal, planning consultant for
B. C. Central, o utlined Central's
planning process for 1979 and beyond ,
stressing these major points:
- a standing business plan, instead
of an a n nual obj ective and budget
preparation
- more board emphasis on planning
- more user input in plan
development
- more detailed investigation on new
projects prior to funding
continued on page 8
ENTERPRISE JANUARY/ FEBRUARY/79
7
Hearty discussions . ..
- periodic indepth analysis of
departments
Sixteen departments are scheduled
for indepth analysis in 1978-79, the
first two being the Education
Department and Central Counselling
Ltd.
Input wi ll be actively sought, and
the res ults of these business
assessments will be published in
Enterprise.
Economic Predictions
Peter Cook made predictions about
the state of the economy and financia l
conditions during 1979. Inflation will
continue to be our major problem
which has serious implications for
interest rates and financial mar kets. A
general slowing of expansion and
credit union growth is the likely
outcome.
Control Structure
Wayne Carpenter, chairman of the
Control Structure Task Force outlined
the terms of reference that the task
force had set themselves. From
questionnaires and briefs submitted to
the task force, he revealed some of the
problems perceived by the credi t union
movement:
- a Jack of influence on the
direction of the movement
- tha t the movement is actively led
or influenced by the large credit
unions
- the inability of credit unions to
share their expertise
- the inability of credit unions to
deal directly with each other (in
borrowing, surcharges, etc.)
- that B.C. Central ignores the
problems of the small credit union.
At the core of any discussion of the
control structure, of course is B.C.
Central.
Of the things Central perceived to
be doing well, Carpenter listed:
- legislative matters
- cleari ng
- as a liquidity vehicle
- busi ness management
- image and philosophy to the
public
- communications
8
ENTERPRIS E JANUARY/FEBRUARY/79
-
guidance for the small credit union
investments
borrowings
leadership
identity
Areas where B.C. Central could
improve included:
- increasing the role of the regional
executive and advisory council
- better communication with the
regional executive
- revising the annual general
meeting structure and content to allow
more mean ingful involvement of
delegates.
The task fo rce will study seven areas
which it fee ls a re effected by the
control struct ure:
- poli tical issues and involvement
- management guidance
- communications
- legislation
- investments
- leadership
- identity
More broadly, it will examine the
problems of representation in the
resolving of issues, a nd what the role
of the regions should be.
Co-op Future Directions
The Co-operative Future Directions
Committee was formed by resolution
at the 1978 CCCS annual meeting in
Regina last May. Its purpose is to set
up a time schedule for and recommend
ways to look at the future, identify
key issues, approaches and
responsibilities.
Rod Glen, a member of that
committee, presented some of their
report and recommendations. (At a
meeting of general managers and
CEOs of CCCS shareholders convened
by CCCS the fo llowing weekend, the
maj or recommendation of the report,
to establish a nd fund a commission to
carry on the work for three years, was
turned down. The committee was
asked to reconsider its
recommendations and develop a
proposal to implement them "through
a suitabl e vehicle. ")
Questions
The question period on both days
proved almost as illuminating as the
formal sessions. Peter Podovinikoff
Education needs, or .. •?•
found himself answering some very
tough questions relating to the
- role and function of the director,
operations of B.C. Central, and
The Provincial Advisory Council
including recognizing the difference
meeting participated in one phase of
seemed to handle them to the
between policy and administration
satisfaction of the Provincial Advisoahe business assessment of B.C.
- importance o f understanding and
Central 's Education Department. The
Counci l.
participating in regional and provincial
Briefly:
participants were split into groups of
meetings
.
.
managers and directors. Both groups
- credit unions and credit cards: a were asked for their opin ions on the
- knowledge of adequate (credit
series of informat ion meeti ngs with education needs of directors and of
union sta ff) compensation and how to
credit unions will be held in J anuary managers. Some of the results seemed
evaluate performance
and February, at which_ ti me they willto go beyond an assessment of
2. what directors feel director
be asked to express their agreement Oeducation needs of managers and
education needs are:
reservat ion o f the proposals.
directors to deal with an assessment of
- clear understanding of the
- ATMs: fifteen automated teller problems in board/ manager relations.
planning process and setting goals and
machines (ATMs) have been ordered.
objectives for management
Son:ie problems were encountered in
Examples:
- how to evaluate management
.
ordering, hence their appearance is
- board and manager as a team
!. what managers feel director
beh ind schedule. A "test ATM" is
3. what managers feel manager
expected to be installed by February. eeucation needs are:
- On-line system: the system was
.-- - - - - - - reaching its capacity load by the end
of 1978, ahead of projections.
Upgraded ~quipment, due for
installation in December and Januar~
should alleviate some of those
problems .
U ntil then, the additional
conversions to the on-line system ha
been postponed. Admitting that
conversions are now a year behind
schedule, Podovinikoff said that over
the past three or four years, "we tried
to do too much, too fas t. "
- mortgage appraisal and legal
services: B.C. Central is not planning
to establish a mortgage appraisal
service for credit unions not able to
afford this service on their own,
however legal services will be
investigated in 1979.
- new schedule for on-line
conversions: B.C. Central will be able
to start conversions again in February.
concentrating on credit unions which
.
haie some branches already on-line. Cr~d1t union man~gers prepare t~eir lists .of di~ector education ne~ds. (I to r) Brian
- distrust of credit union managers Ellwt_t, Map~e R1~ge Comm~~1ty Credit Umo~; R oss IJ_reth~nck, Terrace and
and directors , between credit unions, D1str1ct Credit Union; Ron Phzlzp, Courtenay Savings Credit Umon.
a nd between B.C. Central and credit
unions: these topics generated some
- knowledge of cred it union
interesting discussion and suggested education needs are:
future
planning
philosophy
remedies. It seems, however, that if
- humility
credi t union people a re speaking out
Admittedly, these points are pulled
4. what directors feel managers
about these problems, there is some
out
of long lists of perceived needs.
education needs are:
hope for solving them.
Some
of the points, however, were
- communication skills - how to
repeated
more than once, and a quick
listen
by Maxine Glover
scan reveals many that are not
. - ability to carry out board
Editor
"teachable skills " , but "desirable
Instruction - how to listen
characteristics. ''
- how to accept criticism gracefully
Perhaps I am read ing more into the
responses than was there. However,
since I have gone this far, 1 might as
well jump right in .
I was struck by what were the low
priorities on the lists of education
needs. Communica tion skills are low
on the list of perceived needs of
di rectors. Are credit union directors
not " ambassadors" of their credit
union? Do they not find themselves
speaking to school groups, service
clubs, the credit union annual
meeting? Are they not involved in
communicating to members through a
newsletter or in other ways? My
suspicion is that credit union directors
are seriously underutilized in this very
important area. (In terestingly, both
managers and directors recognized a
need for managers to have
communications skills.)
Most telling of all, however, was
that in the long list of education
needs, only once d id " ability to assess
member needs" appear. (Actually, it
appeared twice, but I suspect that it
was not an "original idea" the second
time.) I've often heard the lament
"we've lost our credit union
philosophy." Now I'm beginning to
wonder.
by Maxine Glover,
Editor
9
Banker delivers
food for thought
"I wish you great success against
everyone but ourselves. "
So said Wayne Allen, senior vicepresident for the Bank of Britis h
Columbia, to the first meeting of the
B.C. Council of the Credit Union
Executives Society, a professional
association of credit union managers.
In offering his perspective of
banking under the new Bank Act, he
began, " The 1954 and 1967 revisions
to the Bank Act had a great impact on
the Canadian Financia l system, but it
didn' t really alter market share. T he
new revisions will not only alter
market share, but will alter the total
system." He sees this as a major step
forward.
The main reason for the Bank Act
revision this time is to encourage
greater competition, and Allen
welcomes the challenges the new Act
will bring. However, the competition is
not expected to be all friendly, and he
did not mince words when offering his
predictions and analyses of the next
several years.
"Canadian banks shouldn't be naive
enough to think that the Bank Act will
benefit us all equally," he said. "It
will not. The five o r seven major
banks will be the major beneficiaries."
He foresees probably ten new banks
springing up over the next several
years, and that many of them will be
major finance and trust companies
who will convert to bank status.
(Small ones may also apply for bank
status, and he feels they will be turned
down.) Some of these banks will be
small, almos t purposely so - they
won ' t try to be all things to all people.
However, "only the strong will survive
to the 1989 Bank Act, " Allen predicts.
The initial success of the foreign
banks should be impressive. They will
be concentrating on the commercial
market. Compared to the European
and American banks, the Canadian
bank rate spread is now very wide.
Allen sees the impact of foreign banks
lessening as the Canadian bank rate
spread is reduced. As that happens,
foreign banks will divert their
emphasis to sma ll, more marginal
accounts in hopes of getting higher
returns. T he returns will be neutralized
10
ENTERPRISE JANUARYI FEBRUARY/79
Wayne Allen
by the higher risk and loan losses.
Qualifying his predictions with the
note that the mode of their entry into
the Canadian system has not yet been
determined, he said "I think that they
will be strong competition on the
corporate side, which will lessen as
times goes on." Genera lly though , he
feels that the increased competition
from foreign banks <;an only help the
Canadian economy.
Referring to credit unions , he stated ,
"It's not easy to talk about your
future from our vantage point. " He
did not name the senior bank manager
who has forecast that in future
liquidity, lending and capital policies
will be managed through an eastern
All business loans
good when made
Presumably all business loans are
thought to be ~ood ~hen they. are
made, so why 1s business lend~ng
considered risky? The reason m most
cases is the tendency to forget about
the borrower between the tim~ the loan
funds are disbursed and the time he
fails to make a loan payment. When
the payment is missed, both sides tend
to overreact , the lender casting
nervous glances towards his security
and the borrower flailing a round in an
attempt to survive. It's obviously not
the best atmosphere in which to work
out a solution to the business's
problems.
