Four mistakes to avoid making when analyzing profitability

Failing to account for staff costs is the most common problem.

From time to time, Kohl is asked to do a comparative audit of a credit union’s internal systems. For example, we might compare the profitability servicing a credit card versus the profitability of servicing a car loan. When we do this, we commonly find that there are significant differences between the systems, and it often comes down to one specific issue.

People.

Many credit union leaders don’t realize that just having employees drives about 75% of non-interest expense—50% of that is direct salaries and benefits and another 25% is everything related to keeping them productive. This includes a place to work and that predicates desks, chairs, HVAC, cleaning services, HR people, computer networks, etc. Surprisingly, not much has changed when accounting for remote staff members so far. Until the office space is jettisoned, the costs are still there. In fact, costs like network connection from home plus security have increased.

 

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