IOWA CITY, Iowa-One credit union here is crediting its own employees for $3 million in additional earnings in 2009 and ROA of 2.1%.
The credit union is also investigating ways it can give more back to members.
The University of Iowa Community CU believes the only way to tackle the huge earnings challenge facing the industry is to involve the best and brightest minds from every area of the credit union. To that end it formed its Earnings Enhancement Team as soon as the NCUA announced an assessment in January 2009. The 15-member group looks at ways to save and make money, and draws on ideas from all 180 employees.
Results speak for themselves, noted CEO Jeff Disterhoft. This year ROA is 1.78% after setting aside $1 million for the upcoming assessment. "Thanks to the team, last year our operating expenses as a percentage of assets fell 21 basis points to finish at 2.41%," the CEO told Credit Union Journal. "Our non-interest income as a percentage of assets increased 31 basis points to finish at 1.71%. Our spread increased 24 basis points to 3.27%."
The team, which met 16 times in 2009, has helped push capital to 8.6%, and with UICCU always managing toward 8% net worth, that has prompted the organization to look for ways provide an even greater return to members.
What makes the Earnings Enhancement Team so effective, contended the CEO, is that the cross-functional group is staffed with employees from all levels and departments within the organization. "You simply get the best and brightest minds getting after this, no matter their position," Disterhoft said.
Choosing team representatives who are well-respected within their departments is critical to gain employee support, noted Disterhoft, who said ideas often come directly to team members through one-to-one conversations with employees. Suggestions are generated by the team itself, as well as through e-mail requests, and through a submission form on the credit union's intranet. More than 300 ideas were generated last year.
It is imperative to communicate and communicate consistently to get every employee's buy-in, stressed Disterhoft. "The first thing we did last year was create a sense of urgency by articulating to employees what the NCUA assessment would be, and what it might mean to members and to employees, such as impact on compensation."
After eliciting ideas, the team's job is to give employees feedback on actions taken on each suggestion, even if the result is no action at all. Disterhoft said a simple Excel sheet is posted on the intranet that allows employees to track the progress of each idea-including money saved or generated-and see who is responsible for managing the effort. Celebrations were held throughout the year to recognize everyone's contributions. Disterhoft said that no incentives were given to employees, as that might run counter to the cost-savings message and the sense of urgency behind the effort.
Finally, Disterhoft explained that red tape cannot get in the way of implementing ideas. "That means letting the cross-functional team make things happen. They don't have to wait for senior team sign-off to get things done."
Disterhoft summed up what he believes makes the team so effective. "I think 90% of the battle is getting the right people in the room-the best and brightest minds and people who the rest of the staff genuinely respect. Get those people on board and create a sense of urgency and understanding of the situation and all the rest falls into place."