The failure to make a loan
repayment is such an obvious fact
that when it happens, it can hardly be
mis;ed . But it's only the outward sign
of a problem which must have started
a month, six months or a year before.
When he misses the payment, the
borrower has finally run out of cash
but in the meantime he will have
tapped every available source and
previous loan payments will probably
have been made by running up trade
credit to the limit, selling inventory at
fire sale prices , rushing around to
collect accounts receivable, etc.
While occasionally uncontrollable
disasters (fire, flood, eart.h quake,
postal strike, etc.) will be the cause of
loan delinquencies, most missed
.
.
. payments arise from deteriorating
he~d office, and t.hat m fact the credit operations over a period of time. An
umon movement 1s already a large
adequate monitoring program for
bank.
business loans should have as a n
"All of us i~ the ban king industry, objective the identification of these
whe~her grudg1~gly ~r not, hav~,ro
potential problem areas so that
admire the credit umo n system, he corrective action can be taken at an
assert.e d. Noting th~t credit unions are early stage. Assuming that the loan
reaching out more mto the
officer has achieved a sound
community, he warned that we should understanding of the business at the
be careful that growth doesn't make W time the loan was approved, this
lose that which has made us
knowledge should be kept current
successful. "My hope, my observation.. throughout the life of the loan.
is that you will continue to grow but Depending on the type of loan
not lose that special relationship with approved, certain information
your members. If you lose that bond requirements will be required fro m the
and become just like any other
borrower on a continuing basis and
financial institution, you will be
the most common problem is that, if
treated as such. "
they are received at all, these
information requirements are not
by Maxine Glover
reviewed on a sys tematic basis.
Publications Editor
On the assumption that nobody has
the time to look at these bi ts of
information as they drift in to the
office from time to time you might
like to try the following tests which
can be routinely used to identify those
high risk accounts among a number of
borrowers. It should be emphasized
that where these tests identify an
account as "high risk" it does not
mean for certain that the account is
going bad. But it does mean that the
account deserves special a ttention so
that the loan officer 's available time
can be concentrated on the areas of
most need.
Typical Danger Signals to Look for in
the Borrower's Planning and
Reporting Performance:
The loan officer should be wa ry when
any of the following symtoms appear:
• Unusual delays in finalizing
monthly/ quarterly/ annual statements.
• Failure to develop annual budget
plans promptly, before the start of the
planning period.
• Incomplete reporting. Borrowers
tend to provide those pieces of
infor mation which look good (e.g.
increasing sales figures) a nd "forget"
to supply the net profit fig ures,
balance sheet, etc.
• Consistently delayed reporting
(monthly, quarterly, annually) against
plan.
~ Consistently large variances from
budget without logical explanation.
• Lack of specific action plans to
remedy problems.
• Failure to identify major external
continued on page 12
)
!HANKS) IM SURI:
£VER'f'rHING Is
GOtNG
To BE ...
11
Group participation
sparks enthusiasm
All business . ..
developments in advance.
• Heavy reliance on outside factors,
such as hoped for general economic
recovery, to achieve goals rather than
on internal management action.
When to Question Management's
Credibility:
• No sense of urgency despite major
problems (his business is falling apart
but he's in Europe looking at new
machinery or on holiday in Hawaii).
• Failure to develop remedial action
plans despite eroding financial and
other resources.
• No recent research of critical
operating factors - markets, prices,
costs, productivity , labour
requirements, etc.
• No satisfactory evidence that
productivity objectives are attainable.
• Casting about for quick solutions to
problems by opening new outlets,
purchasing new machinery, developing
new markets, etc., without relation to
the company's present resources.
Identifying High Risk Accounts from
Financial Statements
• Is the net worth in deficit at present
or would less than two years
operations at last year 's level put it
into deficit?
• H as the business lost more than it
has made in the last three years?
• Have sales declined compared to the
prior year in two of the last three
years?
• Have gross margins declined as
compared with the previous year in
two of the last three years?
• A re interest and financial costs
greater than profits after tax?
• Have inventories or receivables
increased more than 10 percent faster
than sales (or declined 10 percent more
slowly than the drop in sales) in the
12
G roup participation by credit union
c.onclusive proof that the accoun1sta ff, management, and directors has
is going bad. How~ver~ it does mean proved to be a va luable j ? int
that increased momtonng should be experience which greatly improves the
undertaken whenever a " yes" does in-house comm unica tion process .
appear in order to identify the
Recognizing this, the Educati on
company's problems. The point is th<Department a t B.C. Central put
a "yes" will occur long before the fir together, last year, a travelli ng
loan payment is missed and usually communi ty ed ucati on program with
corrective action can be implemented several objecti ves in mind:
in the meantime.
• to provide an opportunit y for a ll
ma nagement , staff members a nd
by William Clark
di rectors to be exposed as a group to
Business Loan Co-ordinator
a n ed ucation a ctivity relative to their
fu nc tion in the credit union
- - -- -- - - - -- - - -- - - - -- - - - - - -- -- - -- -- * to take t he program on a regional
basis to credit unions so that
.
.
.
participants would not have to bear
Credit Unions . ..
These meetings will provide a forum th e cost of travelling to Vancouver for
through which credit unions can
training courses
caisses populaires in Canada should
review the study results in depth,
* to provide credi t u nions with an
have a bank card system of their own;
~iscuss their co.ncerns and make
opportunity to sponsor an ed ucati onal
maybe credit unions should move in a
tnforme~ dec1stons.
.
.
. activit y for th eir com m u nity (good for
concentrated way to discourage the use
The aim of the meetings is to give public relations)
of credit cards.
individual credit unions a chance to
.
.
.
review and consider the study so that . Looking for a venue m which to
I do not know the final answer to
they can be better equipped to d 1·d pilot the project, the Educat10n
these questions , but I do know that
if and how they wish card servic~~ t: Department held informal discussions
credit union members in Canada
be offered to members.
with the general managers of fi ve
collectively have the answer - or the
Credit unions that elect to
Kootenay c~ed1t unio ns: Grand F orks
answers, since there may be several - if
participate will be requested to
D1srnct Savings, Castlegar Savings,
only they are given an opportunity to
underwrite a portion of the
Nelson and District , Rossland and
bring their minds to bear on the
development costs on a shared basis. Kootenay Sav in?s Credit Unions . T he
subject.
Central or League personnel will co- response t? the idea was m.ost
ordinare rhe consultation meetings enthus1 ast1c a nd it was decided tha t an
by A. F. Laidlaw
wirhin their own province. 8. C.
educa11onal weekend (October 20 .- 23)
Centraf's Development Division wit{ wo.uld ~e sponsore? by t.hese credit
act as the co-ordinaring agenr for
urnons m conJ un~t1on with Credit
British Columbia.)
Union Day. Selkirk College was
(Editor's Note: Following their review
chosen as th e most suitable site for the
of the card task force's feasibility
sessions.
study last fall, the Canadian CoTo get the weekend off the ground,
operative Credit Society and the
each credit union was assigned a duty:
general managers of the provincial
Castlegar - facility arrangements;
centrals agreed that each level of the
Grand Forks - registration; Rossland
credit union system will be involved in
- hospitality; Nelson - financing;
major decisions relating to card
Kootenay Savings - door prizes and
services for Canadian credit unions.
advertisi ng . B.C . Central was
A series of consultive meetings,
responsible for course content
planned for early 1979, will give the
presenta tion of program and l~ngth of
representatives of provincial centrals
each session .
across Canada a chance to discuss the
"Since each credit union had a
task force study with management and
responsibility
to fulfill" says Cathy
officials of individual credit unions.
Manson, manager Grand Forks
last two years?
• Are more than 30 percent of the
receivables or payables over 90 days?
• If you add back depreciation to net
profit after tax, is the resulting
amount ("available funds " ) less than
the next year's principal portion of
term debt repayments?
• If the working capital ratio has been
declining over the past three years, has
the ratio fallen below 1: I?
In applying these tests it should be
remembered that a "yes" answer is
~ot
District Sav ings C redit Union , " we
fi rs t had a mee ting and made some
overa ll decisions rega rding t hings like
how m uch money should we be
prepared to spend , what fac iliti es to
use, and how to sell o ur sta ff and
directors on the idea of giv ing up a
day o ff to a ttend. "
To make the presenta tion interesti ng
to all levels of staff, m anagement a nd
direct ors , a wide ran ge of topics was
chosen including:
1.
2.
3.
4.
5.
6.
long-range planning strategies
economic fo recasting
time management
developing a training program
image building
asserti veness training
T wo sessions of communit y
leadership training - one fo r
tee nagers a nd one fo r adults - were
open to members of t he community as
well as credi t union peop le. Mo nday
sessi ons were held in order to
accomm odate those cred it union
people who worked on Saturdays but
had M ondays off.
Says Cath y Ma nson , "The staff wa s
invited to participate in the image
building seminar, while ma nagement
involved itself with time management
and training plann ers. The board of
directors took part in the long-range
planning strategies and econom ic
forecasting session together with the
senior management people.
Assertiveness traini ng lent itself to a ll
interested participants.
"The community leadership
registration was left to the general
managers. We contacted various
groups in our communities, explained
the program's availability, and left it
to them to make the decision regarding
attendance. For instance, I contacted
the student council at the Secondary
School, the Minor H ockey
Association, the Little League baseball
people and some clubs and
organizations.
"We received some very positive
responses from the participants. My
personal feeling, and I feel the other
managers agree, is that this type of
educational vehicle is of great value to
our employees . They thoroughly
enj oyed t he one-day sess ion a nd woul d
cer tainly like to see ann ual or semiannu al similar seminars in the futur e."
Two hundred people attended t he
sessions , bu t com munity regi stra tion ,
according to Ca thy M anson, was lower
than had been a nticipated.
