The Price of Top Talent
CUs try to retain their best and brightest without busting their budgets.
Attracting and retaining highly engaged, skilled staff has always been a difficult challenge. And in this age of lean compensation budgets, this task has become even more difficult.
As the competition for top talent and specialized skills continues to increase, credit unions will need to review and possibly adjust their salary ranges more frequently to ensure relevance and to maintain a competitive position.
Working with senior management, human resource (HR) professionals must make sure credit unions have the strategies they need to compensate and reward essential staff and top performers.
Recruit and retain
Recruiting and retaining top talent will be one of the most important and difficult challenges facing HR executives in the next decade, according to multiple surveys of HR executives.
Many HR professionals say the challenge lies in creating a corporate culture that attracts and retains the best and brightest employees, remaining competitive in the talent marketplace, and finding employees with increasingly specialized skills.
“Financial firms are cutting thousands of jobs because of a slowdown in the mortgage business, a sluggish economy, growth of online banking, and new regulations,” according to a recent USA Today article.
The same article described the financial industry as the “top job-cutter…due to more banks closing branches and building smaller outlets as more consumers bank online.” This isn’t good “press” for HR professionals trying to attract qualified candidates and encourage careers in the credit union movement.
Credit unions’ average employee turnover rate is 12%, with turnover for front-line staff running as high as 18%, according to CUNA’s 2013-2014 Turnover and Staffing Report. Regional variations exist, however. A survey by the HRD Network of credit unions in the western region found average turnover of 17% and as high as 28% for some positions. There most prevalent reasons for employees leaving their credit unions are career-advancement opportunities, compensation issues, or dissatisfaction with managers.
This means the search for qualified candidates will be never-ending.
After exhaustive and expensive candidate searches, it’s essential to retain the employees you worked so hard to attract and bring on board. Adequate training, recognition, and feedback are paramount to employee job satisfaction, which in turn leads to higher levels of engagement and retention.
Credit union HR professionals must rethink their recruitment and retention strategies so credit unions become “employers of choice” in their markets. Consider partnering with your marketing team to develop recruitment strategies. Identify the characteristics that make your credit union unique and a great place to work. Then, find ways to leverage those characteristics to your advantage.
If you’re not sure what those characteristics are, ask your most engaged employees. Research shows that members of Generation Y are particularly interested in working for organizations that have a social mission and exist for reasons other than to maximize profit. Credit unions’ cooperative business model and social mission are a perfect fit for them. Leverage those organizational qualities and differentiators to your advantage.
NEXT: Employee benefits
Benefits are an important component of any employee compensation package—especially health insurance. But again, because of tight budgets, offering a competitive benefits package is difficult.
The U.S. spends about $2.6 trillion annually on health-care services, more than any other nation, according to the Society for Human Resource Management (SHRM).
It’s not surprising, then, that nearly 80% of HR professionals responding to a SHRM survey said rising health-care costs were their main concern for the near future, and 75% said health-care reform legislation was their second biggest concern.
The average overall increase in credit union benefit costs was 9.2% in 2013 for credit unions responding to a HRD Network survey. The greatest portion of that increase was for medical plans. And the Affordable Care Act mandates—allowing dependents up to age 26 to remain on their parent’s plans, no lifetime maximums or pre-existing exclusions—have increased benefit costs for credit unions. And laws changing domestic partner coverage also have increased many credit unions’ costs.
While many credit unions have absorbed the additional expenses, others have passed on all or some of the additional expenses to their employees.
About half of credit unions responding to the HRD Network survey made changes to their 2014 benefit plans to help manage rising costs. Changes include:
Self-directed health-care plans, health savings accounts (HSAs), and high-deductible plans are gaining in popularity as ways to reduce benefits costs for employers.
But these options do shift much of the responsibility for managing health-care expenses to employees, many of whom aren’t up to the task. Implementing these types of plans requires extensive employee education and communication if these plans are to be well-received and effective.
Employers are trying to manage escalating costs while still demonstrating concern for their employees’ health-care needs.
One way to do this is by offering employee wellness programs. Sixty-one percent of employers offered wellness programs in 2012, up slightly from 58% in 2008, according to the SHRM report.
Employers responding to a 2012 WorldatWork survey said they implemented wellness programs to improve employee health (85%), increase the perceived value of their benefit plans (79%), decrease premiums (77%), improve employee productivity (73%), and increase employee engagement (72%).
The survey also found that 87% of employers believed their wellness programs had either a positive or extremely positive effect on employee engagement, 71% said the programs lowered health-care costs, and 61% saw a positive or extremely positive effect on absenteeism.
