Citi, fund managers, and the CU difference

There’s a great discussion going on over on the Filene blog that is centered around an article and what it can tell us about the credit union difference. I encourage you to check out the whole writeup and the comments.

I’ve copied my comment because I’d like to go just a little deeper with it here.

* Citi claims some 370,000 employees worldwide, so the reduction we are talking about represents a little over 8% of their workforce. Don’t get me wrong, that is a lot of families, but unfortunately layoffs of this size are not unheard of in our present day economy.

* It looks like Citi wasn’t going on a hiring tear to increase profitability or throwing people at their problems. They were playing the acquisition game that our financial institutions (both banks and CUs) are so in love with. The people were just by-products of the acquisition.

If you’ve got some spare time, look at the Citi 4th Quarter and Full-Year 2007 Earning Review. If I’m reading everything correctly, I read that 50% of Citi’s 2007 Expense Increases and that 75% of the Headcount Increases were due to acquisitions. All this to get a 4% boost in revenue. I know it’s crazy, but that’s the game everyone is playing right now.

What does this article and these comments tell me about the CU difference?

The difference between shareholder and stakeholder value is intrinsic in the bank v. cu debate. While some say the everyday corporate world needs to approach value from more of a stakeholder position, this article makes it clear that this is currently not reality. Credit Unions naturally take this position and it is evident in the way they approach everything they do.

However, I also believe that as banks become focused on stakeholder value, triple bottom lines, and the like, the magnitude of this competitive advantage could shrink significantly.

So here’s the question burning in my brain: At what point is laying off employees good for a credit union? I’m not talking about firing bad employees. I’m talking about letting people go to increase member value.

Presidents, GM, and Board Members: Would you let 1% of your staff go if you wouldn’t lose productivity and could drop rates across the board? What if it allowed you to offer more small business loans? More education loans?

Credit Union Members: How do you handle inefficiency at your cooperative? Would you let 1 employee (and fellow coop member) go if services didn’t take a huge hit and it meant everyone got a bigger dividend check?

You see what I’m getting at? I understand that credit unions are definitely more emotional about these things, but you can’t run a coop on pure emotion. (Even the “triple bottom line” still includes a financial line.)

I’m interested in hearing how real life CU people handle these types of things. Would you ever even consider this? Has anyone had to do this after a consolidation? Was it worth it?

(Anonymous or Pseudonymous comments are welcome. They kind of have to be!)

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