Credit unions leverage a mix of compensation adjustments and one-time bonuses to address inflation.
In July, the U.S. Bureau of Labor Statistics reported that the Consumer Price Index—a measure of the average change over time in the prices paid by urban consumers for goods and services—increased 9.1% between June 2021 and June 2022. “The 9.1-percent increase in the all items index was the largest 12-month increase since the 12-month period ending November 1981,” said the report.
The numbers haven’t improved much since then. The 12-month percentage change in September 2022 for all items in the CPI (the latest data available from the Bureau at the time of writing) was 8.2% before seasonal adjustment. “Increases in the shelter, food, and medical care indexes were the largest of many contributors to the monthly seasonally adjusted all items increase,” according to a CPI Summary released on Oct. 13. Food prices rose by 11.2% over the past year, and energy costs soared 19.8% despite a decline in the gasoline index in September.
What should CUs do about inflation?
Despite the record numbers, rising inflation and cost of living aren’t news to anyone paying the bills, and many employers have been considering salary and other compensation adjustments accordingly, amid an already tight labor market.
“I am interested in hearing how you are addressing the rising cost of living with salary strategies.
We have been considering the following options:
- Multiple increases for the year, one performance-based and a second for a cost of living [increase]
- Larger-than-standard increases between 4%-5%
- One-time bonuses that will not increase the base salary but will help offset the shortfalls in the cost of living
Thank you for your feedback.”
Several CUES members replied. Wendy Yow, VP/HR at $1.4 billion Credit Union 1, Anchorage, Alaska, reported that while bonuses in her organization remain based on performance, notable salary/wage adjustments were made:
“We did a larger-than-normal increase for all employees—providing a 5% increase across the board. Additionally, we provide quarterly bonuses for all non-management staff based on performance as well as annual bonuses … based on performance. We did a significant increase for our front-line staff due to our current market. (We are all competing for candidates from a small labor pool.) Finally, we do a salary/wage review each year based on survey information for our region and adjust accordingly.”
$1.9 billion KEMBA Financial Credit Union, Columbus, Ohio, announced a $525 inflation bonus for each of its 304 employees in October.
“Our associates are the No. 1 key to our success as a financial cooperative,” said CUES member Mark Decello, president/CEO of the credit union, in a press release. “Their well-being is of utmost importance. If they’re feeling financially overwhelmed, it’s going to trickle into their workday, and our goal is to remove some of that burden.”
KEMBA Financial CU also paid its annual success bonus, typically awarded during the holiday season, early this year. All employees received the tiered bonus—dependent upon their tenure—before the end of October. For example, a new associate making $40,000 annually would receive a combined bonus of nearly 2% of annual salary in addition to an annual merit raise and a profit-share contribution made yearly into each associate’s 401(k).
A Head Start on Helping Employees
That’s not to say credit union leaders have only just begun to consider the need to adjust compensation strategy in light of record inflation. The pandemic, rising costs and the war for talent had many organizations looking for ways to help employees and boost employee retention over the past year.
In a January 2022 statement, $28 billion SchoolsFirst Federal Credit Union, Santa Ana, California, announced salary increases to contribute to the financial well-being of its team members.
The CU increased entry-level starting salaries for all hourly positions. Base salaries for front-line staff who serve members over the phone or chat, such as contact center team members, now start at $18/hour and increase up to $27/hour, depending on position and experience—more than the California minimum wage of $15/hour (for employers of 26 or more employees). For branch team members, the starting hourly salary now begins at $20, with opportunities to earn up to $31/hour.
SchoolsFirst FCU adjusted salaries for current team members whose base salary was below the new minimums and also increased non-executive salary ranges by 5.5% to allow the opportunity for non-hourly team members to increase their earnings.
Last holiday season, $2.4 million Credit Union of Southern California, Whittier, California, issued two bonuses: a holiday bonus and an inflation bonus.
According to a November 2021 statement, the holiday bonus amounts varied depending on the role and tenure of the team member, while each full-time employee received a $1,000 inflation bonus. Part-time employees and those hired after Oct. 1, 2021, received pro-rated bonuses.
“This is our way to say ‘thank you’ for everything they have done and continue to do,” said President/CEO Dave Gunderson, a CUES member, in the press release. “We hope these bonuses take some of the financial burden off the collective shoulders of our wonderful employees.”
CUES member Michelle Hunter, CCE, chief communications/experience officer for the credit union, reports that in 2022, CU SoCal provided another $1,000 inflation bonus to team members and plans to make a bonus announcement (and another surprise announcement) at the credit union’s all team Building Better Lives Forum on Nov. 11.
CU SoCal will also be providing both cost of living and merit increases at a level that ensures compensation levels are competitive and fair to team members, Hunter adds.
Such adjustments haven’t gone unnoticed or unappreciated by credit union teams.
“When the [early bonus] announcement was made, the room erupted in applause,” said Mackenzie Krygier, human resources coordinator at KEMBA Financial CU, in the aforementioned press release. “I feel so fortunate to work for a company that recognizes the financial burden its employees are facing and steps up to do something about it. This will absolutely make a difference to me personally.”
Danielle Dyer is an editor at CUES.