What the Data Show in the War for Talent

By Ray Birch

DUBLIN, Ohio—The war for talent is still heated but it could be cooling, according to new data that show the dramatic increases in credit union pay—especially at the upper levels—are beginning to soften.

As CUToday.info reported, new data released by CUES reveals base salary, base salary plus bonus, and total compensation packages increased last year across 20 of 22 positions at credit unions that are surveyed by the association. 

According to CUES, key findings in its most recent survey show:

• A credit union’s asset size continued to be the leading influencer on compensation levels.
• The most common length of a CEO contract is three years.
• 24% of reported CEOs are female.
• 93.1% of CEOs were reported to be eligible for bonuses (down from 93.8% last year) with an average bonus amount of 20.7% of base pay (up from 16.8% last year).
• The top four factors leading CEOs’ bonuses were earnings, board evaluation, loan growth, and membership growth.
• 63.9% of reported CEO’s are eligible for professional association membership(s) as a perquisite.
• Over 91% of CEO’s have a four-year college degree or higher.
• More than 25% of CEOs were reported to have the CCE designation, while the number averages less than 10% for non-CEO positions.

Still High, But…

“Overall, what we're seeing, among the executives, down to the salary positions and even to some of the hourly employees, is that compensation is still high,” said Scott Hackworth, president of Industry Insights, which conducted the study for CUES.

And it's particularly high at the top ranks, he said.

“For instance, the CEO's salary, on a same sample basis, is up about 8% from last year,” said Hackworth. “That's coming off of a 9% increase last year in the previous survey. Those are really large percentage changes for total compensation. Obviously, some of that is becoming more incentive based. So, it's based on the bonus as well.”

Actual salary is going up in the 5% to 6% range, Hackworth told CUToday.info.

“But, still, that's very hefty over the 3% to 4% historic annual shifts that we've seen,” he said.

An Ongoing Battle

What the numbers show, said Hackworth, is the war for talent remains very much a battle.

“There's still definitely a lot of demand for talent, a lot of interest in maintaining and retaining, and also attracting really good talent for those top positions,” he said. “But, there is a softening in pay increases a little bit from last year—and I think it will further soften this year.”

While demand from executives for more money will never go away, credit unions need to pay closer attention to the effects of big pay hikes on the bottom line, remiinded Hackworth, who thinks that is beginning to occur.

“For credit unions, seeing the close to double-digit percentage pay increases each year is getting hard to swallow,” Hackworth contended. “Unless it’s increasingly becoming heavily performance-based, to continue this trend just places a great deal of pressure on the credit union.”

Scott Hackworth

Boomers Moving On

Hackworth reminded the pressures placed on credit unions regarding CEO retention really began during the pandemic as a significant number of veteran leaders deciding it was time to retire, creating a shortage of talent and a large number of positions to fill.

“It's still an uncomfortable time,” he said. “You're still fighting for talent—the unemployment rate is at 3.5%, which is crazy. There's still a lot of pressure out there. However, it's feeling more manageable than recently, and that's across the board.”

Hackworth said he believes the data show credit unions have been extremely aggressive in recent years in their efforts to keep good talent at the top.

“They’ve been making sure they have maintained their executive talent,” he said.

New Incentives to Remain

Hackworth said the data also show credit unions have been focusing on hiring or promoting younger leaders, meaning somewhere down the road a second wave of retirements will eventually challenge a new generation of leadership.

“I think in the past credit unions may not have been that aggressive in incenting leaders to remain, and that has now changed,” Hackworth said. “We're seeing in the data that some of the CEOs and some of the top titles are younger than they have been, which is what we'd expect after a lot of the Boomers have moved out.”

Hackworth reiterated that the high percentage pay increases CEO leaders have seen in recent years is not sustainable.

“So, next year it’s going to be another 8%, 10%?,” he asked. “Those are difficult percentages to maintain, especially longer term. Some of this has to subside.  It's been 8%-9% increases, but we're expecting it’s going to fall to the 6%-7% range over the next couple of years.”

A ‘Robust Time’

Hackworth called it a “robust time” for credit union talent at all levels.

“We're seeing the salaries are increasing, and that is tied to total compensation. And, it’s extremely tied to the size of the institution,” he said.

The percentage of women CU CEOs continues to steadily increase, added Hackworth, pointing out the survey found 24% of CEOs are female. Other surveys of credit unions have found that figure to be significantly higher.

“That is a great trend. We’re seeing more diversity, as well, among races. But increases there, compared to the increase in female CEOs, is moving a little slower,” he said.

Report data comes from credit unions who participated in CUES Executive Compensation Survey and/or CUES Employee Salary Survey between Jan. 1 and April 17 of this year.  

For more info: CUES 2023 Compensation Surveys Executive Summary. CUES said its Unlimited+ members have free access to the results of both surveys.