- Turnover within credit unions approached nearly 20% in 2018, resulting in the loss of key individuals, to the detriment of credit unions. By 2020, approximately 2 out of every 5 employees were new to their credit union employer.
- Employee longevity is important for data accuracy. Longer employee tenures allow credit unions to maintain data standards over the course of many years, reducing the possibility of inaccurate or misleading data to surface because of new employees.
- Loss of brain trust, or individuals with extensive knowledge of the industry and their specific credit union, can lead credit unions to be unprepared for unforeseen crises.
Knowledge is power. It is as common a saying as any other, and perhaps a bit cliché. But it does have many practical applications. When applied to industry, the phrase must be viewed through a different lens. After all, businesses themselves are systems. They do not retain power. Power inside an organization is retained by the employees, from the entry-level clerk to the C-suite. Therefore, holding onto employees who retain valuable knowledge pumps power back into the companies for whom they work.
This is especially true for credit unions. Credit unions serve a unique role in the community. Success for credit unions requires they establish longevity in the community. In 2018, the turnover rate at credit unions was 19.7 percent. Employment in the same year increased by 3.6 percent. This combination meant only 180,000 of the more than 300,000 employees working at the beginning of 2020 were retained employees while nearly 40% were new. If credit unions are going to not only succeed and grow, they must invest in their employee base to reduce turnover.
Data Skills for Growth
Out of sheer necessity, credit unions rely heavily on data. Data must be carefully gathered, stored, and organized. Credit unions are faced with challenges in analyzing data compiled over weeks, months, and years. Appropriate data analysis is typically holistic, as no one wants an isolated data set. Instead, data is assessed in trends over time.
It is therefore important to have dedicated staff to understand, collect, and monitor the data over the course of years. With the same talented, technical staff in place, credit unions will have confident data procurement, if it remains standardized. Board member retention is also critical to maintaining data standards as their oversight requires consistent reporting requirements. Accurate data is critical to identifying systemic issues and market opportunities. And employee retention forms the backbone of maintaining consistent data standards.
Preventing Loss of Brain Trust
Another reason to work for high retention is to retain the credit union’s brain trust. The brain trust is the group of experts in any one industry or organization. These experts hold scores of knowledge, allowing them to provide unique insights and create meaningful solutions. When brain trust is lost, the daily functionality of a credit union may not be affected at first. However, it is when a crisis arises that the loss of knowledge becomes painfully apparent.
Think back to the turn of the millennium. During the Y2K crisis, industries all over the world were asking key programmers to come out of retirement to tackle the issue. There were plenty of young employees with the technical skills needed to address the problem. Unfortunately, these young employees lacked the collective brain trust to come up with concrete, workable solutions. Keeping critical, knowledge-laden employees on staff will help ensure credit unions are insulated against damaging changes.
Managing the Changing Technology Landscape
There is no question technology evolves rapidly. For that reason, it may be tempting to think that hiring new people with the latest skillset is better. Certainly, new employees with the latest skills do add something to credit unions. However, it is important to maintain perspective.
The rapid evolution of technology is precisely why employee longevity matters. There will always be new technologies. Instead of investing in new people to spearhead those new technologies, it is more cost-effective and self-preserving to invest in the best current staff to navigate the changes as they come. Employees with the skills to evolve with the technology help form a strong foundation from which credit unions can take steps forward, without losing sight of where they have been.
Maintaining Connections to History
Finally, credit unions are part of the community. They hold a special place in the local business landscape with most members feeling connected to their credit union. This connection matters – and it must be maintained.
Obviously, growth and change are inevitable, technology will evolve, and service offerings may come and go. And it is more obvious than ever that credit unions must be willing to respond dynamically to shifting community needs. As these necessary and important changes occur, credit unions are encouraged to remember why they exist in the first place – to serve their community.
Employee retention is a critical tool in this pursuit. By maintaining enough critical staff at all levels, it is possible to make sure new hires understand the history of your credit union and its members, thereby keeping credit unions poised to move forward without abandoning its roots.
The Bottom Line
Turnover is inevitable. But employee retention will make a tremendous difference to the overall performance of a credit union. Credit unions flourish when connected to the community. This connection starts with every employee on the payroll. By holding employee longevity as a top priority, the longevity of the credit union at large is protected as well. #CUMovement