Efficiencies can be found in every process and every activity if you have the data and the awareness to look for them. To uncover the source of waste, an organization needs to have data that is tracked over time on the key performance indicators that matter to their business. For credit unions, the KPIs where you'll often find the most opportunities for change are the ones that factor in your people. When you measure your loans, net income or members against your number of employees, you'll start to see if your staff has the training and resources they need to be as efficient as possible. Members per Employee can be one of the simplest and most telling KPIs a credit union can learn from.
Members per employee is calculated by dividing the number of members by the number of full-time equivalent employees.
This formula measures the productivity of the credit union’s employee base. Given that human resources costs are typically credit unions’ largest operating expense, this ratio is critical. In theory, a higher ratio means a credit union is more productive, but other factors also play a part. When examining the ratio, credit unions should also consider product penetration rates, members per branch location, the geographic distribution of the membership, and field of membership requirements. The national average as of 2018 was 385. How does your credit union compare?
Strategic factors that impact the ratio include organizational service level goals, growth, and product and technology development. Technology is used to increase efficiency, and automation even more so. For credit unions, the hub of this technological aspect is the core and, if it's working correctly, has the potential to double the national average of members per employee. If your core technology is doing what it was designed to do, your staff totals should be decreasing relative to your membership numbers.
If your core technology is effective and supports your credit union's efficiency, then focusing on growth should not be painful or costly. To grow your membership, consider some of these suggestions:
With a combination of smart membership growth initiatives and the right core technology to support that growth, your efficiency ratios will continue to improve. Technology can be a boon to your productivity and help your credit union stay competitive. Learn about the other KPIs you can use in our download.