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 ($680.6, Roanoke, VA) doesn’t let its size get in the way of clean processes and straightforward procedures.
At the end of 2014, Member One’s efficiency ratio which measures how much it costs the credit union to make $1 of revenue was markedly lower than it’s asset-based peers, 73.5% versus 82.3%, according to Search Analyze on CreditUnions.com. That’s a desirable result. It also bested its peers in operating expense measures. Member One spends $263 per member while other credit unions with $500 million to $1 billion in assets averaged $367 per member in the fourth quarter.
How Do You Compare?
Check out Member One’s performance profile and six quarterly performance reports available only on Search Analyze on CreditUnions.com. Then see how you stack up against this Virginia cooperative.
On the productivity side of things, Member One posted a higher net income per employee than similarly sized credit unions $40,848 versus $30,810 as well as more loan and share accounts per full-time employee 1,063 compared to 865.
So 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.
You can go into Sears to buy a TV, sign the swipe pad, finance your purchase, and get a Sears credit card in the mail three weeks later, says Jean Hopstetter, chief operating officer of Member One. So when our employees have those types of experiences or see what other folks are doing and wonder if we could do the same, they share it with the PIT crew.
PIT Mission statement
The process improvement team serves as a visionary arm of Member One that strives to examine, discuss, and advance ideas that will facilitate the credit union becoming more efficient, becoming an industry game changer in relation to service, becoming better prepared for an unforeseeable future, and providing team members with a working environment aligned with happiness, clarity, and personal and professional successes.
The PIT Crew
When Member One’s chief technology officer, Jeff Wieczorek, took a core tour in 2009 to uncover best practices for its processing system, he also picked up the idea to create a department solely devoted to process improvement. The Process Improvement Team or PIT became a formal part of the credit union in 2012.
Today, the seven-person team represents departments including compliance, technology, lending, operations, and training. It also relies on internal experts who, depending on the nature of the problem, provide information and research assistance. For example, an expert in the compliance department would help the PIT research a compliance-related problem by interviewing and shadowing compliance employees or vetting external vendors.
Employees at all levels of the organization suggest areas in need of review, and the PIT uses process mapping to break down steps, systems, and users in even the most menial tasks to identify fixes, efficiencies, and better alternatives. Wieczorek and chief risk officer Tim Rowe review proposed solutions to ensure they align with Member One’s mission and goals.
Among other things, the PIT has helped Member One replace its legacy core system, create a fraud program, and build a products and services department.The crew has learned a lot over its six years of operation; here are three lessons to help credit unions get started on their own PITs.
Lesson No. 1: Rotate Members To Keep The Team Fresh
The PIT started as an informal group of four to five employees led by the vice president of IT. Today, PIT members meet for one hour, two to three times per quarter and often work on projects outside of these meetings. The total PIT commitment equates to 5-10% of an employee’s workload, Wieczorek estimates.
The PIT assumed a new research-oriented structure as of Jan. 1, 2015, and now falls under the leadership of Jason Specht, the credit union’s manager of business analytics and innovation. This is not the first change of leadership since the PIT formed in 2009, but that churn is intentional.
It doesn’t have to be a formal rotation, but continuously changing personalities throughout the group invigorates it, Wieczorek says.
For team members, terms are structured but flexible, Hopstetter says, which allows the team to bring on new members or experts and keep ideas flowing.
Lesson No. 2: Foster Fresh Ideas
Fresh eyes bring new perspectives, and new perspectives can add value. The PIT does much of the work to bring an idea to fruition, but Member One encourages employees at any level to submit ideas. For example, during new-hire training, the credit union encourages employees to ask questions, challenge practices, and compare Member One’s processes to those of previous employers.
We want to challenge people to look at our processes and submit ideas and recommendations.
We want to challenge people to look at our processes as they’re learning them and compare that to their own past experiences, whether that was in a retail environment or a financial institution, and submit ideas and recommendations, Hopstetter says. We’re never opposed to hiring people who don’t have financial services experience because they look at things from a completely different perspective.
The credit union also introduced an online portal in 2012 as another way to collects tips and suggestions for processes that need improvement. Employees email the Brainiac Club, the club collects input, and posts suggestions on the credit union’s intranet.
The credit union must weed out some suggestions for legal or other reasons, but in general, no idea is a bad idea. And Member One rewards employees for contributing to a more efficient workplace.
If there are things that save the credit union dollars or generate dollars for the credit union, there are dollars they can earn in addition to their regular pay, Hopstetter says.
Lesson No. 3: Don’t Make Employees Do The Legwork
The PIT has reconfigured many processes at the $680 million institution. Part of that success has as much to with the psychology of its employees as anything else. Even when employees are engaged enough to identify redundant or unnecessary processes, some might be hesitate to share their insights because they lack the technical experience to solve it. Time, knowledge, and resources are all barriers that prevent the average employee from solving problems. But the PIT has access to all three.
If you have a teller that says Why can’t we improve a process?’ you can’t realistically expect that teller to reach out to Diebold and improve that process, Hopstetter says.
Likewise, a teller who has a great idea doesn’t want to be asked to do six months of legwork gathering information, Hopstetter says. The PIT helps with the legwork and putting all the information together.
The PIT is about overcoming these barriers, Hopstetter says. It’s about taking the idea and building a case for it.
Drew Grossman contributed to this article.
Visit the Strategy Performance archives on CreditUnions.com to read the five-part series Anatomy Of Member One Federal Credit Union.