CEOs Talk Workplace: James Schenck on PenFed Credit Union’s Headquarters
James Schenck is the CEO of PenFed Credit Union, a credit union based in McLean, Va. that serves a diverse population including members of the military and their families, employee groups and association affiliations. We recently sat down with him to discuss how the company’s new headquarters is supporting PenFed in its endeavor to help employees be their best everyday, and lead the industry with competitive financial products.
Bob Fox: Tell me a little bit about PenFed, the industry you’re in, and the type of work that people do here.
James Schenck: PenFed is in the financial services industry. We’ve been around since 1935, for 82 years. We support our nation’s defenders — the men and women who fight and win our nation’s wars — and those who support them. While our roots are serving military members and their families, military service is not required to join PenFed. We’re in a very competitive industry; we have over 12,000 competitors. We compete in the area of car loans, credit cards, mortgages, personal loans and student loans, along with deposit products — certificates of deposit and savings and checking accounts. It’s a 1,000-year-old industry, and we compete nationally. We’re in all 50 states, [plus] our overseas military locations such as Okinawa, Guam, and the Azores. Our mission is to provide financial services to help our men and women in uniform and those who support them do better financially.
What type of work do the people who work here in your HQ do?
All divisions are represented here in our Tysons headquarters. We have a lot of leadership from our IT and business managers across our information technology units, and they’re embedded with our mortgage operations, our credit card operations, marketing, and finance. The nine operating divisions within PenFed are all co-located here.
Can you describe the demographic?
It’s a huge generational mix. We have employees who are right out of high school, to young college graduates, to employees who have been with PenFed for over 43 years. So we have a full spectrum of diversity in gender, race, and age throughout the building on any given day. We’ve got about 2,500 employees, and just over 350 in our headquarters here, which we’re going to expand to over 500 in the next year. Right now we’re on the top three-and-a-half floors, and we’re adding an additional floor-and-a-half of space.
Can you give us some basic facts about the building and the amount of space that you occupy here?
The building’s a little over 300,000 square feet; PenFed occupies about 150,000 square feet of it, and we leased back half the building to LMI, which is in our select employee group, so their employees are eligible to become PenFed members. They’ve served the national defense community for over 54 years, so it was a good long-term tenant to share a headquarters with.
Describe the culture of PenFed.
PenFed is a growth culture; we have high-energy leadership at every level, from a branch manager to a unit manager to a mid-level manager. We create a culture in which everybody’s unique expertise is appreciated. To run any firm, it takes an assortment of unique expertise [areas] — marketing, public relations, mortgage, IT — and we try to create a firm that’s high-energy, high-growth with unique expertise from all backgrounds, and in which the institution reinforces that we care about them as individuals, and as leaders, at every level, for the expertise that they bring to the team. We want to hire people that bring two things: high performance ego — they want to be the best at their unique expertise; and high team ego — they want to succeed as part of an overall team to achieve a mission that’s greater than self. If you align a workplace that reinforces performance ego and team ego, you create a winning environment. That’s what we try to do in our space here.
Can you share some of how the space captures that or helps to drive that?
Absolutely. The space allows individual team members, at every level, across all divisions, to participate real time in feedback, problem solving, and leading the organization forward. So on any given day, across all the floors, folks are pulling together across divisions, across age groups, and across demographics to solve problems, and to put in place processes, products, or service level systems that lead the organization forward. A good example is the recent launch of our new credit card product. That campaign not only touches the product owner, it’s integrated across all channels: branch, web, and mobile. So we have business units represented from all of the different operating divisions. It also involves our outside ad agency and when our account reps are here, they need a workspace. Another example is our merger teams. Some 80 people meet every week from all disciplines, and not everybody’s in Tysons. Our workspace allows you to videoconference in real time, and have a collaborative meeting with the right skillsets at the right time with the right participants. It creates productivity and allows you to get from point A to point B faster. It’s fostering business productivity, and teamwork, and better decision-making.
When you started thinking about this space and this project, what was your big goal? What was the most important thing to you to accomplish?
Attracting and retaining talent. As a CEO, one of my primary responsibilities is to attract, hire, inspire, and retain the best and the brightest. I have to have employees who can outthink, out-execute, and outrun our competitors. And in order to do that, you need to pay well and you need to provide great benefits. And one benefit that [everyone] appreciates is quality workspace and quality equipment. They need the right resources to accomplish the goal that they’ve been given. Great workspace design and technology allows that to happen.
So how is that going for you here?
Let’s just say as a CEO, I am proud of the hires we have made over the past 36 months. We are very proud of our retention record, and I’m very energized by the engagement and commitment of the employees to the mission of helping others Do Better. And the workspace has helped to further that effort.
You’re a visionary business leader. So what’s the biggest value that the space provides to you in terms of trying to achieve your vision or drive the goals of the organization?
The space allows us to run fast. When the space fosters faster, more inclusive decision-making, an organization wins. Time to market with a product or service is critical, when you’re competing against 12,000 others. It’s the old adage: time is money. But when space allows you to make better decisions with [fewer] mistakes, faster, when you can operate inside the decision cycle of your competitors, you can win in any rate environment within financial services. Our space allows me to attract and retain the intellectual capital to operate in a faster decision cycle than my competitors. Space is energy.
