The economy is making for some tough decisions for employers.
A recent Society of Human Resources Management poll, "Financial Challenges to the U.S. & Global Economy and Its Impact on Organizations," found that the top three steps taken by companies include budget cuts across the entire organization, attrition of employees and hiring freezes. Rounding out the top five are freezing employee wage increases and implementing layoffs.
Credit unions have hardly been immune to the times, and, most recently, The Golden 1 Credit Union had to layoff 25 employees at its Sacramento, Calif., headquarters.
"The impetus certainly is that earnings are down. As loan losses and delinquencies have risen, we've done well compared to most of our competition. But with California leading the national meltdown, we had been looking at how we can manage through difficult times," said The Golden 1 CU President/CEO Teresa Halleck. "It became very obvious with the huge decline in loan volumes, the extraordinary impact of NCUA's actions with regard to WesCorp, and the fairly consistent bad news for the California economy, which appears likely to extend well into and possibly through 2010, that it was time to make a difficult decision as we hadn't adjusted staff levels in several years."
She added the $7 billion credit union had to deal with the realities of the market and that meant recognizing that it couldn't support staffing those areas impacted by a decline in volume.
"This is something we tried our best to avoid by taking many other steps," said Halleck. "We were slow to make this move, and it isn't something we wanted to do."
Halleck said the credit union tried everything from renegotiating all its vendor contracts, including branch leases and reducing legal expenses, to putting a freeze on hiring, cutting back on travel and merit increases, not matching 401(k) contributions, and even switching its newsletter from monthly to quarterly. Through it all, Halleck said employees have been very understanding and many praised the credit union's cost-saving efforts over the past year.
"I think the communication has been important," said Halleck. "For the past few months, I've been posting economic updates to our internal newsletter, and in the case of the NCUA's recent actions, sent an e-mail to all staffers to ensure that our employees are aware of what's been going on in the economy, our industry and fully understand the ramifications."
She added that by sharing information about the current challenges and the proactive measures taken by the credit union have helped better prepare employees so no one would be caught off guard.
"We didn't dodge the hard issue of making adjustments in staffing to better meet market demands. In the long run, that helps preserve workplace morale because employees don't feel like we are nickel and diming them or looking for every opportunity to reduce their compensation," said Halleck. "The employees impacted were across the board, not just from the rank and file."
To break the news, Halleck opted for a coordinated, personal approach.
"We didn't want to send out an e-mail to all staff, so we struggled with how to get everyone minus the call center and branches together," said Halleck. "We really wanted to do this face-to-face. First we met with the leadership teams, so they would be prepared to handle questions from staff."
Halleck then sent an e-mail asking all employees to attend a mandatory leadership meeting while the 25 employees whose positions were impacted were speaking to Human Resources Vice President Toni Davis. After the meetings, an e-mail summarizing the details was sent to all employees.
"We didn't want anyone to hear the news from any other source, which is why we made sure everything was precisely timed," said Halleck.
Davis said those who were laid off were understanding, and many remarked that they had noticed their workdays just weren't as busy. To help ease the transition, Halleck insisted that in addition to a generous severance package and outplacement services, staffers would receive one-on-one coaching and counseling services.
"This was purely economy related, so it was important to Terry that they have every advantage, with access to more personalized services rather than, for example, attending a lecture on r?sum? writing where there are about 500 people in attendance," said Davis.
–[email protected]