"We ran into a problem with
community response ," she
co mm ented. "Obviously, a phone call
to one person from each community
gro up was no r the way to handle
registra tion . We should have run a few
ads in th e newspaper and a lso hav e
had some radi o expos ur e ex plain ing
what it 's all a bout, then let interested
persons contact us either by letter or in
person . ' '
N ex t time the participating credi t
un ions will kno w ho w to invol ve their
communi t ies. Will there be a next
time?
As far as C athy Manson is
concerned t here will be. "Yes,
de finitely recom mend do ing it again .
As long as co-operation is recei ved
fro m credit un ion s within t he specific
a rea rega rding arrangements, etc. and
as long as the parti cipa nts are eager,
edu cation weekend s will be a success ."
Favourable comment s recei ved from
participants in t he sessions are typifi ed
in the foll owing letter from a young
studen t:
M rs. Manson :
The course on leadership which I
attended at Selkirk College was a most
rewarding experience.
T he leaders were abs olutely
fantastic! T heir friendliness and spirit
helped us to loosen up and be honest.
I als o made a lot of friends, both
people m y own age and adults, that 1
won't easily forget.
The one thing that stood out
throughout the whole three hours was
the fact that the course centered on
positivity. We di scovered the bad
points of leaders in general through
the many exercises we participated in.
In closing , I would just like to thank
the credit union very much for
13
Campbell River
Credit Union Day promotion
brings positive results
Credit Union Day can be just
another day in October. Or, as
Campbell River District Credit Union
found out, it can be a very convenient
hook on which to hang a successful
promotional campaign.
By October, 1978, Campbell River
District C redit Union had a lot of
things to tell its members and the
surrounding community.
It was necessary, however, to decide
what information should be projected,
how should it be projected and when
would be the best time.
"What information" seemed to be
dictated by several needs:
- the need to do some advertising
since the credit union had done very
little in the preceeding months of 1978
- the need to familiarize both
members and prospective members of
a number of new services which had
been introduced in a short period of
time: on-line system , fast deposit,
travel agency services, the new "total
account", and a new radio jingle
- a need to encourage members and
the general public to use the credit
union's services
- a need to inform non-members of
what a credit union is and how much
Campbell>River District Credit Union
is involved in community life.
"How" was answered one noon
when Bill James, administration
manager of the credit union, was
driving home for lunch.
"I was listening to the local radio
station," he said, "and they were
doing an on-location broadcast in
Campbell River. I began to wonder if
a radio broadcast would work for the
presen~ation of our services."
Losing no time, he looked into the
cost of a similar broadcast for the
credit union. He found the cost
reasonable and took the information
back to the credit union's board and
management.
As the idea grew, the "when" was
pinpointed as the week in which Credit
Union Day fell. Accordingly, a fourhour broadcast time was booked with
14
Payroll system
uts down drudgery
With the advent of the credit union
n-line systems, and the ado~ti~n of
ore sophisticated systems ~1thm ~he
redit union movement, an mcreasmg
umber of credit unions have been
equesting that B.C. Central study the
feasibility of providing a computerized
ayroll system.
The latest word is that such a
payroll system is going to become
operational and should be ready to go
into a test period at B.C. Central
during the latter half of 1979. After
the in-house testing is completed the
system will be offered to credit
unions .
The process of studying the system
has been carried out over the past
several months by Central's
Management Services Department
which has included in its research a
number of interviews with credit
unions already using comput erized
payroll systems.
Human Resources personnel are
enthusiastic. "The new system will do
an awful lot of things for us that we
can't do now," says Ray Decloux,
anager, B.C. Central Employees
Bill James, centre, takes part in broadcast.
~;~s;~~;i~~enefits and Payroll Department, who
~
as recently returned from a
emonstration tour of Management
redit Union Day ...
',.
.I
Members and prospective members line up for service during promotion days.
the local radio station for October 20.
"Now we were faced with two more
problems to solve," says Bill James.
"First, the radio station had never
done a broadcast from a financial
institution before. And second, who
does one ask to participate in such a
program? The only answer we could
come up with was that we should
proceed on our own and see what
happened."
It was finally decided that content
of the broadcast should include:
- history of credit unions in general
to tie in with Credit Union Day
Science America Inc., the company
which will be supplying the Personnel
Management and Reporting System
(PMRS).
He added, "It is a good sys tem and
it will eliminate some of the drudgery
now involved in preparing payroll
records. We hope that we can have
some credit unions on the system
this year.''
Connie Shaw, manager, B.C.
Central 's Human Resources Division,
points out, "A unique feature of this
new service will be the personnel
management information system which
will provide an effective tool with
which to maintain accurate employee
records such as vacation and sick leave
entitlements, performance appraisal
reviews, salary progression reports,
staff turnover analyses, employees
listed by seniority and numerous
statistical reports."
T he beauty of this payroll service is
that it will accommodate any type of
pay period - hourly, weekly, bi-weekly,
semi-monthly, monthly - calculate
overtime and process government,
employee benefit and pension
deduction. It will also produce income
tax forms such as T4 forms.
By using the computerized payroll
system those credit unions already online will be able to reduce considerably
the workload in their accounting
department by transmitting their
payroll information through the
terminals directly to the payroll office
at B.C. Central. This will eliminate the
arduous task of producing manual
payrolls within a limited time frame,
maintaining staff records and
calculating government remittances.
Cost to credit unions using the
payroll system has yet to be finalized
but it will probably be determined as
either a basic cost or on a cost per
item basis and will be competitive with
other computerized payroll systems
being offered throughout the province.
(Additional information on the
computerized payroll system can be
obtained from Ray Decloux at B.C.
Central.)
- history of Campbell River District
Credi t Union
- definition and purpose of a credit
union
- organization of a credit union wit h
regards to members , board of
directors, management and staff
- a summary of the credit union's
community involvement
- description of services (all 23 of
them) offered by Campbell River
District Credit Union
- a look at the cred it union's future.
Also incorporated in the week's
activities were a membership drive
with three draws for Olympic coin
sets, for new members; demonstration
to members of the on-line system ;
children's draws for "Ollie" the onli ne owls; free giveaways; and open
house with coffee and donuts on the
day of the radio broadcast. A gra nd
prize draw gave away a three-night trip
for two to Las Vegas.
"Early results indicated that the
promotion was a huge success,"
affirms Bill James. "The transaction
count for the day of the broadcast was
the highest it had been in the current
year. Within the two weeks following,
some 116 new accounts were opened.
The feedback from members has been
nothing but complimentary. lt
(Credit Union Day) truly was a day to
celebrate."
by Pixie McGeachie
in collaboration with
Connie Shaw and Ray Decloux
by Pixie McGeachie
Bill James
15
1C
1.: \f
....
i• ,,~\~
v ·. . .
1· \\ ~, .
Forum
- A reply to the article by L. "Van"
van der Gracht in the November, 1978
issue -
Enterprise chose well when they
asked Van to come to the defense of
the open common bond. Va n, being a
pioneer and charter member of our
movement, could not consciously build
a case for the open bond, no matter
how hard he tried to apply himself to
the task. He d idn ' t prove the case but
rather on ly asked or identified many
hypothetical questions. I would like to
answer some of his many questions
and ask some of m y own .
He states that several Canadian
provinces enjoy open bonds. What
provinces is he referring to? I only
know of one, that is Alberta, that has
allowed some open branching. Ontario
has a bond of convenience but
exercises control on bra nching. This is
hardl y severa l. If there are provinces
with completely open branching, let
the advocates of th at system prove by
statistics and community ana lysis that
it has, in fact, proven to be a better
way to serve our members. T he facts
stand now that we have a good system
in place that has enjoyed fan tastic
success. W hy change only for the sa ke
of cha nge?
T he question is asked; what is o ur
real "bond "? I sincerely believe it is
community identification or
association identification or whatever
the group has in common. This
identification has given our members
the feeling they are a part of the
group . If my cred it union was all over
the place grabbing what we cou ld,
where we cou ld , would we retain this
identification; or would people start
thinking of us as just another one of
those banks?
Van emphasizes that people should
have a choice. In my community they
have a choice of fi ve trust companies,
twenty ba nk branches, two mortgage
companies, two community credit
unions, two associational credit unions
and within a 30 minute drive, they
have a hundred banks, four or five
16
community credit unions a nd at least a
dozen association credit unions. ls this
not a choice? Van, obpiously you're
not serious. I can give you at least 50
examples without a search, where
people have made t his choice. I think
of the credit union system as a total
integrated single system in the sense
that you would think of one bank. In
these terms, would the Bank of
Montreal advocate that they establish
branches to compete wit h their other
branches solely on the argument that
people should have a choice?
I don't accept the premise that the
more open membership credit unions
that there a re operati ng in a
community th e better they all will do.
At best, perhaps this could appea r to
be the case in the short term but never
in the long term. Most experts will
accept the fact that everyone wi ll not
join a credit union. The best example
we have is some credit unions in
Sa skatchewan where they have
penetrated the population to the extent
of better than 50 percent, e.g. Prince
Albert, Assiniboia, Swift Current, etc.
If then, we estimate that we, as a
movement, can only obtain, say 60
percent of the pop ulation it can
reasonably be presumed that if a
commu nity credit union was doing
their job t hey could event ua ll y attain
that goal. If there were two
communi ty credit unions in that
community and also presumi ng t hey
were both doing their j obs, each credit
union' s potential wo uld be cut in half.
If you extend this to three or more
credit unions , a ll you are doing is
duplicating the overhead to do the
same job and at the same time, they
would be destroying their public image
a nd changing managements'
motivation from an atmosphere of
friend ly co-operation to one of life or
death competition . Is this what we
want? I would prefer to look at my
fellow credit union manager as a
fri end, confidant and helpful cooperator, not as my friendly
competitor.