The cost of employees’ benefits can add 25% to 30% to employees’ total compensation costs. But many of your employees are unaware of just how much your credit union contributes to their health and welfare benefits; time-off benefits; bonuses; payroll taxes; loan discounts; and required insurance, such as workers’ compensation.
Employee engagement and satisfaction
Many HR professionals are working on employeeengagement strategies and on recruitment and retention strategies for employees with critical skills. But this is no easy task—100% of the HR professionals responding to a 2013 HRD Network survey said the ability to attract qualified candidates is their No. 1 recruitment challenge.
The increased demand for specific technology skills compounds that challenge.
In such a competitive marketplace, many credit unions have been willing to pay top dollar for top performers from other credit unions, making the challenge of retention even more difficult. And competition for skilled employees will only increase as the economy improves.
HR professionals will need to be strategic in their efforts to attract and retain employees with critical skills, and they’ll need to have succession plans in place in case they lose those employees.
Many credit unions conduct annual employee-engagement surveys to track levels of satisfaction over time. This can be an effective way to identify trends and issues to address.
Be sure to communicate survey findings to employees along with action plans for addressing declining levels of employee engagement or satisfaction.
It’s important to let employees know their voices have been heard by senior management. Even if your credit union doesn’t have the resources to address low levels of employee satisfaction, it’s still important to let employees know they’ve been heard.
NEXT: Succession planning and leadership development
Succession planning and leadership development
Employees expect to be fairly compensated for their skills, education, and tenure. What might be even more important to them, however, are career advancement opportunities.
Many employees will leave their credit unions if they don’t see clear career paths. As training budgets have been trimmed during the past few years, the ability to provide leadershipdevelopment and career-advancement programs were also trimmed, even though HR professionals say leadership development is a critical element of succession planning.
Two-thirds of credit unions had succession plans in place as of year-end 2012 and another 14% expected to have them in place as of year-end 2013, according to CUNA’s 2013-2014 Staff Salary Report.
With 30% of all credit union CEOs older than age 60, it’s important for credit unions to revisit their succession plans to make sure they’re current. More than half (52%) of respondents to a recent SHRM survey said “developing the next generation of corporate leaders” is one of the top challenges HR executives will face in the next decade.
About two-thirds (67%) of credit unions responding to CUNA’s salary survey say internal candidates are in line to succeed their CEOs. But what about the other one-third of credit unions? If you haven’t identified an internal successor, do you have plans to develop an internal candidate, or is your plan to recruit externally?
CEO recruitment can be expensive and time consuming, but some credit unions might have no other option. In either case, develop a formal plan and timeline sooner rather than later.
This will require the board of directors to work with the HR executive and, where appropriate, the current CEO to develop a comprehensive plan that you can easily enact when the time comes.
Even a short-term vacancy in the CEO position can have negative implications for the credit union’s performance, employee morale, and industry perceptions.
Having a clear succession plan, on the other hand, can minimize disruption and streamline the transition to a new CEO.
Variable pay and employee recognition
Variable pay can be an effective way of recognizing and rewarding employees.
About 83% of all U.S. companies offer some form of variable pay, according to WorldatWork. Variable pay in credit unions, however, is lower than the national average with only about 64% of credit unions offering it, according to CUNA’s salary survey.
About 55% of credit unions provided bonuses to management and nonmanagement employees in 2012, although offering bonuses to management employees (55%) is more prevalent than bonuses for nonmanagement employees (48%).
Aside from variable pay, many credit unions use other methods of rewarding employees.
Consider these five tips for using rewards to recognize your employees’ exceptional performance, according to Derek Irvine, executive vice president at Globoforce, writing in WorldatWork:
1. Make the rewards matter.
2. Reward frequently and in a timely manner.
3. Give rewards of choice.
4. Reward everyone when appropriate.
5. Measure results to ensure success.
Today’s multigenerational and culturally perse workforce has unique needs and desires.
Many organizations implement recognition and award programs that let recipients select their own rewards through a gift catalog or a gift card. This type of program can be very successful because each award is personally relevant to the employee receiving it. These programs can be extremely motivating.
Irvine also suggests employers consider programs to recognize all employees. “Programs that target incentives only to the top performers might sacrifice the employee-engagement opportunities of recognition for all,” Irvine says. “When strategic recognition principles are made available to all employees, companies can change their culture to one that is motivational, encouraging, and engaging. The result is improved performance across the entire organization.”
Adapted from the soon-to-be-released 2014-2015 CUNA Environmental Scan.
DEBRA SALLEN is vice president of human resources for Alliance Credit Union, San Jose, Calif.