The Importance of Productivity

Do Credit Unions know YOU can help them be more productive? The recent slowdown in credit union trends is fairly clear. A new focus on increasing productivity is now more important than ever!

 
 


Unlocking the Value

Recently a group of credit union managers and consultants discussed the concept of productivity and its measurement in credit unions. What did the term mean? How could it be managed? What are strategies for implementing productivity gains?

While some aspects of productivity are fuzzy, there was consensus that a productive credit union was key to unlocking member value in the form of better savings rates, lower loans, and an equitable fee structure. Several participants were even more emphatic. They asserted that members as owners had the right to a productive credit union. If a credit union's management and board were not committed to using resources in the most effective manner, then they were failing their obligation to their members.

Why Productivity is Urgent

The recent slowdown in credit union trends is fairly clear. ROA is declining, margins are compressing, expenses are taking a larger share of revenue and both loan and share growth are more difficult to achieve than in the 2001-2003 years. One indicator that not all credit unions are meeting the market's challenge is the fact that 4,693 reported loosing members in 2003. These credit unions managed 23% of the industry's assets. Their members are voting with their feet-the credit union are not providing sufficient value to retain their business.

Some might reply that those losing members are primarily smaller credit unions. However, one participant countered that with the 12,000+ decline in credit unions over the past 15 years, all the small credit unions are gone. "What is a small credit union today is us." Even if the decline is predominately in smaller organizations, that does not mean the need for member value is any less valid. These "smaller" credit unions may just be the canaries in the coalmine for the whole industry.

What Moves Credit Unions to Action?

At this symposium, a process was developed to think about and identify opportunities for productivity improvements. The core concept is that productivity is about managing throughput. Finding and measuring activities such as member served per hour by tellers, loans processed per day, ATM volume, calls handled by operator per session, and so forth are crucial for managing change.

The model below was proposed as a way to identify potential opportunities that exist for improvements.

 

 

 

June 21, 2004


Comments

 
 
 
  • Productivity is crucial to all organizations, especially credit unions. Our experience shows that having the right people in jobs is one of the key factors. Other attempts at imporvement don't go very far if this one isn't addressed first.
    Anonymous