Operations

Strict Cost Controls Create High ROA

Overall return on assets for CUs rebounded to 68 basis points at year-end 2011.

January 13, 2013
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Although credit unions’ overall return on assets (ROA) rebounded to 68 basis points (bp) at year-end 2011 (up from 18 bp in 2009 and 50 bp in 2010), this measure remains below historical averages, according to CUNA’s economics and statistics department.

But some credit unions are bucking this trend. Case in point: Baton Rouge (La.) Telco Federal Credit Union, which reported a robust ROA of 146 bp in 2011 due to a strict focus on expense control, says Darryl Long, CEO of the $221 million asset institution.

He cites several ways the credit union keeps expenses in check:

  • Don’t be all things to all people. Focus on what services are important and ignore the rest.
     
  • Have few branches and limited hours.

    Instead, embrace Web-based services and shared branching.
     
  • Offer simple accounts. Make accounts easy to explain and to understand. Don’t over-complicate.
     
  • Answer the phone. Resolve staff and member issues right away.

  • Respond to emails right away to prevent duplication of effort.

    “Procrastination is expensive,” Long says.
     
  • Skip the call center. Fully utilize all staff.

    Most employees can answer phone calls along with their other duties, he says, although this must be monitored and encouraged.
     
  • Have meaningful evaluations. Hold staff accountable and reward high performers.

  • Hold few meetings but make them meaningful. Make staff aware of your goals and successes.

  • Have few layers. A flat organization chart allows for faster reaction times.

  • Employ no executive assistants.

  • Market sparingly. Rely on word of mouth and make sure marketing promotions are justified.

  • Compare your expenses and efficiency to your peers.

“You can’t improve,” Long says, “if you don’t keep score.”

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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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