Tips for responding to four 2021 trends that impact how you reward your team
Like just about every other conceivable organization, credit unions across the country felt economic, operational, and social impacts in 2020. The pandemic took its toll on credit unions, as we saw many move to greater virtual and remote services, as well as limit in-person branch transactions. More importantly, employees were impacted from a health and safety perspective, as well as a changing work environment.
With major changes to the way we work occurring as we enter 2021, we also find changes and trends affecting how we compensate and reward our employees. Some of the major compensation trends today affecting credit unions include:
- Remote work and workplace flexibility
- Upstream effects of a living wage and minimum wage increases
- Spotlight of pay equity and risk mitigation
- Increasing prevalence of executive retention tools
If your credit union does not assess and adapt its compensation strategy in light of these trends, your organization’s approach to rewards may just be tailored to a time that has already passed you by. Now, some of those trends may be front and center for your organization already; we see many in the financial sector leading the way with a $15 minimum wage. However, for other trends like remote work and pay equity, credit unions may not have fully fleshed out their approach and adapted their compensation strategy.
We want to stress that we use the term “trend” related to these topics, not to represent them as something that could be considered short-term or a fad but to denote that these are strong forces pushing organizations to rethink their strategy, and those forces are only increasing.
Take remote work and workplace flexibility as an example. Although credit unions are monuments within the communities they serve, recent research suggests the financial sector may have the most potential for time spent working remotely than any other industry sector. Additionally, research suggests that for workers that are highly educated and highly skilled, more than 20% of the workforce could work remotely three to five days a week as effectively as they could if working onsite.
If embraced, credit unions could immediately expand their recruiting radius, not just across town or across the state, but across the country. As a result, an organization that previously never worried about or considered geographic pay differentials may need to account for pay differences of underwriters in Seattle, Topeka, Kansas, and Jacksonville, Florida.
- What will be the organization’s strategy moving forward?
- How will the credit union understand the market and the differentials?
- What does it mean for our staff working fully onsite versus fully remote?
All are new questions faced by credit unions; the responses affect the organization’s compensation strategy going forward.
Another major trend is the recent push for minimum wage increases. As mentioned earlier, many credit unions increased their entry-level start rates years ago to $15 an hour. This had major effects on attraction, as well as the financial well-being of those workers employed by the credit union.
However, with a regulated push for higher wages, it means increased competition and broader elevation of base wages. This creates compression of pay levels within the credit union into higher-level jobs. But at what level does the impact stop: with like jobs or those with a relative job worth, first-line supervisors, management levels? How will your organization address broader minimum wage increases affecting jobs within the credit union?
Other trends, like greater pay transparency and pay equity as well as executive retention needs, are impacting the industry. They impact talent at all levels of your organization, as well as your rewards systems.
Credit unions that intentionally review their compensation philosophy and strategy on an annual or biennial basis will be the organizations that evolve and thrive. If you do not take time to step back, assess the work environment, and consider the impact of trends on your rewards systems, you and your organization will be constantly reacting. By adapting your compensation strategy, your credit union can stay ahead of peers in the industry and be intentional in your decision-making about your total rewards programs.
Jennifer Hassrick is consultant and operations manager and Matt Shefchik is senior consultant at Carlson Dettman Consulting, a Cottingham & Butler company. Carlson Dettman specializes in compensation strategies, employee engagement and related business services. Cottingham & Butler is a privately held insurance broker that specializes in innovative property and casualty and employee benefit insurance solutions. Reach Shefchik at 608.467.0696 or on LinkedIn.