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In today’s challenging economy it is more critical than ever for credit unions to perform budget reviews and consider cost-reduction measures. In any discussion concerning cost-reduction strategies, one of the first questions is, “What is the ultimate goal?” Are the potential reductions being considered in terms of revenue enhancement goals? Is the ultimate goal to increase efficiencies? Without clearly stating the goals, reductions could be made that produce unintended effects and result in decreases in revenue or loss of efficiency. Once goals are established, it is important to look at the different avenues that might allow the credit union to achieve its goals for financial performance or cost reductions.

Among the first things to consider, staff reduction is one of the most obvious. The intent is to reduce payroll and benefits. However, this is an area that needs to be analyzed and considered carefully before reductions are made. Without a clear strategic plan, reductions in staff may actually reduce efficiency. One of the first steps a credit union must take is to analyze the organization and establish benchmarks for as many processes as can be measured. These benchmarks need to be agreed upon by management and staff.

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Peter Westerman


Credit Union Times

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