How do we go from 9 million to 30 million members?
May 9, 2016Following up on last week’s post, I’ve been talking to Alliance member society leaders about what it would take to grow the fraternal movement from its current 9 million members to 30 million over the next decade. In “Jim Collins Speak” that’s a BHAG (Big Hairy Audacious Goal) but one that I honestly believe is attainable. For some, the answer is simple: merge with one or more societies. If you take three-30,000 member fraternals with similar common bonds (the Sons of Uzbekistan, the Uzbek Fraternal Union, and the National Alliance of Uzbeks, for instance) and consolidate them under one banner (let’s call it Uzbek Community Life), then – BINGO! – you’ve got yourself one good-sized society serving individuals with an identifiable common bond. Theoretically, the organization’s costs have been reduced, its governance modernized, and its operations streamlined. There’s just one problem… You haven’t increased overall membership one iota. Granted, this newly consolidated fraternal may be better equipped to improve its service to current members and attract new ones. But that’s only if all three societies enter the agreement on solid financial ground and with a firm understanding of who’s going to be making decisions and how those decision-makers are going to be selected. As anyone that’s experienced a merger will tell you, even the most strategic and well-thought-out partnerships often prove to be much more complicated and expensive than projected. Don’t get me wrong; I firmly believe that further consolidation in the fraternal sector is going to happen. What’s more, I think that such consolidation will be good for the overall system. Fewer societies with competitive products, omni-channel distribution systems, relevant common bonds, sound IT platforms, innovative branding, and the financial resources to implement all of these elements have a much better chance of growing overall fraternal membership to 30 million or even more. However, as my Uzbek example shows, mergers don’t guarantee growth or sustainability. So how do small and mid-sized societies with limited capital acquire the products, IT platforms, branding, distribution, and back office administration that they need to truly grow their membership and have a shot at maintaining their independence? How about sharing those services on a cooperative basis with other similar societies? (I know, I know… I can hear many of you saying “Here he goes again with that crazy cooperative concept. Yes, we understand that each fraternal is, in fact, a risk sharing cooperative of members. But we’re never going to get to the point where the societies themselves are going to form cooperatives.”) Well, I’m not so sure. Yes, we’ve been talking about the cooperative concept for a long-time. Yes, other similar financial services organizations (credit unions, for one), successfully use cooperative programs to enhance the services they provide their members and reduce their overhead expense. And yet, except for a few minor breakthroughs among small groups of societies, the idea hasn’t really taken off. But eight years of low interest rates – and projections for these conditions to continue for years to come – is eroding investment income for smaller insurers, including many fraternals. This means fewer dollars for the membership benefits and community service projects that differentiate us from our competition. Combine that with increasingly complex and costly regulatory compliance – another factor with that’s not likely to change any time soon – and society executives and boards are coming to the conclusion that “something needs to be done.” That “something” may be a fresh look at the cooperative concept, where societies combine resources – from capital to candle power – to address their common problems. The key to the success of any cooperative is the quality of its participants. A cooperative comprised of a “Coalition of the Desperate” – societies with minuscule surpluses, declining membership, antiquated governance, and irrelevant common bonds – will almost certainly fail. But for societies that know they need help to be sustainable and are willing to sacrifice some of their individual independence to better serve current members and attract new ones, the time for the cooperative concept has arrived.