Do you know why you pay your employees what you do? Just as important, do your employees know why you pay them what you do? And do they know what they can do to earn more?
Compensation management has always been a challenging issue for employers. Some might even call it “uncomfortable.” But today, during the COVID-driven “Great Resignation” in which more than 50 million Americans have already voluntarily left their jobs, being able to quantify and justify your credit union’s pay scales is not only beneficial — it can also be key to your credit union’s very survival.
"TO STAY COMPETITIVE, ORGANIZATIONS MUST BE ON TOP OF RAPID ECONOMIC CHANGES AND BE PREPARED TO BID AGGRESSIVELY AGAINST COMPETITORS TO ATTRACT AND KEEP TOP TALENT."
To compete successfully in today’s labor-driven economy, your credit union needs a compensation management system that:
Helps you determine the appropriate salary range for each position within your credit union.
Adjusts those salaries in response to changes in the local, regional, and national economies.
Shows employees the justification for their compensation packages.
Incentivizes performance excellence.
Gives employees an incentive to stay with your credit union and not seek work elsewhere.
Stands up to any legal challenges citing wage discrimination based on age, race, gender, or any other protected class.
Informed by these insights, let’s look at each of these issues in turn, posing questions we often get from our clients.
What is an "appropriate" salary?
Generating competitive remuneration involves more than just selecting a title, then seeing what similar companies in your market are paying for people with the same designation. As an employer, you must first define as granularly as possible exactly what responsibilities each job entails. (For example, the job of “vice president” can vary wildly from credit union to credit union. So can the education, skills, and experience necessary to fill that role.) Accordingly, an apple-to-apple comparison can be difficult to ascertain. Also, most businesses don’t make such information public, making it more challenging.
How do we adjust for economic change?
The past 20 years have been chaotic with so many economic shocks, including the Great Recession, the COVID-19 crash, The Great Resignation, and now, inflation. Credit unions can no longer get away with offering employees automatic 3 to 4 percent wage hikes each year. To stay competitive, organizations must be on top of rapid economic changes and be prepared to bid aggressively against competitors to attract and keep top talent.
How transparent do we need to be?
In decades past, it was considered bad manners to discuss one’s salary with coworkers. In fact, in some companies, talking about one’s compensation was grounds for dismissal. (Which has been ruled illegal by the NLRB.) This attitude is quickly falling by the wayside. Today, workers expect transparency when it comes to salaries and view bans on salary levels as a sign of deceit and exploitation.
BUSINESSES WHO WANT TO KEEP VALUABLE EMPLOYEES MUST PROVIDE A WAY FOR THEM TO ADVANCE.
What about incentives?
Offering bonuses and/or salary hikes is a proven way to boost worker engagement and productivity. But to be truly effective, a worker needs to know all relevant conditions of the transaction; just what does the credit union expect, and what are the rewards for meeting those expectations?
How can we better prevent employee turnover?
Many career counselors advise workers to find a new job every two or three years to maximize their income. And, in fact, the desire for higher pay is one of the chief reasons for The Great Resignation. As replacing employees is very expensive, companies need to do everything possible to prevent this kind of rapid turnover. Certainly, one of the easiest ways to do this is to simply provide your workers with a clear and attainable career path within your credit union. Provide a road to professional advancement and show them the kind of salaries they can expect to earn should they succeed.
How can we prevent legal challenges?
We all know discriminating based on race, age, sex, and disability is not only unethical but also illegal. But discrimination was around, and tolerated, for so long that it’s baked into many compensation structures, consciously or not. Creating a system under which “similar,” — not necessarily “identical” — jobs are paid commensurately can be difficult, especially from the inside. It may take an outside expert to devise a system providing true parity and the kind of justification that can withstand a discrimination lawsuit.
Compease from CUSG can provide your credit union with a sound, defensible compensation structure that addresses each of the above issues.
Reliable and regularly updated market data on a wide variety of positions based on multiple survey sources.
A solid compensation structure of salary grades and ranges.
Compensation consulting to map out your credit union’s salary philosophy to attract top candidates and help them progress through their remuneration tiers.
Justification for each salary range to support employee morale and help prevent wage discrimination lawsuits.
Used by hundreds of credit unions of all types and sizes throughout the United States, Compease is the 21st-century solution for one of business’ oldest problems. To arrange for your free demonstration of Compease, please contact CUSG today!