Look Beyond Base Pay When Compensating Employees

By Beth Soltis
Senior Research Analyst
Credit Union National Assn.

Wage growth has remained flat the last few years and there are no signs that that’s going to change. According to Salary.com, salaries are projected to rise an average 3.7% nationally in 2006. This figure is virtually identical to what was reported in 2005 and, if it holds true, marks the fifth consecutive year of average pay increases below 4%.

Credit unions are not bucking the national trend. According to CUNA’s 2006 Complete Credit Union Staff Salary Survey, management wage increases averaged 3.92% overall in 2005 and 3.7% overall for nonmanagement employees. Not only are these figures similar to 2004 average wage increases, but they are also not far from the wage increases budgeted for 2006. As is typically the case, credit unions are cautious about the future, with anticipated wage increases for 2007 at only 3.15% for both management and nonmanagement staff.

Flat wage growth is of course preferable to wage freezes, the prevalence of which continues to decline among credit unions. Just 7% of credit unions with $1 million or more in assets implemented a salary or wage freeze in 2005, a decrease from 10% in 2004 and 15% in 2003. Furthermore, this trend is expected to remain steady at 7% in 2006.

As an additional compensation component, about 30% of credit unions with $1 million or more in assets and at least one full-time employee report that employees are eligible for incentive payments. Bonuses continue to be more common than incentives—overall, 53% of credit union managers and 40% of nonmanagement employees are eligible for bonuses.

While pay is the primary component of compensation, there are factors beyond money that contribute to a competitive compensation package. At a time when skilled workers are at a premium, many companies are using alternative strategies to compensate employees rather than increases in base pay. These strategies include flexible working hours, job training and supplemental insurance choices. Some workers, especially younger workers, value flexibility and learning opportunities as much as or sometimes even more than pay.

Credit unions actually have a valuable recruitment and retention tool in their back pocket: the credit union philosophy. A Filene Research Institute study that looked at credit union employees and their attitudes toward their credit union found that employees liked what they did, particularly in regards to helping members and providing service. Of significance, the study concluded that credit union staff often value their mission over money—if they understand that mission.

Underscoring the need for a compensation package that both attracts new employees and keeps high- performers at the credit union is the increase in turnover. This year’s Salary Survey found that among credit unions with $1 million or more assets and at least one full-time employee, 78% of job incumbents remained in their positions for all of 2005. This is a decrease from 84% the previous two years.

Credit unions looking to recruit and retain their share of skilled employees will need to offer competitive pay and monetary rewards, but also non-monetary forms of compensation. And it is essential that credit unions make sure their employees are aware of and understand the credit union mission.

Understanding the principals of a competitive compensation package is the first step in competing for and retaining top talent. The second step is making sure your credit union’s compensation program is competitive. CUNA’s 2006 Complete Credit Union Staff Salary Survey presents average salary, incentive, bonus, total variable pay, total cash compensation, and salary range averages for 89 full-time and 8 part-time positions within credit unions with $1 million or more in assets. Just the information you need to master compensation planning.

Additional tools available to purchasers of the report are:

• The Geographic Customized Salary Survey provides average and median base salaries in addition to percentiles for your local market(s).
• The Online Peer Comparison enables your credit union to access the survey data file for generating customized peer group comparisons.

In addition, created exclusively for small credit unions, CUNA’s 2006 Small CU Staff Salary Survey details base salary, incentives, bonus, total cash compensation, and salary range statistics for the most common positions in credit unions with $20 million or less in assets.

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