Good ideas are often born from circumstance. And during a networking event some four years ago, Mark Richter, the chief executive officer of First United Federal Credit Union ($28.3M, Grandville, MI), and executives from nearby credit unions posed a question rooted in the cooperative spirit: What would it take to create an employee-sharing program a kind of crowd-sourced float staff?
A few of us said wouldn’t it be nice to have this? Richter says. We liked the concept and did the legal work to create an agreement. Now, we share employees from time to time depending on our staff capacity.
First United has nearly $30 million in assets and 10 full-time employees. Unlike larger credit unions, it can’t afford a float staff. That means when someone takes extended leave whether for vacation, illness, maternity leave, or something else the credit union was stuck operating under capacity or hiring a new employee. That’s not the case anymore. Now, it has access to a shared employee from a trusted credit union partner.
CU QUICK FACTS
First United FCU
Data as of 03.31.15
HQ: Grandville, MI
ASSETS: $28.3M
MEMBERS: 4,926
BRANCHES: 1
12-MO SHARE GROWTH: -1.9%
12-MO LOAN GROWTH: -3.9%
We try to help people out and send someone over, Richter says. Even for an extended period.
Sharing Is Caring
Currently, First United is legally partnered with FEDCOM Credit Union ($58.3M, Grand Rapids, MI) and one other credit union that has since merged with a larger institution to share employees. However, other credit unions have expressed interest in the partnership and Richter is interested in developing a CUSO.
For now, these credit unions share tellers, front-office personnel who interact most often with members and have the largest personal influence on the development of the member experience. The credit unions experimented with sharing other positions, such as loan officers, but found there was too much of a difference in job capacity and job training between the two institutions for it to work successfully.
It takes a little more time and planning than saying Hey we had someone call in sick today; can you send someone over?’ Richter says.
But for tellers, a few days’ notice and a fully staffed branch is all First United needs to be comfortable sending excess staff it has six part-time tellers to its partner institutions.
In fact, when the credit union hires its part-time tellers, it asks them if they would also be comfortable working at other credit unions when needed and with compensation for travel more than 30 miles one way. If they are, that’s whom First United calls on when a partner contacts the credit union to fill an unexpected gap in staffing.
First United keeps the tellers it shares on its payroll and invoices the other credit unions a predetermined amount specified in the agreement.
Although sharing tellers does have its costs, the benefits outweigh the drawbacks. For example, employee sharing eliminates onboarding and other training costs associated with a new hire; plus member service remains unchanged because tellers already have the training.
The credit unions in the partnership currently all operate on the same core, CU*Answers CU*Base, so system familiarity is not an issue. However, Richter doesn’t anticipate problems if tellers were required to use other systems.
As of first quarter 2015, employee compensation and benefits at First United totals nearly $139,000. That’s slightly more than 36% of its total operating expenses, according to Search Analyze data on CreditUnions.com, its largest expense. At small or mid-sized institutions, where a smaller resource pool leaves less room for error, saving on the cost of personnel could mean the difference between soundness and something else.
Our credit unions aren’t interested in merging, Richter says. We’re interested in being independent credit unions.
2 Shared Employee Best Practices
Do Your Due Diligence
From the start, think about all the ways that sharing employees affects the credit union. Whether it be from a compensation, legal, or insurance point of view, address those issues first. Leave no stone unturned.
Keep The Partners Close
Sharing employees between institutions involves risk. Because of that, it’s important to have a close relationship with the CEOs of partner institutions to discuss ways to improve the partnership or work out any problems that arise.
Due Diligence Done Right
Even as Richter was dreaming up the partnership, he was thinking about its legal ramifications. Some, like compensation, were obvious.
To legally cover all the credit unions, First United contracted attorneys to create documents that clarified compensation as well as other risk factors. Then, each partner signed them.
We wanted to make sure we were covered and weren’t missing anything, Richter says. We manage risk, that’s what we do. That’s what a loan is, and that’s what a shared employee is.
Next, First United contacted its insurance and bond carriers to determine how each credit union’s bond covered each shared employee. This helped ensure the distribution of risk was fair.
It took the credit unions several worthwhile months to conduct their due diligence. Luckily, it did not encounter any insurmountable hurdles. And the process strengthened the partnership, Richter says.
Due diligence has to be done before you just send someone a teller, he advises.
The Ties That Bind
Because sharing employees involves risk, not only from an insurance standpoint but a quality of service standpoint, Richter says it is critical to have a close relationship with the CEOs and other executive officers at each partner institution.
In that way, a credit union can be confidant its partners are treating its employees respectfully while also upholding their own policies and procedures. It can also be sure its partners won’t try to poach employees.
We’re all credit union CEOs and we have a philosophy of working together, Richter says. If there is a shared employee we want to use in a different capacity, and that has happened, we just have that conversation with each other.
For example, one employee worked part-time at two partner credit unions simultaneously, rather than simply floating between the two, demonstrating that developing close relationships with partner credit unions can prove beneficial not only when staffing needs arise on short notice but also in unusual circumstances.
We’re for working for what’s best for everybody, Richter says, Especially the employee.
You Might Also Enjoy
-
3 Credit Unions, 1 CEO
-
Survive Together Or Merge Alone