Wednesday, January 17, 2007

UI Held Hostage Day 62 - Revisiting Optiva

See "Note" below regarding UI President Search

Jeff Cox's letter to the editor in the Press-Citizen this morning, Jeff Cox, "Credit Union Must Hold New Election," Iowa City Press-Citizen, January 17, 2007, reminded me that I'd intended to provide an update regarding my earlier concerns about the change in name of the local credit union to "Optiva."

The University of Iowa Community Credit Union ("UICCU") was created in 1938, and has grown and prospered for nearly 70 years with that name. Since the University is clearly the largest employer in the Iowa City/Johnson County area -- if not the whole of Eastern Iowa -- it was natural that its founders and most of its early members would have a university affiliation of some kind. Today, having long since severed ties with the University and moved off the campus into numerous locations throughout the community, and with over 40,000 members and growing, it's obvious there is no confusion in anyone's mind regarding the fact that it is open to all. And yet it is still the case that virtually everyone on its board of directors has had, or still has, some affiliation with the University of Iowa.

In short, this is not the case of a new start-up company searching about for a name into which it hopes it will be able, over time, to blow some meaning and positive customer response -- such as Kodak did. The UICCU already has that meaning and customer response. What it is proposing to do is to shoot itself in the foot by hauling out to the city dump what has cost millions of dollars and nearly 70 years to build, and start all over from scratch with a new name.

Moreover, the new name is one that many view as, at best, silly, and -- at $250,000 to a consulting firm -- well over-priced. And of course the purchase price for the name is only the beginning of the cost. Paying lawyers to handle the paper work, changing the signs on buildings, the literature and stationery, the checks and statements and all the other documents associated with banking ain't cheap. But it is as nothing compared with the multiples more costly, years-long expense of the advertising and marketing necessary to implant a new name in the public's consciousness. And all of this is in addition to the very substantial (and unnecessary) throwing away of the asset represented by the present name -- clearly a relevant item when calculating the "cost" of this move.

I wrote about some of these issues last fall. See Nicholas Johnson, "Optiva," October 13, 2006, and also Nicholas Johnson, "Seattle's Optiva," October 23, 2006.

Following that, I communicated with each member of the UICCU board by mail individually. I was interested in, among other things, the organization's governance model in terms of board-CEO-member relations, and wanted to find out the extent to which this decision to become "Optiva" truly represented an enthusiastic choice by each of the board members. Following that, I intended to (and ultimately did) talk with management as well.

Communicating with board members proved to be a little difficult. When I inquired as to their names and addresses it soon became obvious that staff had been instructed not to reveal that information. A number of appeals and stubborn persistence on my part ultimately, over time, extracted the names (although not an up-to-date list as it turned out), but a continued refusal to provide addresses or e-mails. So I was left to track down mailing addresses from phone books and the University directory.

Aside from that little glitch (of which more later), I would have to say that, as boards go many of the board members were responsive, some extremely so. (During and following my time on the local school board people I didn't formerly know have sometimes stopped to thank me later for responding to their e-mail to all board members, saying I was the only board member to respond.) That's not to say that anyone on the board or in management showed an inclination to reconsider their Optiva decision. But that I got any response at all was welcome and appreciated.

There are a number of issues here.

Was the decision to change the name a reasonable and rational one? If so, was the use of an expensive consultant necessary? If so, was the ultimate selection of "Optiva" a wise one? What alternative names might have been considered -- or were considered and rejected -- that might have been better?

A credit union is a membership-governed, non-profit organization. As such, there is apparently a legal requirement that before one can change its name a vote of its membership is required. (I have not examined this law or done any research regarding it.) Thus, there are other questions regarding whether the law was complied with. Were there irregularities in the voting?

Even more significant than the legal requirements, from my perspective, are the issues surrounding the most appropriate relationship between the members of a credit union, the management, and the board. This is, in part, the issue that also concerns Jeff Cox.

1. I did not, and still do not, believe that the decision to make a name change (a change of any kind, not just to "Optiva") was either necessary or in the best interests of the UICCU (for some of the reasons mentioned above, and others). Had I been on the board (on the basis of what I now know) I would have voted against doing so. However, I would acknowledge that the board members who voted for making a change had reasons; there was a superficial rationality that they could provide for their vote. I just don't think that the benefits of the change could come close to outweighing the costs and disadvantages of doing so.

2. I do not believe a consultant was necessary. Selecting names is not rocket science. Board members and administrators have access to computers connected to the Internet. They know how to use Google -- which, not incidentally, provides 130,000 hits for this "unique" name "Optiva." As I'll note in a moment, even if a change of name must be made, a number of names are easy to think of that would have advantages over, and none of the disadvantages of, "Optiva."

3. For a whole variety of reasons, were a new name to be chosen, "Optiva" would not have been anywhere close to my "final four." It communicates nothing of the UICCU's near-70-year proud history -- nor even its location. It subjects the organization to ridicule. And, as just noted, it's widely used elsewhere.

4. There are other names. Go to the Iowa Credit Unions Web site. Once there, click on "Locate a Credit Union," fill in your zip code, and a distance from home; 100 miles will give you the maximum choice: 173 credit unions. There are a number of things you'll observe on that list. (a) No more than one name was a silly, meaningless name like "Optiva." (b) There are a great many that bear the name of an institution; for example, "Collins" and "Quaker Oats" both appear in credit union names. (c) Most of the other names refer to some geographical location, such as the "Linn Area Credit Union."

Is it possible those 173 credit unions' board members are not nuts? Is it possible they see a value to an institutional identification (while opening membership beyond that institution), or to a geographical reference? Is it possible they considered a change of name, but decided they'd rather save the fee some consultant would charge them for a less useful name that would, in addition, subject them to ridicule?

