FOREST GROVE, Ore. - The increasing costs of business has been a driver of mergers; during an economic downturn, organizations are typically more conservative in hiring. That has been the case with banks, but not credit unions.
Banks and credit unions added to their workforces during the boom years. Banks cut back significantly on hiring in 2007 at the start of the economic downturn, while credit unions increased as indicated in the chart at right. It appears the banks are adjusting to and forecasting for an economic decline much quicker than credit unions by cutting their workforce. Credit unions continue to have above average hiring rates–3.64% annualized for the first quarter 2008, according to David Bartoo of Merger Solutions.
2007 marked the seventh consecutive year in which the number of members served per employee declined. According to Merger Solutions’ analysis, in 2007 there were 403 members per full-time employee compared to 465 members in 2000, which is an additional cost of $1.6 billion, according to Bartoo. For comparison, credit unions had a net income of $1.184 billion in the first quarter of 2008.
With the increasing cost of business, credit unions may have to revisit the wisdom of excess staff during a time of shrinking margins. Can credit unions continue to support this high level of staffing while their competitors–banks–are slimming down their workforce? (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
