Employee ROI Increases Throughout The Industry

Loan origination growth outpaced employee growth, pushing originations per employee $16,000 higher than one year ago.

 
 

The U.S. unemployment rate ticked up slightly in the last month of 2018, from 3.7% in October and November to 3.9% in December. Still, that was down from 4.4% one year earlier and is the lowest year-end rate since 1969. For their part, credit unions employed 305,312 full-time equivalent (FTE) employees as of Dec. 31, 2018, a 4.3% increase from last year-end. Growth in FTE employees — calculated as 100% of an institution’s full-time employees plus 50% of its part-time employees — kept pace with the industry’s 4.4% year-over-year membership growth; as such, the number of members per employee in the industry held steady at 385.

In 2018, credit union employees earned a combined $22.9 billion in salaries and benefits. That’s up 7.6% year-over-year. To retain top talent, credit unions spent on average $4.2 million on salaries and benefits. The growth dynamic between total compensation and FTEs resulted in a $2,319 increase in average compensation per employee, which rose from $72,829 at year-end 2017 to $75,148 at year-end 2018. Salary and benefits are typically a credit union’s largest expenditure. At the end of 2018, compensation accounted for 50.9% of total non-interest expenses for the industry.

As the number of employees increases, employee efficiency also rises. Total revenue per salary and benefits, a productivity metric that measures how much revenue a credit union generates per dollar spent on employee compensation, increased 15 cents yearover-year to $3.24 as of Dec. 31, 2018. Total income per employee expanded 8.2% year-over-over from $225,141 in the fourth quarter of 2017 to $243,700 in the fourth quarter of 2018.

Credit unions reported nearly $1.7 million in originations per employee in 2018. Notably, loan origination growth of 5.3% outpaced the industry’s employee growth of 4.3%. Consequently, originations per employee at year-end 2018 was $16,230 higher than at year-end 2017, showing how employee return on investment is rising throughout the industry.

LEADERS IN ASSETS PER EMPLOYEE

FOR U.S. CREDIT UNIONS >$100 MILLION IN ASSETS | DATA AS OF 12.31.18
© Callahan & Associates | CreditUnions.com
Rank Credit Union State Total Asset Per FTE Employee* FTE Employees* Total Assets
1 MERCK EMPLOYEES NJ $76,001,925 25 $1,900,048,135
2 STAR ONE CA $43,493,579 197 $8,568,235,095
3 NCPD NY $33,485,907 22 $736,689,943
4 SELF RELIANCE NEW YORK NY $31,666,427 42 $1,329,989,936
5 STATE FARM IL $31,314,883 131 $4,102,249,620
6 CONNECTICUT STATE EMPLOYEES CT $27,528,548 66 $1,816,844,183
7 APCO EMPLOYEES AL $24,896,006 115 $2,863,040,687
8 CALTECH EMPLOYEES CA $23,267,164 72 $1,675,235,840
9 SCHLUMBERGER EMPLOYEES TX $20,331,548 40 $813,261,903
10 SAN JOAQUIN POWER EMPLOYEES CA $20,263,392 7 $141,843,747
* FTE = Full-time equivalent. FTE employees is calculated as all full-time employees plus 50% of part-time employees.

Case Study: Productive Listening Supports Productive Employees

CU QUICK FACTS

Digital FCU
Data as of 12.31.18

HQ: Marlborough, MA
ASSETS: $8.5B
MEMBERS: 802,007
BRANCHES: 23
12-MO SHARE GROWTH: 4.3%
12-MO LOAN GROWTH: 11.6%
ROA: 0.77%

Digital Federal Credit Union’s ($8.5B, Marlborough, MA) staff of more than 1,300 employees is a productive group. They manage more accounts per employee than most billion-dollar credit unions, and they generate more income per employee, too.

But DCU got mixed news from its first-ever employee engagement survey, which found challenges in such areas as communication, compensation, career development, and employee empowerment.

Armed with data from that 2016 survey, the credit union set to work developing a plan to show employees it appreciated them sharing their confidential opinions and, more importantly, was addressing the pain points they identified.

Actions taken so far include:

  • A full-scale compensation program review that resulted in the adjustment of some wage scales to better reflect the local labor market. The credit union also increased hourly starting wages.
  • The addition of an organizational development specialist to the human resources department. This staffer focuses on leadership development, career pathing, and employee engagement.
  • The creation of a communication task force as well as investments in additional methods of communicating, such as lobby and lunch room monitors.

Read the organizational development specialist complete job description in our Policy Exchange today. Don’t have access? Learn more here.

And to ensure the credit union gets as much as possible from the survey-and-response strategy, it conducted a follow-up survey — a shorter version called a “pulse survey” — in the summer of 2017.

“It’s kind of a check-in,” says senior vice president for human resources and training Jane Fontaine. “We found we need to continually evaluate our methods of communicating throughout the organization and we need more career development on the supervisory level.”

Those two pain points became more evident when the survey uncovered that not all managers were sharing important information with their own staffs.

“We’re now devoting time to working with our managers in improving their communication skills,” Fontaine says.

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May 13, 2019


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