How Money One FCU got its groove back
Operational effectiveness is a term you may have heard around the office and wondered what the latest jargon was all about. Operational efficiency, however, is far more than jargon. It’s the type of culture credit unions, which were chartered to return as much as they can to their members, should strive for.
A deeper understanding of operational effectiveness and how it applies to your credit union will allow your team to do more with fewer resources and celebrate it!
What Is Operational Effectiveness?
Operational effectiveness or operational efficiency measures a credit union’s revenue against its operating costs. In its essence, it is the formula for sustaining any business. And the more disciplined the operational effectiveness, the healthier and more sustainable your credit union will be.
While money spent and earned is one way of looking at operational effectiveness, it’s not simply a matter of financial gains and losses. It also involves taking a closer look at how efficiently your credit union is running and the processes being used. For example, marketing strategies and campaigns can cost a lot of time and money, especially if the campaign is unsuccessful. Having a sound, efficient strategy for your credit union’s marketing means you will be able to make the most out of your marketing efforts and dollars spent and most likely see returns from it.
Another way operational effectiveness can be applied is the member experience. For-profit businesses have approached it in various ways that make sense for what they are and how they operate. If you’ve been inside a McDonald’s in the last few years, you will notice their self-service kiosks where customers can place orders without waiting in line for an open register.
Or Carvana’s car vending machines, so consumers could be spared the agony of going to a dealership. These methods allowed these companies to run more efficiently while making the experience more convenient for their customers. And, by the way, the customer can still choose to use these self-service options or continue with the more traditional options.
Operational Effectiveness Halves Money One’s Delinquencies
Operational effectiveness can also be applied to how credit unions operate. In the past, Money One Federal Credit Union’s collections department struggled. Despite having more than sufficient staff running the department, including the help of an outsourced collections agency, the delinquency rate jumped. Even though Money One had more than enough people power, the collections department clearly needed to become more effective and efficient to get the delinquency numbers back on track.
Free Case Study: How O2 Breathed New Life into Money One’s Operations
Our experts at O2 Consulting Group studied Money One’s operations, presented a plan, and then put the necessary people, processes, and procedures in place to make the whole department more efficient and effective. O2 performed a gap analysis on people, processes, and systems that identified problems. O2 drew insights from that data and made recommendations for change. Following the approved plan, a collection department manager and two new in-house agents were hired and trained by O2, allowing the department to be more streamlined and eliminating the need for an outside agency.
By optimizing its collections, Money One not only saved time and money running the department but also cut delinquencies in half.
More Than Cost Cutting
Operational effectiveness affects the processes used to manage your credit union, as well as how your members interact and do business with you and vice versa. Turning around a home equity loan in hours or, at most, days rather than weeks is another benefit of operational efficiency that positively impacts member service.
Operational effectiveness will help your credit union leadership determine how and where to best use your resources. While every credit union’s needs and available resources will differ slightly, it’s crucial to ensure your time and dollars – and your members’ time – are invested wisely and aligned with the credit union’s strategic goals.
Picture this: Your credit union leadership team is gathering to budget for next year. Every department head is asking for more money. Doesn’t it make sense to ensure the investments they are already receiving are being used efficiently, driving productivity and profitability? Strategic and operational planning are inextricably linked and should be designed to inform and support one another for growth, effective management and operational efficiency.