That’s huge, and I think that in post-recession companies, what we’ve seen is their ability to flatten the organization, increase the speed with which they make decisions, and they can react to change much faster. And it sounds like you’ve accomplished a lot of that.
Some firms are penny wise and pound foolish when it comes to investing in their employees. We factor in the intangible benefits of retention. If I could reduce turnover by 10 percent among senior leaders, mid-level leaders, and line employees, it would pay for the space 10 times over. The operational efficiency you get with a team that works well together, when you’re not constantly changing in and out the players, will win over a long period of time.
I’m curious, in terms of that rapid decision-making, how does the space help to facilitate that?
It is the ability to have huddle rooms, and have on-post amenities in which employees are able to come from a workout at lunch, go into a meeting with two employees or somebody from around the world through videoconferencing, and 15 to 30 minutes later to be in a meeting with 30 employees, communicating with six other decision-makers remotely, and then an hour later to be in a discussion halfway around the world with another decision-maker. That would not be possible without the right workspace design and without the right technology integrated into it.
Do a lot of your employees work remotely?
Not full-time from home, but we have a lot of employees outside of our HQ region with about 500 employees in Omaha, Neb. and another 500-plus in Eugene, Ore. And we have triple-redundancy of most of our processes and business units around the globe. So when I’m dealing with something, say a service center operational issue, I’m dealing with folks from Omaha, Eugene, Tysons, and Alexandria, Va. simultaneously and we can do that all through the technology and the workspace design. They have the same technology in their spaces, so it’s very seamless.
It sounds like there’s a lot of spontaneous interaction in the space. Can you describe some of the collaboration that occurs?
We created several collaboration areas that bring people together. We have candy and coffee areas that seem to be clustering spots. We provide high-end lattes, mochas, cappuccinos through different pantry areas. You get a lot of employees getting to know one another casually in those venues. IT professionals and somebody in credit cards might be talking about a problem over a cup of coffee and another IT colleague getting coffee might hear it and say, “Wait a minute, I can write code to solve that.” So it creates a lot of informal relationships across the firm.
It sounds like you’re innovating as well. Can you describe a little bit how that happens?
The space encourages innovation. And we’re constantly innovating – on products and on execution. To bring any new product to life takes huge teams of intellectual horsepower to work through the system issues, the feature issues, the regulatory issues, the disclosure issues; so any single product launch literally has dozens, if not hundreds of touch points, and you want to get as much expertise on each product as fast as possible.
Do you measure the performance of the space?
We do not. There’s not a KPI to measure the performance per square foot. We measure it more holistically, in the sense of asking, “Is it allowing us to attract and retain the best people out there?” We have a lot of feedback from new hires — and folks who have stayed with us who were considering maybe potentially going somewhere else — that the space made a difference in their decision. When I have an employee who can work at PenFed at the same price point as another competitor, and that competitor has a 1970s space that’s not in an epicenter of business, it makes the employee feel good about coming here and not feeling isolated. Space matters.
What part of the budget, when it comes to the space, are you least willing to cut? Or where are you willing to spend more money?
Well, glass is more expensive than sheet rock, but having high-glass windows versus sheet rock creates a much better environment. You come to work with natural light. Light creates photosynthesis in plants, and the same thing in the human mind. Natural light spurs health and wellness. You put somebody in a dark, cramped room and ask them to solve a problem versus a well-lit, glass natural-light room and ask them to solve a problem. Where do you think you’ll get the better result? You’ll get faster and better decision-making in a well-lit, glass room. We never go cheap when it comes to motivating the human mind because in financial services, it’s the intellectual capital that separates the winners from the losers. Sort of like the clothes somebody wears or the car somebody drives, the workplace of a corporation sets the vision, the tone, and the style of that workforce, every day. You never should go cheap on workplace design because the intangibles of productivity are immeasurable.
Do you have any health or wellness programs?
We do. Throughout all of our places, everybody has a FitBit, so we have a lot of walking contests. There’s a weight loss contest across all of our centers; people compete against different teams. There are thousands and thousands of pounds that have been lost. It creates a workforce that cares about overall wellness — mental wellness which allows you to focus, and also physical, financial, and spiritual wellness. It’s the whole combination: focusing where you are, on the task at hand, in order to provide higher-level productivity and outcomes to serve our customers. And most folks work standing up — we have height-adjustable desks, and we spent a lot of time on getting the right chairs. The land next to us also has a park and a pond, and you see a lot of folks out walking and running, especially now with the good weather.
What do you want to communicate when people come in, what do you want them to experience?
They immediately sense a successful company, a growth company with inspired, engaged employees, and it’s built to last. Nothing’s flimsy. I’d rather have one of something than 10 of something, but the one that we have is going to be quality.
When somebody comes into the space, how do they generally react?
I’m very proud to say, very positively. They love the boardroom, they love the openness of the high ceilings, they love the energy-saving features — offices light up when you walk into them and go dark when you leave. They love the common areas, free coffee and free snacks; it allows employees to take breaks during the day. And they love the amenities, the restaurant, and the workout room.