It is not the fear of competi tion that
concerns me but rather the lost
opportunity for planned orderly
growth to the full potential of our
community. If limi tations are placed
on us by the division of our potential
by our frie nds, my credit union ftr
example would perhaps never attain
the expected goal of being a major
influence in our community's fi nan
affa irs. Financial decisions affecting
the people of our community would
continue to be made by strangers in
another city.
I hope Van 's article is not going t
be used in our management ilasses a
Co-op College as his statement "rui
resu lts from poor management, not
competition" will be a great opening Dear Max ine:
line, but then,_ it is as creditable as th Hurra h for Phi lip Moore, a nd a
rest of the arti cle. .
.
plague 011 the views of Rodger Lutz.
I know Van is being facetious wherEve n Rodger' s ti tle is wrong to man y
he uses the names o f two Bank of members of cred it unions .
B.C. em ployees as heroes of our
Someone has sa id tha t "the real task
financial wor ld . I am sure he mea nt of the credi t unio n movement, is to
F~ther Cody or our own Rod ~Jen f(prove the brot herhood of man"! I do
his example, as the bank ers mam clainot feel that this is Rodger's objective.
to fame is the fact that they identifi~He even uses the word " PROFIT' ', to
credit union strengths and tried to i11ustrate his credit union objectives.
emulate them in their bank. Cody alliAs anyone versed in t he credit union
Glen were advocating these strengthsidea knows , that word should never be
before either one of the bankers was used.
born. The open bond would c;;mulate When credit unions try to, copy the
the bank system , while at the same large banks; when they a re directed
time banks are trying to copy us.
and lead by the "young turks" who
T he advocates of the open bond may have their own personal
keep saying "what are you afraid ofladva ncement in view, (as well as that
A very infamous person once said tbiof their own credit union), then we are
if you keep repeating an untruth lon1departing from t he basic idea of the
and often enough people will accept imovement. When we do that, then we
as a fact. I think that has proven to tare fair game for taxation and
true in this case. To date, no fac ts regulation, as are the other lending
have been given, no projections mad~nstitutions. Take away t he sense of
no studies made, so no case has beenbelonging, the volunteers, and , our
proven for t he open bond. Therefore.most powerful weapon, t he lobby,
we would be insane to change from ipply taxation, and t he mega-credit
the known to the unknown at this Jnions will have difficulty competing.
point in time.
I am one of the many thousands
In my opinion one of the most
.vho gave willingly of time and effort
important aspects of the present
n the 60s to spread the credit union
system is that it has a built-in
dea, - and it worked. The mega-credit
discipline. T hat is, the credit union mions are just banks. We do not need
must accept its responsibilities to
hem.
service its group . When restricted to Hurray again for Ph ilip Moore.
an area it must develop new and bettMay his ideas prosper!
services for those in the bond rat her
than the same services to an ever
fo urs for service,
widening number. This is t he princip!Cy Relph .
that guar antees that credi t unions will\ credi t union member
continually serve their true purpose.
The advocates of the open bond
keep repeat ing that they are only a
part of the financia l system and
Dear Ms. G lover,
cannot do anything but play the gami
along wi th everyone else. But isn 't thi Following a recent sta ff excha nge
why our fat hers organized credit
)rogramme between m y credit unio n
unions? Weren't we going to try to ind the Credit Union Central o f
~lberta duri ng which I spent three
continued on page f nonths studying the operat ions of
Canadian credit unions, I was
fortunate enough to obtain a number
of copies of your magazine .
Let me commend you for the quality
and diversity of in formation which
you supply to your readers. I
especially enjoy your interview sections
- George May of CCCS, Peter
Podovini koff etc. and problem
solving, computer information
sections.
I was tempted to complete your
recent reader questionnaire and return
it, but I would have had to mutilate
my copy to do so.
I now appear to no longer be
receiving issues of your maga zine, my
last one being June, 1978. I would
greatly appreciate your confirming my
name on your mailing list. Should
there be a cost involved, please bill me
accordingly.
Kind regards,
Alwyn B. Gill,
Loans Manager.
Macleay Mutual Credit Union Limited
New South Wales
Australia.
Dear Maxine:
I am also one of those who left the
questionnaire for "George" to
complete. It looks as if George
couldn' t find the time either . And now
I can't remember whether I sent in the
card requesting continuation of
Enterprise. I attach my address label
as suggested in your November issue
with the hope that you will continue to
sent it to me.
The sad part of this whole affair is
the large number of questionnaires we
are asked to complete. Most of us try
to complete them as soon as they come
in but many times they are pu t to one
side until there is more free time.
Frequently we don't fin d that free time
and the questionnaire is misplaced.
I would surmise that you have had a
greater response to the threa tened
discontinuation of Enterprise than you
got from the questi onnaire. I would
suggest (tongue in cheek) that you
make continued receipt of Enterprise
cont ingent on completion of a periodic
questionnaire .
In any event please continue to send
me Enterprise and keep up the good
work.
Yours sincerely,
Charles I. Kinney,
Manager,
Chemainus & District Credit Union.
Forum .. .
influence t he financial system with the
application of our co-operative
principles? Why have some of them
now given up to the so called
marketplace? Perhaps we ha ve all
become too sophisticated to put up
resistance.
Van maintains throughout his article
that people should be given a choice of
credit unions and by ope ing the
bond, that purpose would be served.
This again would be true for the short
term. But is a lso guarantees that
within the next twenty years this action
would reduce the number of credit
unions in the provi nce to
approximately five to ten. T his then
would defeat the purpose of choice
that he is trying to promote. The net
result of his recommendation would be
that all choice would be eliminated.
This would force Van to start
organizing credit unions a ll over again
to re-establish the opportunity of
choice. You did it once Van, you can
do it again.
May I ask a very important question
of the avocates of the open bond?
Why would one community group
want to exploit another community?
To answer this let them look closely at
their purpose for existence. Is it for
the colonization o f other communities?
Is it for sending forth their missionary
branches to convert the unbel ieving?
Or is it merely the easy way to
expand ?
In closing his article, Van asks if he
has any support out there. A s a
gentleman and a folk hero of our
movement, Van, you have a great deal
of support, but as for your article, I
cannot believe you are t he least bit
serious.
Ron Davies
General Manager
North Shore Community Credit Union
ENTERPRISE JANUARY/FEBRUARY/ 79
17
Co-op service station
leads in low gas prices
Checking delivery receipt at B.C. 's newest co-operative gasoline station are, left to
right, Alan Jones, general manager of Metro Co-operative Services; Bil Noyes,
driver for Metro; and George Rea who operates the service station for the Lower
Mainland Foundry Workers Co-operative Services.
some tanks and pumps, a minimal
How would you like to be able to ~uskin and a freig ht hauling service
office facility and a willingness to keep
buy gas for your car at a cost lower hat specializes in transportation of
the operation simple. If there is a
than the lowest price in town? That ·rozen foods to and from Vancouver,
danger, it lies in trying to expand to
was the aim of B.C. 's newest cov'ancouver Island, northern B.C. and
too man y services, too many lines of
operative service station and today ~rince Rupert.)
products . The more complex a service
Metro Co-?p's general ~an~ger;
that objective has been attained.
becomes the less competitive advantage
However, there is no use rus hing or\lan Jones, 1s very enthus1ast1c about
it has."
to join, for the co-operative is not he example set by t~e Esco group . He
The Esco group operates its service
only new, it is very unique to B.C. Ftaid any company with a reasona ble
station for one hour a t the change of
starters, membership is closed - youiumber of .employees c~uld use the
shifts for a total of only three hours a
have to be an employee of Esco Ltd, ame principle to eff~cu vely help .
day. At other times the pumps are
(a lower mainland alloy steel fou ndry:mployees reduce. their cost ~f hvmg
kept locked. By keeping its operating
and the service station is open only ind at the.same time reduce 1 ~s own
hours restricted all sales take place in a
three hours per day. However, with 1notor veh icle fuel costs . T he 1?creased
short period providing maximum
potentia l of 350 members, the co-op (Olume could mea~ a substantial
utilization of the attendant's time. The
looking forwa rd to sales of half a a vi ngs to companies that already have
principle of closed membership permits
million gallons a year.
heir own pumps, he said. " It is a
clear understanding by all concerned
The employees of the Port
:reat way to .help st~ff, cut costs and
as to what can be expected in regards
Coquitlam foundry, with enthusiastic1t the same time build loyalty and
to rights, privileges and
support of the company, developed t mployee moral~.
responsibilities. Ordering supplies
co-operative as a means of bringing 1 "All ll n~eds is a clear
becomes predictable; sales are virtually
themsel ves substantial benefits by mderstandmg of the c~ncept, support
guaranteed; and accounting is
reducing the cost of motor vehicle rom all concerned, a httle space for
minimal.
petroleum products.
The company provided space for t~-------------=-. .-.--.............----...
service station with its five pumps,
three underground storage tanks,
office and the use of its payroll
computer system so that "sales" coul
be simply tallied and deducted from
the employees' pay-cheques each
month. The service station has one
tank wi th a 5,000 gallon capacity for
" regular" leaded gasoline, another
~~
18
ENTERPRISE JANUARYIFEBRUARY/79
by Clarence Morin
======:...--....=====----.....----.............................__................
When you contribute to the
Co-operative Fund Raising Drive,
You ·
hands with others
01.,.__..____________
equal size fo r un leaded gas and a
3,000 gallon tank for diesel oil. The
office is in a small, low-cost building
at the site. Being self-service, only oo
person is needed, part-time to look
after the pumps and to tally the sale1
The service station's operating cost
are absolute minimum. There is no
sign other than lettering on the officr
wall, no advertising, no " free air". 1
fact, the co-op has no cash register
and no safe because there is no need
fo r either . The whole operation is
neat, attractive and very simple.
