Raises At Small CUs Rise For 1st Time Since '01, Dip In '06

Register now

Salary increases at small credit unions are projected to rise this year for the first time since 2001, but that respite will be short lived, as raises are expected to dip once again in 2006, according to the Small Credit Union Salary Survey conducted by CUNA's Center for Research and Advice.

Moreover, salary increases at small credit unions continue to lag behind those of their larger CU brethren, CUNA added.

"The numbers for 2006 are sort of phantom numbers, but the projections are for raises to be lower," said Beth Soltis, senior research analyst for CUNA's Market Research department. "I think credit unions [responding to the survey] are being cautious. They're unsure of the economy, and the cost of benefits continues to be a problem."

While small credit unions, defined as CUs with fewer than $20 million in assets, are included in CUNA's general salary survey, the trade group offers a separate survey that specifically breaks out small CUs tso they may benchmark against their peers.

"A lot of the trends we're seeing for small credit unions are the same as what we're seeing for larger credit unions-increases in variable pay, decrease in wage freezes, for example," Soltis noted. "Small credit unions face the same challenges, but these challenges are often more difficult for smaller credit unions. Essentially, the trends are the same, but on a lower scale."

The projected salary increases are a perfect example. CUs overall are predicting a 3.9% increase in 2006 for management positions, up from 3.7% the previous year and in line with what's going on across a number of industries. Indeed, 2005 will be the fourth consecutive year of average pay increases across the board to come in below 4%.

But smaller credit unions are, not surprisingly, at the lower end of the scale with a budgeted 3.07% salary increase for management positions in 2006, down from 3.72% increase in 2005.

"I noticed that the larger credit unions are more likely to say that they have increased employee contributions to the benefits plans," she offered. "On the other hand, smaller credit unions are more likely to give internal applicants preference when they are hiring. Overall, it's pretty evenly split, but the larger credit unions tend to look outside, while smaller credit unions tend to look inside."

This is one area, Soltis said, that small credit unions might be able to turn into a benefit.

"A lot of people are expecting turnover to increase as the economy improves, and we're starting to see it in some segments, but not really at credit unions, yet," she noted. "But we should start seeing turnover increase at some point, and that's going to make employee retention a bigger deal. Small credit unions can use as a selling point that they are more likely to promote from within, and that could be one way they will be able to attract and keep good employees, by letting them see they have more opportunity to advance."

Finding ways to acquire and retain good employees is going to take some creativity, regardless of the size of the credit union.

"It's going to be more and more important to pay attention to training. Credit unions can't expect to be able to hire qualified employees (who don't need training), and offering better training programs will be an important hiring and retention tool," Soltis commented. "With the cost of health benefits continuing to rise, we don't expect to see any major increases in salaries, so credit unions are going to have to rely on different kinds of incentives and benefits packages instead of pay raises."

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER