Turnover Trends Play A Critical Role In Strategic Planning

by Beth Soltis, CUNA

Information on industry turnover and staffing trends is a key tool in your credit union’s arsenal. These trends provide a basis for strategic planning and can help identify current skill and performance levels of existing employees. This information can be used to determine where training and development is needed, as well as what skills to recruit for. By projecting these trends into the future, your credit union can plan for staffing and skill levels needed to meet strategic goals.

Turnover and staffing levels also play a crucial role in containing operating expenses.  Each of these elements influences productivity levels and cost efficiency, which directly impact both labor costs and profitability.

Among credit unions with $1 million or more in assets and at least one full-time employee, turnover remains low. The overall credit union turnover rate is 10%, according to CUNA’s recently released 2012-2013 Credit Union Turnover and Staffing report.  This figure is down from 12% in 2010, and is similar to the 2009 turnover rate (9%).

Among lending positions (loan officers, loan processors, interviewers) in particular, turnover has dropped dramatically since the onset of the Great Recession.  Overall, turnover in lending positions was 8% in 2011, according to the CUNA report. This percentage has remained fairly stable since 2008.  But it represents almost half of prerecession lending turnover rates.  From 2005 to 2007, turnover in lending positions was approximately 15%.

In addition, hiring for new lending positions has been low the past several years.  In 2011, only 2% of lending employees were hired to fill newly created positions. This percentage has also remained fairly stable since 2006.

Loan growth is improving, albeit slowly. Credit unions must address strategies that promote loan growth and get new members to transfer loan balances to the credit union.  Credit unions must also address lending to credit-impaired members, including policies that help loan officers navigate those waters.

Turnover is expected to increase as the economy slowly improves and stabilizes.  Dissatisfied, stressed workers are expected to seek job opportunities elsewhere when hiring picks up. In additions, retirements could drive an increase in turnover in the near future.  As a result of the economic downturn, many older workers put off retirement to rebuild their nest eggs. As finances improve, these workers will begin exiting the workforce.

To prevent unwanted turnover, credit unions should focus on their high-performing, key employees. These are the employees whose departures would most hurt your credit union, and those you most want to keep.  You’ll want to build your credit union’s retention strategies around these employees.

In addition, credit unions can plan for the departure of employees considering retirement.  Credit unions can enlist older employees in grooming their successors though mentoring and job share programs.

During the past six years, a historic shift has occurred where credit union net interest margin no longer covers operating expenses, according to CUNA’s 2012-2013 Credit Union Environmental Scan. If it weren’t for noninterest income, many credit unions would be out of business.

To maximize profitability growth, credit unions need to get as many products as possible into members’ hands.  To do so, credit unions need to identify which combinations of products are profitable.  Then, they need to understand each member’s needs to better package/cross-sell products to specific members.

By controlling turnover and determining the appropriate staffing levels, employees can perform at their best and provide optimal service quality.  And by recruiting and retaining employees with the necessary skills, staff can meet performance and productivity goals.  In turn, the credit union is well positioned to meet its business objectives and strategic goals.