Metro Co-operative Services, whid
assi sted the group to become
operational, supplies the gasoline and
diesel oi l. (Metro Co-op Services
operates a petroleum products
distribution system in the lower
mainland area, a home heating oil
delivery service, a hardware store at
1
Co-operative Services truck at left keeps the station's tanks full with regular and
unleaded gas in addition to dieseljuel.
The co-operative is highly
independent in its operations. This
enables it to solicit the lowest possible
price fo r supplies. Pre-determination
of costs enables the mark-up to be set
a t the lowest possible level to cover
operating expenses and ensure fu ture
autonomy. There is no provision for
dividends as none are intended or
expected. Benefits of membership are
real and immediate.
"Now that the Lower Mainland
Foundry Workers' Co-operati ve has
been incorporated and made
operational, other groups interested in
the concept will be able to save time
and expense by having a functioning
example to follow," Mr. Jones
explained.
"If you know anyone who might be
interested, let me know, " he said.
When you contribute to the
Co-operative Fund Raising
Drive, you help people in Canada
and arou nd the world to help
themselves.
In Canada ...
The Co-operative Col lege
Foundat ion Fund helps new co·
operat ive ventures to get on their
feet, a nd promotes educat ion in the
co-operative movement through
publi shing, trai ni ng an d resea rch.
.. . and around the world
The Co·operat ive Deve lopmen t Fund,
administered by the Co-operat ive Union
of Canada, concentrates on co-operative
development in the third world.
Con tributions to this fund are
matched by some provincial
governments, and then by the
federal government. Therefore,
each dollar you give to the CDF
will be doubled , or even
quadrupled.
Give generously: help people to
help themselves.
You r contri butions are ta x
deduc tible. Se nd your cheq ue ,
payab le to the Co-operat ive Colle ge
of Canada, to the address be low. We' ll
send you a receipt fo r income tax
purposes.
Send cheques to:
Co-operative Co llege of Canada
141 · 105thStreetWest
Saskatoon , Saskatchewan, S7N 1N3
19
600 canvassed to update study
The following summary briefly
outlines the main findings realized
from the 1978 Image/ Attitude/
Awareness Study. This province-wide
study updates a similar survey
conducted in both 1976 and 1977. The
data was gathered through a telephone
survey of 600 respondents throughout
British Columbia. This study becomes
increasingly valuable with each update
as trends can be tracked and
observations confirmed or repudiated.
The fu ll analysis of the findings which
also points out differences by the
respondent's age, sex, income, etc. as
well as outlining any differences
between the credit union regions,
should be available in January 1979.
The following points then form this
overview:
1. Non-member knowledge about
credit unions is unchanged from June
1977. This is reflected by the fact that
only one in three non-members
spontaneously mentions credit unions
as a financial institution or is able to
form an opinion about credit unions.
At best, only one half or fewer of the
non-members are aware of the full
range of credit union account types even when read a list of the services.
On a free association basis with the
term " credit union", members focus
on interest rates, member ownership
and services available while nonmembers mention a wide ra nge of
ideas without a ny clear consensus.
2. At least three in four credit union
members currently use a chartered
bank, and demonstrate patronage
levels of individual banks comparable
to those recorded by non-members.
3. Credit union members use more
financial institutions per capita than
do non-members. This is witnessed by
the fact that over two-thirds of our
members use more than one financial
institution while only one quarter of
the non-members do likewise.
4. Overall, members and non-members
use the same accounts but differ in the
source of these accounts. However,
credit union members report a greater
incidence of mortgages, term deposits
and RRSPs . While both members and
20
non-members rely on the fin a ncial
institution they use most often as the
source of their chequing and savings
accounts, members place a greater
reliance on secondary financial
institutions for the rest of their
accounts than do non-members.
5. There is only a limited
understanding of the relationship of
credit unions and co-operatives. This is
evidenced by the fac t that over twothirds of the members and nonmembers are unable to enumerate any
similarities between the two
organizations. Co-op members explain
their patronage of a co-op on the basis
of its competitive features whereas cooperative philosophy represents only a
limited portion of their rationale.
6. Convenience is a major factor in
the selection and retention of the
financial institution used most often.
While members seem to be more
conscious of the nature of services
offered as a criterion in the selection
of the financial institution used most
often, both members and nonmembers explain that convenience
(location/hours) is a major factor especially proximity to home . This is
emphasized by the fact that household
moves are important reasons for
moving accounts.
7. Both members and non-members
demonstrate a considerable inertia with
respect to changing financial
institutions. T his is reflected by the
Jong-term relationship established with
their fina ncia l institutions. Household
moves are a major reason for closing
accounts, and so is member and nonmember dissatisfaction with their
financial institutions. However, it is
observed that there is considerable
tolerance toward dissatisfactions with
the currently used financia l
institutions.
Conclusions/Summary:
Non credit union members have not
demonstrated any significant change in
Marketing packages ·
t•
d t• • t I
~nowl~dge/opinions effec 1ve a ver 1s1ng 00 s
behaviour towards financial
institutions. or
about credit umons smce 1977. Credi
union members use more financial
d.
how that credit unions are
. . .
h
b
d
St u 1es s
ms11tuttons t an non-mem ers an
.
h e to become more and
·
h
· ·
ao1ng to av
ssi·ve in their marketing
hold t h e1r accounts w ere 1t 1s most "
·
f1
more aggre
·
advantageous m terms o ocat1on anr·
h ·n order to attract new
approac 1
terms.
.
.
.
business. That means taking every
Convenience of loca tion continues
. bl pportunity to reach t he
I .
d ava1 1a e o
k f
. h
be a. ey d actor ~n \.e se ecti'on an right people at the right time with the
~on~mu.e usHe o a mahncia ct·
. right information. And that means
mst1tut1on. owever, t at ere 1t uniothat planning for a com prehensive and
members are somewhat more
_
·c distribution o f info rmation is
discriminating than non-members is ,trat.eg•.
.
h
.
a
pri
onty.
re f lected m t e greater importance
With more people becoming aware
they. place o.nl tbhle terdms/n~turde ol.f theof credit unions, there is less need to
services ava1 a e an service e 1very romote general image than there is to
Nevertheless among both non-mem!J' f
people that credit unions a re
b
h
·
·d
bl in orm
~nd ?1em ersdt e~e 1hs. a cof.ns1 e.ra e indeed competitive, full-service
~ner.ua :owar sw1tc mg manc1a 1 financia l institut ions, providing
mst1tut1ons.
. .
:omparable or better services than
T~eref?re: t~e .o~portun.1t1es for :>an ks or trust companies. One of the
credit u~~ons. he m mcr~asm? the
:>est ways to communicate with noncross-ut1hzat1on of credit union
Tiembers and members is through
accounts among members and m
:>roduct ad vertising. The marketing
gaining inroads among non-members:>ackages offered by the advertising
~erv!ng as a secondary financial jepartment of B.C. Central a re
ks igned to help credit unions do this
mst1tutton.
n a professional and effective manner.
In late 1977, B.C. Central conducted
by Robert Williams
1 survey of all credit unions in the
Research Analyst
)rovince. The questionnai re listed 14
<leas for marketing kits. Survey
·eturns showed a keen interest in
) fO duct-type packages such as
nortgages , Joans and P lan 24, and in
Group participation ...
1978 the Advertising Department
1ffered these two ki ts.
providing the course. Also, thanks
There will be a total of eleven
from Lori Palmer, who attended thenarketing packages offered in 1979.
cou rse with me.
3ach package generally will contain
Yours very truly,
>0sters, counter cards, sta tement
Cheryl Pavan
!uffm, press ads ~nd radi ~ copy.
.
_ertam packages will contain
The Educalton Department of B.C1dditional elements such as giveaways
Central will arrange to come to any If mobiles.
B.C. region that would like to sponsr Seasonal facto rs have been taken
similar education session s. Further. nto consideration in determining the
information is ava ilable by contact1n1e1ease date for each of these
Larry Wald or Doug Wi lli ams.
1ackages. For instance, in March
redit unions are in a good lend ing
10sition so it is logical to market first
. .
.
by Pwe McGeach1e
nd second mortgages. In April, it has
. . ieen fo und, people tend to concentrate
Cathy Manson and Doug W1llwms 1n savings. In May and J une vacation
Jans are a good thing to boost.
.eptember brings the new car season
o auto loan marketing would be
e~evant. In the fa ll, people start
runking about mak ing their homes
?Y
~~~~~~~~~~~~-
snug for winter so term deposit and
second mortgages are the logical
services to promote.
But while seasonal factors are
considered for the production schedule
of the packages that does not
necessarily say tha t all credit unions
need to distri bute the information at
any particular time. A credit union
ma y find that it does not need to
ma rket the product featured in any
given month. This does not mean that
it should rule out ordering the
package. The credit union may
anticipate market changes and want to
be prepared to take advantage of those
changes immediately, or want to
market that product at a later date. In
either event, advance ordering of the
packages will enable the credit union
to be prepared for most situations.
Perhaps the strongest advantages for
credit unions using the packages as
opposed to creating and producing
their own marketing materials are the
savings resulting from sharing all
development a nd production costs, and
the convenience of having all the
details looked after and the finished
prod uct delivered ready for use.
T he marketing package idea is not a
new one. Alberta credit unions have
used it successfully for two years, and
the other western provinces have
latched on to the idea. The 4-PAC*
program (where the advertising
departments of the four western
centrals join forces to provide
marketing material), is a four-way
partnership which splits development
costs.
B.C. Central' s original intention in
becoming involved with 4-PAC, was
to meet the needs of medium to small
size credit unions to get good quality
promotional material at a relatively
low cost. The program , however, has
already appealed not only to small
credit unions but also to some large
ones.
While the marketing packages do
not cover every credit union product
or service, they do cover the major
areas of activity and will go a long
way towards helping the credit union
to communicate to its market in a coordinated, timely and professional
manner.
