Use Salary Data to Attract & Retain Skilled Staff
Setting appropriate staff compensation levels is crucial to recruiting and retaining skilled employees, encouraging and rewarding high performance, and ensuring your credit union’s competitiveness in the labor market.
But determining what to pay employees isn’t easy—it’s not simply a task of assigning monetary value to work performed. This process is influenced by the demand for particular skills and the perceived value of those skills.
Although organizations can pay only what they can afford, there are repercussions to paying too little or too much: Don’t pay employees enough and they’ll seek employment elsewhere. Pay employees too much and you’ll undermine your pay budget and profitability.
Credit unions must analyze market data and make market comparisons regularly to make sure their compensation levels are appropriate and competitive—ideally, every year or every other year. Three years is the longest an organization should wait between market comparisons, compensation experts contend.
Furthermore, most experts recommend using a minimum of three data sources when conducting a compensation analysis. Because organizations pay differently for different reasons, using multiple sources helps companies get closer to the “true” salary.
Is the data valid?
The best way to make market comparisons is to use industry data with organizations of a similar revenue size.
Asset size is the most important salary determinant for many credit union employees. Salaries for credit union positions tend to increase with asset size. Therefore, it’s important to examine the appropriate asset category when evaluating your credit union’s compensation figures.
It is of the utmost importance to use valid salary data when making market comparisons. Valid—or reliable—data refers to the extent to which the data can be considered accurate.
Because pay decisions will be based on the market data you use, it’s imperative that you be able to justify those decisions.
There are three standard criteria to help you discern whether salary data is valid:
1. Methodology: The methods used to gather and analyze the salary data.
2. Effective date: The specific date on which the organization paid that salary for that particular position.
3. Study sample: The industry or type of organization of the study participants, as well as the number of participants in the study.
Credit unions must be aware of the market value of employees’ positions and skills, as they must be prepared to provide counter-offers. As the job market improves, more workers will look for new positions.
In fact, 60% of employees plan to pursue new job opportunities if the economy improves this year, according to Right Management. Organizations that ignore the market and wait to conduct compensation analyses risk losing and having to replace quality employees.
CUNA’s Complete Guide to Setting Salaries can help credit unions develop compensation programs, make market comparisons, and monitor the competitiveness of their programs.
This report explains the steps involved in developing a compensation system and using market data from salary surveys to ensure compensation levels are appropriate, competitive, and effective in attracting and retaining key talent.
CUNA’s Guide to Setting Executive Salaries helps credit unions design compensation programs for executives, ensuring these plans reward executives for decisions that are in the long-term interests of the credit union, members, and employees.
This report uses peer comparisons to ensure executive compensation is in line with industry benchmarks, and provides guidance on how to select appropriate peer groups to attract and retain highly qualified executives.
BETH SOLTIS is senior research analyst for the Credit Union National Association.