Credit Union Compensation Trends: Salary Increases Down, the Use of Variable Pay Up, and Change Is on the Way

By Chad Thiele
Senior Research Analyst
Credit Union National Association

The dismal economic conditions of the past few years continue to weigh on the minds of employers nationwide. This is reflected in the continued reluctance of employers to give their employees substantial pay increases.

The average pay increases given by U.S. employers amounted to 3.3% in 2003 and 2004 and is expected to increase only slightly in 2005, according to Mercer Human Resource Consulting.

CUNA’s 2004 Complete Credit Union Staff Salary Survey points out that although the average pay increases given to credit union employees continue to be slightly higher than the averages among corporations nationwide, pay increases for credit union employees continue to decline.

However, credit unions need to keep an eye on current economic conditions. If the economy picks up as CUNA economists predict, credit unions may need to make adjustments in their salary budgets in the upcoming years.

Credit unions can also help attract and retain top performers by supplementing their income with incentives and/or bonuses.

Although variable pay continues to be a small part of a credit union employee’s total cash compensation package, the use of variable pay is quite common. In fact, the use of variable pay is becoming more common in all industries. In a January 2004 Industry Week article, Leon Potgieter, principal and head of Towers Perrin’s Global Consulting Group states that, "In the last two years, the use of variable pay has grown worldwide as companies recognize the value of tying pay to performance and results. The use of variable pay has helped employers manage their cash outlay in a tough business environment while laying the foundation to share success with employees when the business results are there."

CUNA’s 2004 Complete Credit Union Staff Salary Survey goes on to say that in 2003, 13% of credit unions with $1 million or more in assets increased or implemented bonus payments. Furthermore, 12% of credit unions of this size increased or added potential incentives in 2003. In contrast, 6% of credit unions with $1 million or more in assets lowered or cut bonus payments in 2003, while only 2% of credit unions of this size lowered or cut potential incentives.

Overall, about 65% of U.S. credit unions with $1 million or more in assets and at least one full-time employee offered variable pay to some of their full-time management personnel in 2003. Likewise, in 2003, 60% of these credit unions offered variable pay to some of their full-time nonmanagement staff. Bonuses were slightly more common than incentives for both credit union management and nonmanagement employees in 2003.

If the economy picks up steam in 2005 as CUNA economists predict, credit union labor costs and turnover will increase in the near future. This will make your credit union’s task of attracting and retaining top performers even more challenging. Providing a competitive compensation and benefits package is one way credit unions can help attract and retain these highly skilled individuals.

A recent report that was released by the Society for Human Resource Management (SHRM) states that pay and benefits are among the top six items employees and HR professionals rate as "very important" to employee satisfaction.

The SHRM report also mentions that 87% of employees who are satisfied with their compensation are also satisfied with their jobs. Likewise, 89% of employees who feel that their pay is internally equitable are also satisfied with their jobs.

For more than 20 years, CUNA has been a trusted source for statistics on credit union staff salaries and benefits. CUNA’s 2004 Complete Credit Union Staff Salary Survey reports the average salary, incentive, bonus, total variable pay, total cash compensation, and salary range averages for 37 full-time management positions, 52 full-time nonmanagement positions, and 8 part-time positions within credit unions with $1 million or more in assets. Using salary surveys such as this one, credit unions can gain the information needed to compete for the top talent.

CUNA’s Center for Research & Advice also publishes the 2003/2004 Credit Union Staff Benefits Survey, the 2004 Geographic Customized Salary Survey, the 2004 Small Credit Union Staff Salary Survey for credit unions with less than $20 million in assets, and the 2004/2005 CEO Total Compensation Survey for credit unions with $100 million or more in assets. For more information, visit http://advice.cuna.org/ and click on "Reports".

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