*(December issue of Enterprise)
by Editorial staff
(Editor 's Note: For more information
on the packages, or to order, please
contact the Production Supervisor,
Advertising Department, B. C.
Central.)
What do bankers . ..
" Credit unions certainly keep us
competitive. They do an excellent job,
especially in pioneering services like
Saturday and other extended hours,
open mortgages and daily interest
accounts. You see the banks following
sui t in many of these areas ."
But credit unions today are strictly
big business. "Growth has often
mea nt a loss of individual contact
between members and their credit
unions," said Scheidt, "and I question
whether such growth really is the
answer ."
H e suggested that the loss of close
control which characterized small
credit unions will have to be replaced
by a substantial capital base and
reserves - " the same kind of standards
which govern other big business."
Otherwise, Scheidt added, the credit
union movement may not have the
resources to weather any prolonged
economic slump.
by Mike Grenby
About the au thor:
M ike Grenby is the personal finance
columnist of The Vancouver Sun. He
writes a weekly syndicated money
management column for newspapers
across Canada as well as personal
finance columns for various employee
and membership publications. He has
won a number of business writing
awards, including the 1975-76 National
Business Writing Award for "best
business column" in Canada.
ENTERPRISE JANUARY/ FEBRUARY/ 79
21
(blf~~
Statistics and trends
· yours for the asking
Campbell Sharp, through its
consulting arm, Pannell Kerr Forster &
Associates, specializes in the
hospitality and tourism industry,
publishing reports on the operating
performance of the hotel and motel
industry in British Columbia. The
program known as Statistics and
Trends provides average information
every month on occupancies, room
rates, guests per occupied rooms, and
food and beverage sales per seat for
hotels and motels of various size
categories in three metropolitan areas
and eight tourism regions of British
Columbia.
It is evident that the hospitality
tourism industry is playing an
increasingly important role in British
Columbia's economy, and it now
appears that 1978 will be a record year
for this third largest industry in the
province. In view of the growth that
can be anticipated for this sector, the
credit union movement is likely to find
increasing activity in accommodation,
resort, and food and beverage related
projects. Pannell Kerr Forster &
Associates wishes to make its Statistics
and Trends reports available, free of
charge, to interested credit unions with
the hope that this will assist in making
better informed decisions regarding
activities or contemplated involvement
in this growing industry.
Services that Pannell Kerr Forster &
Associates conduct include market and
economic feasibility studies, for clients
considering investing in
accommodation/ resort/ convention and
food and beverage facilities; market
position studies aimed at improving an
existing operation's profits through
developing strategies to improve dollar
volumes and operational studies of
major problem areas aimed at
maintaining effective control over
revenues and expenses to the extent
that is consistent with the standards
required to meet the needs of the
market.
Additional advisory services,
including preparation of short and
long term budgets, financial planning,
income valuations of existing
22
t6CONOmll5 ~T
operations, conducting franchise
negotiations and/or arranging
management contracts, and referral of
supporting accounting, audit and tax
services can also be provided.
If you have any questions regarding
the scope or nature of the advisory
services that Pannell Kerr Forster &
Associates provides to clients in the
hospitality and tourism industry, or if
you would like to be placed on the
mailing list to receive Statistics and
Trends every month, please contact
Pannell Kerr Forster & Associates at
688-8666, or write to them at Box
12517, 1066 West Hastings Street,
Vancouver, B.C. V6E 3Xl.
· ·
.
The Consumer Price Index is one of
Wilham Clark, Business Loan Co. . C
<la's most widely used
aausucs
ana
.
.
ord mator, comments.
.
A
easure of inflation it
"C d.t U .
·11 r d St t. . nd1cators. s a m
re I
nio~s w1 J m
a istiq, applied to wages for the calculation
and Trends
useful
when ,f cost-of-l·1vmg
· a d"JUstments·, 1·t 1·s used
.d . particularly
.
1:
11.cat1ons
cons1 enng /oan. .app
J or ne1
th
.
C
.
compute e ·mc r ease 1·n personal
hoteII moteI Jiac11lf1es. onventwna/ 0
. f ·
ta p rpo . ·t
· I
.r
.r . · d
xempt1on or mcome x u
ses, 1
appraisa s are OJ ten .r
OJ 11m 1te .value
.
f
·
d
·
ng
pension
h
.
; the basis or m ex1
1
h
b
sue cases ecause OJ t e se ectwn o-rayments; it finds its way into a
the unsubstantiated occupancy rates .
f
t t
here cost
anety o con rac s w
Jiood and bevera?e _sa les per seat '-ncreases
are built in; and it is used by
figures, etc. Statistics and Trends w1
•.
bers of Parliament to
provide another measuring stick to ippositwntmem omi·c
.
. , lemonstra e econ
determm_e whether the appraisers nismanagement. The Consumer Price
assump_tions are reasonable or
d x ervades our business life.
otherwise. "
n e P
bckground
Basically, the function of any price
--------~----------------~ dexistomeasurechangesin t he
Index is often called a cost-of-living
index.
A first step in carrying out this
function is to determine what goods
and services people actually buy and in
what quantities. After that consumer
basket has been developed, prices for
each individual item within it can be
collected on a regular basis.
The amount purchased is extremely
important in the derivation of a price
index. For example, a 10 percent
increase in the price of salt is much
less disruptive to a family budget than
a 10 percent increase in the price of
bread; a 20 percent hike in monthly
rent is much harder to cope with than
a 20 percent rise in the cost of home
insurance. The amount bought
determines the relative importance of
specific prices. When the amounts
bought are known, a system of relative
weights is derived, which in turn is
.
applied to individual prices to produce
the index. The index, therefore, is a
weighted average of all prices in the
basket of goods and services. The
value of the index in any particular
month is related to the value which the
index had in the base period. For the
Consumer Price Index the base period
is 1971.
Statistics Canada undertakes
periodic household surveys to
determine expenditure patterns; ti.,
last such survey was done in 1974. The
Consumer Price Index weights, derived
from that survey, reflect the 1974
spending patterns of all households,
regardless of size or income, residing
in 51 Canadian urban centres with a
population of 30,000 or more. The
table shows the relative importance of
the various categories as well as the
number of commodity groups .
To summarize, the Consumer Price
Index measures the change in price of
a fixed consumer basket. The basket is
fixed not only in the items included
but also in terms of the weights which
reflect 197 4 experience.
Uses and Limitations
As a general indicator of consumer
price inflation the Consumer Price
Index is the finest measure available
but it has the limitation that it
probably overstates, to a small degree,
actual changes in the cost of living.
This is not a problem which can be
solved easily, if at all. It arises as a
direct result of the fixed consumer
basket. When relative prices change so
do spending patterns. If, for example,
the price of beef went from $2.25 to
$2.85 per pound while chicken stayed
.verage price level over time. The
;onsumer Price Index is designed to
nswer such questions as, "over the
ntire range of goods and services that
onsumers purchase, what has been
~e rate of price change?"
-----------------------~ccording ly, the Consumer Price
Soon you will be planning your
technical assistance. We can update
your account system just as we have---------------------------------------------------~
staff's 1979 vacation schedule and may
find yourself in need of temporary
already assisted a number of credit
Consumer Price Index Weighting Diagram
assistance somewhere throughout the
unions with conversions from hand·
year when you take your own
posting to machine-posting, from
machine-posting to batch system an~
Number of commodity
holidays . Perhaps you as a manager
Percentage
items prices by
from batch to on-line.
need a replacement while attending an
Examples of
Categories
Weight
Statistics Canada
education course, or perhaps you
We also offer a bookkeeping or
items priced
accounting service on a monthly or
would like to take a leave of absence.
Keep in mind that qualified
quarterly basis, or just occasionally,
help you with your ledger balancing, All items in the index
100.00
425
replacement staff is available through
the Credit Union Development
adjusting entries, accruals, month-en
Food at home
122
Department, to help you out on a
and quarterly reporting, etc.
16.88
various grocery items.
temporary basis. We may very well be
O ur fees for services are based on Food away from home
8
4.61
restaurant meals
19.10
each individual credit union's ability Shelter
10
able to "lend" you a
rent, property tax, insurance, mortgage interest
pay and are set according to mutual Household operation
8.59
utilities, non-food supermarket purchases
manager/treasurer or a loans officer
34
Household furnishings
for the required length of time.
agreement rather than to normal
and equipment
divisional billing rates.
6.37
44
Central's Credit Union Development
furniture, appliances
Department assists small credit unions
10.12
Interested? Give us a call at local Clothing
105
women's, men's, boy's, girl's and infant 's clothes
Transportation
3560 or 3562.
15.84
28
in many other ways too. We help in
motor vehicle purchase and repair, public transport
Health and personal care
26
setting up efficient systems and forms,
3.96
medical and dental, personal supplies
Recreation, education,
in expansion of services, and in
and reading
8.29
providing background information and
39
stereo, T.V.,movies, magazines
by Gertie Rubio Alabau,
Tobacco and alcohol
6.24
at home or in licensed premises
9
Acting Manager, and
Marnie Vanstone,
Development Officer,
Credit Union
Source: Statistics Canada
Development Department
23
"It is not very difficult to persuade people to do what they all long to do."
~ilillliilH!HlliilliliiillillillilHllilill
.Aldous Hux/~
Following on last month's article, if
we know why and how consumers
react to our products or services, the
suggestion is that the next major
question is "what?" We need a
method of learning and monitoring
consumers' needs. Too many managers
assume that they can simply observe,
and by intuition, guess at what the
target market is like, what they want,
what they will accept.
Feedback information, interaction
with consumers, can be segmented into
four stages - needs analysis,
perceptions of the offerings, the
establishment of preferences, and the
satisfaction gained from the offering.
