Musings from the CU Suite

Written by Anthony Demangone

NCUA and other financial regulators have been focusing on "concentration risk." The following guidance comes from NCUA Letter to Credit Union 10-03. (Enclosure.)

"A risk concentration is any single exposure or group of exposures with the potential to produce losses large enough (relative to capital, total assets, or overall risk level) to threaten a financial institution’s health or ability to maintain its core operations."

The guidance focuses on investments and products.  But what about people?  I'd bet you my last dollar that employee concentration risk can be just as dangerous.  Let me ask you a few questions.

• Do you overwork your talented people, because they'll "get it done?"
• Have you ever uttered the following?  "If we lose (him or her), we're in deep trouble."
• Are there divisions within your credit union where a star player keeps saving the day?
• Do you expect more out of your talented employees while accepting less from others?

Clearly, talented staff is a scarce commodity.  Many businesses struggle to attract and retain high-performing employees.  That is no excuse, however. I'd recommend the following:

1. Look for employee concentration risk within your credit union.  Try to put a finger on whether talented employees are hired and retained at your credit union.  Or whether you constantly lose your star players.
2. Once you've identified your key players, let them know how important they are.  Treat them like key partners on your road to success. Because that's what they are. If your credit union started driving away your best members, you'd investigate the cause immediately. Treat your key employees the same way.  When one departs, find out why. 
3. Deepen your bench.  Look at your job descriptions and advertisements.  Do they truly describe the person that you want to attract?  Work with your HR team to find ways to attract and keep the best employees.  Be patient during the hiring process.  Study where it has broken down in the past, and try to improve it moving forward.  But be honest with yourself.  If you are describing your workplace as fun and dynamic, is it true?

No organization can eliminate all employee concentration risk.  The good ones, however, effectively manage it.  I have much to learn about the game of management. The more I learn and experience, however, the more this becomes clear: Behind every successful organization is a team of fantastic, motivated employees.

I'm sort of partial to this bunch....

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