Human Resources

Compensation Caution

CUs continue to be cautious with their salary, benefits, and hiring strategies.

August 09, 2011
KEYWORDS management , staff , wages
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Turnover trends down

Credit unions have historically treated employees well. The industry has a reputation for investing in employees and valuing their ties to the community. Credit union employees, who often enjoy generous benefit packages, are aware of this goodwill.

But credit unions can’t rest on their laurels. “Employees have been known to stick with credit unions, but everybody has their limits,” Soltis says. “Ensuring that employees feel valued and play a significant role in the credit union’s success can inspire employees to hang in there.”

In Birmingham, bank consolidations have put many workers in the financial services market out of jobs. So competition for jobs remains high, and local industry unemployment has most of America’s First Federal’s staff staying put. “I think people were less likely to be looking around in the past year or so,” Connor says. “Most people were saying they were glad to have the jobs they have.”

The credit union’s turnover rate was down to 14% in 2010 after regularly ranging between 16% and 20%. But even with fewer jobs available, Connor acknowledges credit unions still risk turnover, particularly among lower-paid, less-experienced front-line staff. “They’re likely to move to another employer for a thousand-dollar raise,” he says.

It’s critical to pay a fair and competitive wage not only for employees’ best interests, says Connor, but also for the credit union’s best interests. Staffing consistency provides security and breeds member confidence, the importance of which cannot be overstated when overall consumer confidence in the financial sector has been shaken by scandal and government bailouts.

“The turnover in front-line staff is particularly disruptive for members. So much of our business is relationship-based, and members like to know who they’re dealing with,” Connor explains. “Members like to recognize a face. They like to be called by name. Every time you have new people there, you have learning curves. Members can sense that.”

Wages aren’t all that matter to employees. In a recent staff survey at America’s First Federal, employees indicated maintaining benefits was as important, if not more so, as increasing wages. The credit union responded by absorbing a relatively modest increase in health-care premiums rather than cutting coverage or passing the cost on to employees.

“I think our employees were very excited we weren’t chipping away at our employee benefits because of the economic situation,” Connor says.

This sentiment seems to hold true for the industry, as only 10% of credit unions reduced or eliminated benefits in 2010, while 45% froze wages and 16% cut or lowered bonus payments.

JoAnn McCausland, senior vice president of human resources (HR) for TruMark Financial Credit Union, cautions credit unions against looking at any of the employee compensation data in a vacuum.

Last year, TruMark Financial—a $1.2 billion asset credit union in Trevose, Pa.—increased wages and added 14 full-time employees, 12 of whom staff two new branches, while the other two are back-office hires in information technology and mortgage lending. The suburban Philadelphia credit union hasn’t touched the employer 401(k) match, nor has it adjusted any holiday schedules.

Overall, the credit union had a tremendous year. In fact, TruMark Financial has met its performance goals for the past four years.

The credit union implemented a health insurance premium, however, for single-employee coverage. In the past, it fully covered employee health insurance costs, and it continues to supplement dependent coverage.

Implementing the premium in isolation might be interpreted as an indication of financial insecurity or caution, but it wasn’t, says McCausland. Faced with double-digit increases in health-care costs, the credit union determined it made better sense to increase the employee contribution, while simultaneously creating a reimbursement program to offset some of that impact.

Next: Candid communication

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