Responsive credit unions are vitally
concerned with the needs and wants of
their members. Need measurement,
however, is not an easy task; in fact,
the very definition of "need" will vary
from one individual to another. In
order to establish a primary list of
membership needs and to assist the
credit union in prioritizing those
needs, most credit unions will opt for
the direct method - asking the
consumer , either by interviews on a
one-to-one basis, or through group
sessions, known as focus groups. T he
types of questions vary from openended (What new services would you
like to see offered this year?), to
closed-ended (Rank the following
services in order of interest.) Openended questions have the advantage of
providing greater insight and more
surprises than close-ended questions ,
but are, by their very nature , more
difficult to tabulate and summarize
into usable information .
C lose, critical a ttention must be paid
to the speci fi c wording of questions,
so as not to inadvertantly introduce
bias in the response. The same caution
should be exercised with regard to how
the survey is conducted (b y phone,
through the ma ils, in person), the
attitudes of the interviewer, the way
24
the sample is drawn , and many other
factors.
A second technique for measuring
needs, especially when there is reason
to suggest that the interviewees are not
truly aware of t heir own needs and
motivations or are not honestly willing
to share their feelings with the
interviewer, is the projective method.
Through such techniques as word
association, sentence completion,
picture completion, or role-playing ,
one is able to probe into t he
underlying motivational dynamics in
order to determine the real needs of
the members. This techn ique requires
the a id of high ly trained persons professional researchers and often a
psychologist. It is not advisable to
attempt to probe the mind without
their help.
Third, the simulation method
presents a prototype of a new product
or service a nd suggests that potential
users try it out or respond to it. While
this technique is most often used for
conumer goods research (taste tests,
advertising pre-testing, etc.), the
translation to credit union services,
attitudes and so on, would be both
expensive, in the extreme, and likely to
provide too little information too late.
Regardl ess of the m ethod used, an
analysis of consumer needs is endemic
to the marketing function. Forma lly
and informa lly, it should be a high
priority, ongoing process.
Another category of consumer
understanding is perception - people
tend to respond to an organization's
image a nd not necessarily to reality.
You may see yourselves as fair
minded, effective and accessible; your
membership may view you as
arbitrary, inefficient, and inaccessible.
P hilip Kotler, in "Marketing for Nonprofit Organizations", defines image
as ". . . the sum of beliefs, ideas,
and impressions that a person has of
an object." He goes on to infer two
important factors: I) images about an
object vary from person to person;
and 2) images differ in their clarity
and complexi ty.
Notwithstanding the fact that image
perception is elusive, it can be
measured. As with needs analysis we can simply ask respondents,
through unstructured interviews, to tell
GJir HJIE9
WAG){
I~
"'¥. CJ
us how they perceive the credit uni01
Of course, the same advantages and
& ~ ~ ,.-.o
disadvantages that we fou nd with
WW'~~'-'
open-ended questions are present. 11
........................... , ....... ,.....
easy to do but difficult to tabulate.
Bias may creep in and people may fi ·
. .
difficulty a rticulating resonses . It cai We asked Christine ~ar:imon to
eas ily be repeated but intereviewers ~rite this co/um~. Chnsttne has been
may exh ibit different sensi tivities, th~orking on cr~d1t union r.ecords that
prohibiting consistent analysis of re deposited tn the Archives. ~he .
results.
hose the Skidegate Inlet Credit Union
Object sorting seeks to determine is her topic. The records of this.credit
simi larities of groups - for examplmion were donated to the Ar~h1ves by
.
)
k
lfr Eric Ross of Charlotte City.
I) ABC Credit
2 Ban o f No ·
iffiidinnii11Hi!immmmmnmnn1mnm1nm
Union
Sc~ This month we look at one of
Uni ty Bank
T-0 Balritish Columbia's earliest credit
3) - - 4) Bank of Montr'nions: Skidegate Inlet C redit Union,
C IBC
Roya l Bt1corporated in 1940.
In this example t he respondent sai For those who may not know
familiarities between ABC and Unitykidegate, it is located on. the Queen
Nova Scotia and T-0, Bank of
:harlotte Islands, approximately 100
Montreal and the Royal Bank, but 1iles southwest of Prince Rupert and
CIBC stood alone. In this manner i:> separated from the mainland by
being compared to another, a fix ~nlecate Strait. The two main islands
perception can be obtained .
re Graham and Moresby and
Multi-dimensional scaling sorts kidegate is on the southeas t coas t of
images by sim ilarities and disiraham Island.
.
similari ties; by using three objects (~ To me the. name Sk1deg.ate was on_ly
ABC Cred it Union, Royal and T-D),aguely familiar t h.rough .its connectio n
the responde nt is forced to choose ·it h west coast artist Em1 l.y Carr who
which are most sim ilar and which ar:avelled, at the turn of this century
least similar. By changing one eleme{ld agai n in the late l 920's, to thi s
in each set, a ran king can be done. (FIDOie corner of the :-vorld and
plotting t he results scientifically
cetched the then fadmg Ha1da
(n-di mensional space) rela tive positiiJlture.
are obtai ned.
ln the late 1930' s travel to the
O ne of t he methods most common"harlotte's was still the major
used by the credit u nion system is ndertak ing it had been in Emily
called an item list. The interviewee ~·arr's day. Yet to this same corner to
asked to rate an organization on a 1Fh!ch one of Canada's foremost
.
of pre-specified attributes. Statemen1rt_1sts had travelled word of the credit
such as "you can trust them" wouldnion movement a lso came. Alex
~adnt~re f'.~m St. Franci~ Xavier
be rated from strongly agree to
strongly disagree (5 or 7 gradations). mverstty v1s1ted the area m 1939 a nd
Familiarity classes, ranging from ; a result of .his teaching credit union
" never heard of it" to "know it ver)~dy groups were set up that very
well" can also be used, as can
mte~ · Later, three credit unions were
favourability classes .
;tabhshed ther~: New Masset, QCI
One of the keys to measuring imaie~tral, and Sk1degate Inlet Credit
.
.
is the understanding of what creates ~on . .
image. In next month 's article, we'll . 1 Skidegate the credit umon
look at understanding image fac tors, 1!1osophy was embraced wit h
and how to produce a change.
msid.erable enthusiasm. One
mndmg member remem bers it this
ay: "We used to get together, it was
by Michael Botnick
sort of social evening, we'd talk
Manager
iout it and argue and - just have a
Development Division
vely time."
...._
Heidi Ross and Doris Leary attended a B.C. Credit Union League Convention held
in Vancouver in 1962.
The social evening atmosphere
seemed to prevail even a fter Skidegate
was incorporated, as one recording
secretary, Mrs. B. Roberts, attested to
by beginning her minutes with: " T he
combined business and social meeting
was held . . . " and ending the
meetings with an account o f the social
events after the meeting was
adjourned: "Bridge and cribbage were
then enjoyed by those present and
refreshment were served."
The members worked together in the
true spirit of the co-operative
movement. An example of this was
mentioned in the minutes of April I,
1948 when one member needed a loan
of $1,500 to cover the mortgage on his
home. The amount unfortunately was
not in the treasury at the time but
another member offered to deposit
$500 in order to cover the loan.
T hey worked together to help each
other buy homes, boats and to set up
businesses. They also worked together
to buy themselves a projector, with 10
members co-signing the needed loan.
The projector was paid off by
charging an admission fee to view the
rented films. Everyone had to pay even the projectionist !
Loans were dealt with fairly and
with the humanity often found in early
credit union business practices. T he
minutes of February 4, 1957 record
that a member was delinquent in his
loan payments a nd then go on to say:
" It was decided to leave the matter
until the summer and get it out of his
earnings from fis hing, if possible."
In 1959, at the annual meeting, a
question was asked regarding this type
of lenient handling of delinquent
loans. The member suggested that the
credit union be more stringent wi t h
delinquents. The president refused to
consider this stating that matters might
be improved if people were contacted
at times during the year when t hey
were earning income.
It is interesti ng to note that the same
names keep reappearing throughout
the history o f Skidegate Inlet Credit
Union : Christensen, De Bucy, Roberts,
Ross and Regnery are a few but by no
means all. These people initiated the
credit union and many of their
children have since become involved in
its function.
In 1968 Skidegate Inlet Credit Union
was merged with the Kaien Consumers
Credit Union.
by Christine Sammon
ENTERPRISE JANUARY/ FEBRUARY/ 79
25
~rawing
__ Board_
Credit unions are becoming
increasingly aware that the youth
market represents a considerable
market potential for them. According
to statistics, 800,000, or 33 percent, of
British Columbia's total population
are under 19 and an additional
440,000, or 18 percent, are between 19
and 30 years of age.
Credit union penetration of the
youth market, especially the pre-adult
segment, has traditionally been very
low in comparison with the
penetration of other age groups. Only
15 percent of young people under 19
now deal with financial co-operatives
while the total penetration rate of all
age groups is 34 percent. The need to
capture a greater share of this market
segment is twofold.
combined effort of the Youth
Involvement Advisory Committee, and
a number of departments in B.C.
Central Credit U nion, including
research, education, advertising, and
marketing a nd services development,
that has produced the series of
informational "packets" that can be
applied to the pursuit of t he youth
market. The following topics will be
available in January and February of
1979:
1. Research
- identifi es the need for marketing to
young people
- provides some background material
on the youth market
- serves as a guide to assist directors
and managers of community bond
credit unions in estimating their
market potential within the yo uth
market segment
2. Classroom presentation tips and
speech material
-
contains helpful information on
I. to avoid having such a narrow
base of members approaching
adulthood in 10 to 15 years time
The Economist . ..
2. to instill "b rand loyalty" or a
predisposition toward credit unions at
an early age in order to overcome the
more difficult task of convincing these
young adults later to switch financial
institutions
at $I. 89 per pound, there would be
many families that would switch to
chicken. With a fixed weight, however,
the Consumer Price Index would
record the full impact of the beef price
rise even though fewe r people
purchased it. T he actual cost of living
would thus be overstated; the fact that
many people often switch to lower
priced items is not taken into account.
