Protect and minimize impacts to your workforce and business.
Businesses across the country are in the middle of what is known as “The Great Resignation”, with employee quit rates recently reported at 3%, according to the U.S. Bureau of Labor Statistics. It’s an outcropping of the extended global pandemic, corresponding with shifting political, social and economic forces, often referred to as “challenging times.”
Credit unions, like the rest of America, are affected.
Four Things to Understand
So, what does your institution need to understand as an employer to successfully journey these stormy waters? It starts with recognizing the following leading factors contributing to “The Great Resignation.”
- Employees are leaving because they’re disengaged. It’s a common experience that society today exhibits less patience. Many of us are increasingly reclusive, following numerous months filled with fear and uncertainty in addition to restrictions and rules that impact almost all aspects of life and work. Disengagement is a theme in life and work.
- The workforce demands flexibility and work/life balance. While many employers have instituted remote and hybrid employment options, organizations in the service industry (like credit unions) cannot offer this level of flexibility for consumer- (credit union member-) facing services. How can this not be a source of frustration for employees, when family members and peers in other industries can take advantage of flexible work options but they can’t?
- People don’t see opportunities for advancement. Almost 90% of millennials say they would stay in a job for 10 years if they knew they’d get upward career mobility, according to statistics cited by CNBC. They are leaving their jobs because they do not see a path upwards in the midst of other factors that they may have overlooked in pre-pandemic times.
- Compensation is more important than ever. Entry-level wage increases have been countered by inflation, which poses further threats to compensation for middle- and upper-level staff, fueling executive retirement gap concerns. Increasing costs of living and reduced supply of certain goods are stretching budgets. Employees want to be paid more.
Three Steps Toward a Remedy
Consider three areas of focus to position your credit union for success in motivating your employee base, rising talent and senior leaders during this delicate time.
- Create an empowering culture directly from the top. Leaders must lead through example and help bring up those that surround them. An empowering culture allows employees to own their careers and make decisions in their day-to-day environment. This enables leaders to cultivate confidence in their employees. Those employees that start to excel and grow in confidence will self-identify as upcoming leaders. They will master invaluable lessons from learning how to prioritize their days to what tasks to put the most effort into. Employees will feel a sense of ownership and pride in the credit union. This helps retain talent because they know they are part of the larger picture and feel valued.
- Leadership mobility is key to retaining employees and preventing turnover throughout your employee base. It starts with understanding where your current and future leaders want to go in their careers. A recent survey revealed that only 43.2% of people feel that they have internal mobility op-portunities, according to statistics from Randstad RiseSmart.
Being transparent about how to move up the ladder is an important factor for talent retention.
Designing a mobility ladder starts with identifying the needs of the credit union and positions that will be needed for future success. Once those positions and gaps are identified, the real work begins by building out a mobility playbook. A mobility playbook not only helps your top performers by showing them a path to leadership—it can also protect the credit union by identifying succession gaps and options.
- Offer short- and long-term incentive programs. Short-term incentive programs have traditionally been designed around results. These may include results-driven year-end or quarterly bonuses. While short-term incentive programs are great for the here-and-now, they do not always work for retention. Employees may hang on until the end of year only to leave once they receive their bonus.
Long-term incentive programs are generally focused on retention, rewarding, and recruiting. In the credit union space, we see these programs designed as either nonqualified 457(f) programs or collateral assignment split-dollar programs.
There is a misconception, though, that these programs can only be for top-level executives, when in fact these programs can be offered to any credit union employee who is deemed deserving or who has been identified as someone at risk of being poached.
Typically, 457(f) plans can be designed several different ways, including as a defined benefit, a target benefit or defined contribution plan. They can be positioned to keep individuals at the credit union through a time of transition or entice an individual to stay until they are able to move into their next position. The plans have numerous uses and time frames with risk of forfeiture dates.
Collateral assignment split-dollar programs are another long-term incentive program. This program characteristically has vesting periods of seven to 10 years but can be built for retention and reward.
Your credit union can combine short-term incentives with long-term incentive programs to retain those individuals focused on the long-term goals and growth of the credit union.
We don’t know how long this period will last, but we can make a difference.
These important considerations will help reset the tone and re-engage your staff at all levels. A happier and motivated employee base translates into stronger services for members and stronger communities.
Your employees, leaders, members and communities all deserve a bright financial future.
Danielle Scodellaro, CFP®, ChFC, is executive benefits specialist at CUESolutions Platinum provider Cuna Mutual Group, Madison, Wisconsin. She holds various FINRA securities registrations, her Certified Financial Planner designation, Chartered Financial Consultant Designation as well as life, health and annuities licenses.