So what names do not appear among those 173 that the UICCU could have selected? Here are a few examples:

Iowa City Community Credit Union

. . . or, if you'd like a broader geographical appeal, how about

Johnson County Community Credit Union (or, as in Linn County, "Johnson Area Credit Union")?

. . . you want something more geographically broader still? OK, how about

Eastern Iowa Community Credit Union
Corridor (or "Eastern Corridor" or "Iowa's Corridor") Community Credit Union?

That's just for starters; off the top of my head; the result of three minutes' research. And they can consider it pro bono; I won't even bill them for my time.

5. Did the UICCU comply with the law? Apparently so; at least we've recently had a ruling from some State regulatory body that the UICCU can go ahead with the name change. A vote of the membership was held. There were charges that the ballot boxes had a good many ballots in them before the meeting even began, and that many of the votes cast were those of UICCU employees. (Of course employees, who are members, have the right to vote. But were they pressured to do so? Or to vote one way or the other? An effort of management to stack the results and shove through its idea?) But apparently those concerns, if legitimate, and presented to the State body, have been resolved in favor of UICCU management. I'm told the membership vote in favor of the change was by a very slim margin -- I think I've read somewhere it was six votes. But, hey, a "majority" is a majority.

6. UICCU management's insistence that the law was complied with is kind of like Regents' President Gartner arguing that "rolling closed meetings" that never close and never re-open, or the resolution of issues by means of e-mail polling, do not violate the letter of Iowa's open meetings law. (My own interpretation is that the Board may have actually violated the law.) But all commentators seem to agree that, at a minimum, the Board of Regents violated the spirit of the law.

And it is the spirit, the notion of a membership organization and its governance, that most concerns me.

Roughly one percent of the UICCU's 40,000-plus membership actually voted -- and a half of those who did vote voted against the change to "Optiva."

There may very well have been some communication to me from the credit union that a vote was to take place. But I don't recall getting it if there was, and clearly it was not sufficient to penetrate my consciousness.

Hanging on the fact that there was a vote at a meeting as required by law is, in my view, a very narrow thread indeed for the management of what purports to be a membership organization.

Jeff Cox is calling for another vote.

My own view is that, at a minimum, there should be a "poll" of the membership. This should have taken place before the first vote. But there's no reason it can't take place now.

If, as management predicts, very few UICCU members -- even after actual notice (as distinguished from some bulk mail item begging to be thrown away) -- choose not to express a view on the matter, fine. That's their choice. Half of the American electorate doesn't bother to vote for their president, either. But if a significant proportion -- say 10% participate in the poll, and of those 55% or more vote against adoption of the "Optiva" name -- then I would think common sense, common decency, and respect for the idea of a membership organization, would call for a second "vote" of the kind requested by Jeff Cox and required by law.

7. Finally, a word about board accessibility. There is no "legal requirement" that the board members of a public body, or a membership organization, make themselves available to their constituents, or members. But doing so is more than just "a nice thing to do." It is inherent in their role -- in my view. It is a responsibility that goes with the territory. (a) UICCU staff should be instructed to provide, as a matter of course, a list of board members, with at least their mailing addresses (business or home, as each board member may choose) to any member of the credit union who asks for it. (b) The UICCU Web site and Annual Report ought to contain addresses as well (along with, ideally, email addresses and phone numbers, since that is the way most folks communicate these days). Just a thought.
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Because there was little-to-no news this morning (Jan. 17) regarding the Regents, UI Presidential Search, and related items -- more evidence of the "UI Held Hostage" -- today's blog entry focuses on the "Optiva" controversy.

[Note: If you're new to this blog, and interested in the whole UI President Search story, these blog entries begin with Nicholas Johnson, "UI President Search I," November 18, 2006.
Wondering where the "UI Held Hostage" came from? Click here. For any given entry, links to the prior 10 will be found in the left-most column. Going directly to will take you to the latest. Each contains links to the full text of virtually all known media stories and commentary, including mine, since the last blog entry. Together they represent what The Chronicle of Higher Education has called "one of the most comprehensive analyses of the controversy." The last time there was an entry containing the summary of prior entries' commentary (with the heading "This Blog's Focus on Regents' Presidential Search") is Nicholas Johnson, "UI President Search XIII -- Last Week," December 11, 2006. My early proposed solution to the conflict is provided in Nicholas Johnson, "UI President Search VII: The Answer," November 26, 2006. And the fullest collection of basic documents related to the search is contained in Nicholas Johnson, "UI President Search - Dec. 21-25," December 21, 2006 (and updated thereafter), at the bottom of that blog entry under "References". A Blog Index of all entries since June 2006 is also available.]

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Trey Reeme said...

Great post, Professor Johnson - it's sparked a nice debate among credit unions already.

While I don't agree that the name change is "hauling out to the city dump what has cost millions of dollars and nearly 70 years to build, and start all over from scratch with a new name," I do agree that name changes should involve the membership more than what's seen in this example.

Anonymous said...

We are circulating a petition asking for a special meeting to conduct a re-vote on the credit union name. We need more than 100 member signatures, essentially immediately.

Unfortunately, we have very litte time to collect signatures; we would like them by Monday evening, Tuesday at the latest. (The reason why we have only begun this now is a very long story which I, Jeff Cox, Tim Taffe, and others will tell you.)

Any of us can email you a copy of the petition today so you and others can sign it and return it asap to the address on the bottom.

In addition, the annual meeting is March 21st. At that time the credit union will re-elect several pre-chosen board members unless enough members turn out to support alternative candidates. Alternative candidates MUST be nominated and seconded from the floor. (There is another tale-- about how the credit union board has removed itself from any semblance of member control.)

Barbara Booth