A further difficulty is that prices are
not weighted by sales volume. Assume
that refrigerators cost $500 in June,
and then were reduced to $400 in July,
and that 10 were sold in June and 20
were sold in July in response to the
sale. The Consumer Price would use
the raw prices so that the average price
of refrigerators in June and July
would be $450. However, since twice
as many were sold at the lower price,
the average cost to consumers was
$433. Consumer Price Index data have
overstated the actual cost of living.
Another area of concern is quality
change, which a fixed basket cannot
In light of this market environment,
a "Youth Futures Users Kit" has been
co-ordinated for use by all credit
unions and co-operatives. With an eye
to developing the youth market
segment, this kit, a modular package
of services, products, ideas and
planning aids, has been designed to
meet the information needs of young
people.
The importance of youth
involvement was clearly recognized in
the spring of 1977. The Youth
Involvement Advisory Committee was
formed and has continued to coordinate the effective development of a
youth program. This working
committee consists of senior personnel
from IO B.C. credit unions which
represent a cross-section of credit
unions of all bond-type, asset size and
magnitude of membership. It is the
26
ENTERPRISE JANUARYIFEBRUARY/79
how to give a pres entation in a
classroom setting
- will be comprised of lecture
material on "What is a Credit Unio·
to be followed by a number of topj;
such as credit, budgeting, and
chequing and savings accounts
Ot her youth related subjects are~
being developed and will be added
later to the Youth Futures Kit. The
include:
student credit unions
money management games
n November 29, 1978, Kootenay Savstudent sav ings
Credit Union received the
credit union careers
gs
Boundary Visitors Associaootenay
For further information regardinon 's first annual award for a business
the Youth Futures Users Kit contaciat has expanded during the preceding
Silvana Giesse, Youth Prog ram Co··ar and whose growth has benefited
ordinator, at B.C. Central.
e community. Don Tuline (left), a
•neral manager of Kootenay Savings,
oks on while Denny Edgar, coby Silvana Giesse
·dinator for Kootenay Visitor 's
Yowh Program Co-ordinator rsociation, presents the award cerMarketing and Services
ricate to Albert Holm, chairman of the
Development Department
1ard of directors of Kootenay Savings
•edit Union.
account for. Although great care is
taken to standardize the items price.
any price increase due to a ri se in
quality of a good or service would ~
reflected in the Consumer Price Ind
as a pure price increase. This
overstates the actual cost of living
beca use higher quality should cost
more.
W hile the consumer basket inclu
a wide range of consumer goods a
services, it does not account for th
impact of income taxes on family
budgets. Income tax changes can h
a profound impact on the cost of
living.
None of the above problems are
particularly serious but, since the
Consumer Price Index has a large
impact on our business affairs, it i
worthwhile to be aware that the
Consumer Price Index is not, strict
speaking, a cost-of-living index. It ·
broad measure of changes in prices
which urban consumers encounter
the retail level.
by Peter Cook
Economist
1itial mailing in January of the money management games Numis and Parsimony was taken care of by Printing and Supplies'
offers Shirley Isaacs and Tom Skyli. The games were sent in cartons to each school district in B. C. A number of letters of ap·eciation have already been received.
27
Security For Records
The requirements for storage of
records will vary with each credit
union and will depend on many
fac tors such as volatility and value of
records, and construction and location
of the credit union building.
While the Credit Union Reserve
Board cannot specify which records
need to be stored (this information is
available from the Superintendent of
Credit Unions), we can assist credit
unions in ensuring their proper
storage.
Most larger credit unions use their
existing vault facilities where space is
not a problem, while others build
special fire resistive vaults. Some
credit unions find it necessary to rent
suitable space, and nearly every credit
union has at least one fire resistive
filing cabinet to meet their needs.
As credit unions expand, the need
for proper storage facilities will
increase. When considering the future
requirements of your credit union,
provision for storage should be
included.
In order to determine what is
necessary to fit your individual
situation, the Risk Management
Department will be pleased to assist
you.
Risk Management Department
Credit Union Reserve Board
James D. Craig has been appoi
CUMIS regional manager for Br
Columbia. He was formerly dis
manager of CUMIS' Toronto West
/ice in Ontario.
Top left: Margaret Lowrey - vicepresident of the Royal Canadian Legion
Branch 16 Credit Union, commemorated the credit union's 30 year
association with the Legion by laying a
wreath on behalf of the credit union at
the memorial services held last
Armistice Day.
• • • • • •
Top right: .Ocean Employees Credit
Union of Vancouver, which serves
employees of Ocean Construction
Supplies Limited, was incorporated in
1944. Today with more than 340
members, it now has assets of $650, 000.
Shown above are the credit union's
manager, Arthur C. MacDonald, at
left, and President Andrew M. T.
Smith. The credit union is currently in
the midst of a membership expansion
program.
• • • • • •
Directors on the CUMIS Life Board, Berni Proft (right)
and Charles Gladu, chat during the luncheon following the
second annual meeting. Bernie Proft, general manager of
the East Chilliwack Credit Union, was also named chairman of CUMIS Life's Audit Committee.
28 ENTERPR ISE JAN UARY/FEBRUARY/79
Mrs. Elizabeth Janzen, widow of Jacob Janzen who
founding member of the Clearbrook Credit Union,
the ribbon at the official opening of the Sevenoaks br
of the credit union. Watching the ceremony is H
Muller, chairman of the expansion committee.
Bottom left: To commemorate the
opening of the B. C. Credit Union Centre building, President Russ Leamy,
(left), on behalf of Castlegar Savings
Credit Union, presented Peter
Podovinikoff, Chief Executive Officer
of B.C. Central Credit Union, with a
framed block of stamps. The stamps
were issued on May 30, 1975, to honour
Alphonse Desjardins who established
the first credit union in North America
(Quebec-1900).
ENTERPR ISE JANUARY/FEBRUARY/79
29
"We wrote the
books" on R.R.S.P.'s
In December, Doug Jack, coroner of the City of New Westminster, officially opened the office of the Royal Columbian 1
Lumber Inspectors Credit Union in the new main section of the Royal Columbian Hospital in New Westminster. Standing at/
Jack's left is John Smail, president of the credit union. The credit union has assets of $1, 708,000 and a membership of app1
imately 900.
and we'd be glad to send
them to you.
Credit Union managers and directors all across Canada rely on these
handy booklets every day . They contain a wealth of information on
the member benefits, systems, and marketing strategies for R.R.S .P.'s.
And they explain how Cooperative Trust helps to make CreditUnion
R.R .S .P .'s the unique "plans of a lifetime". Hundreds of Credit Union
managers consider these booklets an absolute must. If you haven't
seen them , order yours now. We'll rush them to you right away. Call
us (collect) for your copies (limit 2 complimentary copies of each booklet per order please).
Contact the Regional Office in your area.
Allan Korneychuk
When this picture was taken, in October, work was well underway on the construction of a new branch office for Gulf and Fraser Fishermen's Credit Union. The new
branch, located near to the fishing fleet facilities in Steves ton, is expected to be
ready for operations early in 1979.
.rr OJ.r Armstrong Spallumc!. GerryW
Lee
The staJJ
Savings and Credit Union promoteav1159 est Broadway
.
.
ancouver
world-wide aspect of the credit ui Ph
movement by donning internati~ one 732· 8 841
costumes for their observance of Cr Ed
.
8 ankowsk1
Union Day
.
30
Cliff Pilkey
llll Portage Ave.
Winnipeg
Phone 786-8624
Bill Janzen
Verle Farber
101 • 10405 · lOOth Ave.
Edmonton
Phone 424-0261
Wayne King
Angus Macdonell
301 · 14th Street N.W.
Calgary
Phone 283-5502
Garth Courtney
Bill Nolan
333 ·4th Ave. North
Saskatoon
Phone 244-1900
Rob Anderson
Byron Price
2055 Albert Street
Regina
Pho ne 569·3155
J ohn Thomas
Bill Jensen
700 Bay Street, Suite 2200
Toronto
Phone 979-2600
Allan Robinson
136 O'Connor Street
Ottawa
Phone 563-0961
Gerry Orum
419 Notre Dame St.
Belle River, Windsor
Phone 738-3200
Vern Creaser
1568 Hollis Street
Halifax
Phone 422-8539
ct
CO-OPERATIVE TRUST
COMPANY OF CANADA
Owned by Credit Unions across Canada.
••
Return Requested
ENTERPRISE
1603 West 3rd Avenue,
Vancouver, B.C. V6J 1K1
Third Troisieme
class ciasse·
2072
Published by
B.C. CENTRAL CR EDIT UNION
(
~-v_A_N_c_o_u_v_e_R_._e_.c_.___, }
3'
I,~
,_
,
1,
Responsibility!
For multi-million-dollar ·
construction projects
... for the financial
security
of his family.
Our aim
is the same
as yours.
A construction worker helps
to assure the structural
soundness of new buildings.
And he is also responsible
for the financial security of
his family.
It comes down to the fact
that our goal is the same as
your credit union's.
His credit union plays a
major role in his planning
for family security because
of the insurance protection
it provides, along with other
fine financial services.
That's to help members
enjoy a better life by
working co-operatively for :
the very best in family
~
finances and security.
Thi s is our responsibility to
your credit union.
Helping to meet
members' needs.
At The Co-operators, our
aim is to help credit unions
meet members' needs by
enabling them to provide a
" total package" of financial
services that include basic
insurance protection.
7
To do this, we work with
credit unions across Canada
to provide insurance plans
that meet the real needs of
members.
Serving Together
the co-operators
Co-operat ive Life Insuranc e Company • Co-operat iv e Fire and Casualty Company
Co-operators Lif e Insuranc e Asso ciatio n •
Co-opera tors Insurance Asso c iat ion

January 1979 - Enterprise Magazine

Transcription

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