Different Sides, Same Coin

This week, CreditUnions.com takes a deeper dive into two complementary, yet often misused, concepts that underpin credit union success — productivity and efficiency.

The terms productivity and efficiency are often used interchangeably when, in fact, they have distinct meanings for credit unions. Productivity measures outputs. Efficiency measures inputs. Efficiency measures money in; productivity measures money out.

For a sampling of metrics that gauge how efficient or productive a credit union operates, check out the CreditUnions.com Graphic Of The Week: The Difference Between Productivity And Efficiency. Share it with staff and use it as an educational cheat sheet. Then take a deeper dive with this week’s featured articles into the two complementary concepts that underpin credit union success.

The term productivity can mean many things, such as the rate of output per unit of input, the state or quality of producing something, or even involvement in the creation of goods and services to produce wealth. By all these definitions, NorthCountry Federal Credit Union is a peer-buster. What’s more, NorthCountry also gets a lot out of its 124 staffers as evidenced in its third quarter 2014 net income per employee.

Sustained efficiency is driven more by revenue enhancement than by cutting costs, says Lisa Huyer, North Country’s executive vice president. Learn how the Vermont credit union achieves such success in The Considerate Cross-Sell And Other Tips.

At the end of third quarter 2014, the average U.S. credit union asset size was approximately $173 million, according to Callahan & Associates. That’s not small, but it’s not huge either, especially in a world where size and scale are considered fundamental requirements for top-notch productivity and efficiency.

The two mid-sized credit unions featured in 2 Strategies To Achieve Efficiency Beyond Your Weight Class prove that assumption dead wrong. A look at indicators such as the amount of loans originated per employee, members served per employee, and the efficiency ratio show Waterbury CT Teachers Credit Union and Energy Capital Credit Union stand tall above their peers. What’s more, these two institutions hold their own against credit unions that have size and scale behind them.

In October 2014, Patelco Credit Union’s budget planning committee faced a difficult question.

Are we using our resources correctly? asked CEO Erin Mendez. If not, how do we realign them?

Mendez challenged the committee to reduce controllable expenses by 10% in 2015. The credit union dug deep to reach that goal, and its efforts provide three lessons all credit unions can follow. Read about them in 3 Ways To Cut Expenses.

When a credit union has $680.6 million in assets, more than 83,000 members, and nearly 200 employees, operations can get a bit unwieldy. But Virginia-based Member One Federal Credit Union doesn’t let its size get in the way of clean processes and straightforward procedures. In fact, the Virginia credit union excels on both sides of the income statement.

How does the credit union turn out this kind of performance? In part because a diverse team of employees from across the institution have met two to three times every quarter for more than five years with one overarching goal: to create economical solutions to process problems. Read more in How To Stop Wasting And Start Saving.

Happy Reading.

February 9, 2015

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