Saturday, January 7, 2012

"Ownership Salience" in Credit Unions (and Cooperatives)

An extremely interesting and unique characteristic of credit unions (and cooperatives generally) is the nature of their relationships with their member-owners. While often understood simply in terms of members' contractual and legal rights, the movement's history clearly suggests that the ways in which members conceptualize their relationship to their credit unions can vary extremely widely between institutions with identical governance structures. Such differences, in turn, can often exert profound influence on the developmental paths of different credit unions, and thus must be understood as driven by subjective, rather than structural, factors. One such dynamic that that I've found particularly useful and compelling when considering credit union development is something I've come to refer to as "ownership salience."

By this I mean, simply, the intensity with which a credit union member psychologically and behaviorally internalizes the fact that he or she owns their credit union. When ownership salience is entirely lacking, members simply treats their relationship with their credit union relationship as identical in kind to the customer relationship with a bank or other non-member owned business. This sort of person is a credit union member simply because it is the most attractive option on the market, and, when thinking about their institution, he or she uses the pronouns "they" and/or "it" (as in, "They made a donation to the food shelf"). If such a person has a negative experience, their natural response is no different than it would be at a bank: take their business elsewhere.

On the other extreme lies the completely ownership-salient member. To this kind of person, the credit union is fundamentally and viscerally theirs; they go to the annual meeting, read the annual report, and might even run for the board of directors. In contrast to the non-salient member, when the credit union does something, it is understood that "we" (not "they) are doing it. As a result, when encountering a frustrating experience, the salient member reacts by accessing their credit union's governance structures to resolve the issue, rather than leaving the credit union for a competitor. At its core, high ownership salience means that, on a psychological level, the member perceives his or her personal interests and those of the credit union to be in alignment. What's good for the credit union is good for the member, and vice-versa.

For credit unions with highly ownership-salient members, such logic can be a profound source of strength. Indeed, when looking at the process by which many credit unions were established, the level of salience among the early members was often quite staggering. For example, Yvonne Gratton, who was the first treasurer of the Chittenden County College Employees Credit Union in the late 1960s, felt such a powerful sense of ownership that every time her board of directors tried to pay her, she donated the money back to the credit union. Over the last few decades, however, the movement professionalized, institutions grew in size, and intensive member participation ceased to be essential to institutional survival, all of which seems to have combined to drive a general decline in the level of ownership salience.

The existence of this trend, however, does not mean that the credit union movement is inevitably trending towards a state of zero ownership-salience among its members. Instead, once sufficiently recognized, the level of member consciousness can (and should) be treated as a variable that can be modified by institutional policies and initiatives.

A great example of this in action can be seen in the case of my food co-op, [City Market]. It was founded in the 1970s as a small buying club in which all the members contributed volunteer labor, but, over the past several decades, its success has turned it into the largest down-town grocery store in Burlington, Vermont. That growth, however, was accompanied by a reduction in the sense of control and ownership experienced by many members (for instance, see these comments). In response, the co-op has actively attempted to mitigate such growing alienation in a number of ways, including running a well-used member-worker program, hosting fully catered semi-annual meetings, allowing members to vote on-line, and sponsoring tours of local farms, free classes, and service projects that allows members to build their common identity as members of their co-op.

While such strategies are not cheap, the resultant member buy-in can pay off in ways that are not easily quantifiable. One concrete example of this can be seen in an experience I had at a bagel shop a few months ago. While standing in line, I overheard the group of young women who were making sandwiches discussing the relative merits of local natural-food stores. When one of the women mentioned that City Market was a co-op, but she wasn't exactly sure what that meant, I chimed in and gave a super-brief overview. To my surprise, it turned out that the woman behind me in line was also a member, and backed up my brief spiel with her own comment in support of the co-op. In two minutes, the women went from holding mixed views about the different options to all understanding, and having favorable opinions of, City Market.

As a customer of a for-profit store, I would not have felt the need to intervene in the conversation. However, because we identified our personal interests and those of City Market as complementary, both my fellow member and I felt it to be appropriate in that moment to make the case for the co-op. In a world in which people are becoming rapidly desensitized to traditional marketing techniques, having members act as ambassadors for their cooperatives in the web of trusting relationships that comprise their everyday lives is an enormously valuable thing, and the next time the banks try to politically attack the movement, it will be ownership-salient members whose participation will be essential its successful defense.

However, such benefits can only be realized when members have fully incorporated the role of "member-owner" into their identities. As such, working out effective strategies that serve to cultivate ownership-salience is one of the most important challenges facing the credit union movement today (for example, one strategy that I have proposed concerning participatory community giving). This task will require an enormous amount of creativity, experimentation, and hard work, but, if successful, it will result in a vibrant, participatory, and strong credit union movement that will be poised to substantially build on the successes that previous generations of credit union people have left us as their hard-won legacy.


  1. Regarding the difficult/essential task of increasing the degree of ownership salience among coop member-owners, the City Market example is particularly useful.

    I feel that there are two ways a coop, credit union or not, can increase ownership salience among its members. One is through internal governance issues (e.g. online voting, transparent board meetings, educational sessions about the co-op's structure and history, etc), and the other is through events & programming related to the larger systems that the coop is embedded within. We (City Market) have been extraordinarily helpful in the growth of Burlington's food system, and I think our work in that area has provided the coop with many brand- & identity-related benefits. Credit unions should take note and more aggressively promote local economic systems as the superior form of economic organization.

    Essentially, there are 3 entities, and two bonds. Individual--Coop--Larger Social System. (Perhaps there is a third bond, between the larger social system and the individual, as that system dictates many of the specifics of my life.) If the coop focuses on making these bonds stronger and more visible, the more likely it is that I will feel a visceral ownership of my coop, and that its interests align with mine.

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