Navigating Compensation Challenges in the Growing Credit Union

For fast-growing credit unions, compensation is often a key factor in attracting, retaining, and motivating top talent. However, rapid growth can introduce several challenges. Here are the top compensation concerns that fast-growing credit unions typically face:

1. Pay Equity and Internal Consistency

• Ensuring pay equity across different roles, departments, and locations can be difficult as credit unions scale quickly. New hires may come on at different pay levels compared to existing employees, leading to potential issues around fairness and internal consistency. Credit unions need to maintain a transparent and equitable compensation structure to prevent dissatisfaction and potential legal risks.

2. Competitive Compensation Packages

• With competition for talent increasing, especially in high-growth area, fast-growing credit unions must ensure their pay packages are competitive. This includes not only base salary but also bonuses, equity, benefits, and other perks. Failure to remain competitive can lead to difficulty attracting or retaining talent, especially as competitors may offer more attractive packages.

3. Retention and Long-Term Incentives

• Retaining top talent as the organization scales is a critical concern in fast-growing credit unions. Compensation strategies need to incorporate retention mechanisms, such as long-term cash or performance-based bonuses, that incentivize employees to stay long enough to see the company's success. Without clear long-term incentives, there’s a higher turnover risk, especially when employees get approached with offers from competitors.

4. Budget Constraints and Profitability Pressure

• Rapid growth often comes with the pressure to keep costs under control, which can affect compensation strategy. As the company grows, maintaining a balance between being competitive in the market and adhering to the company's financial constraints can take time and effort. Credit unions may have to make difficult decisions about whether to prioritize hiring, offering higher compensation packages, or investing in other areas like technology, marketing, or compliance.

5. Bonus Concern: Performance Management and Compensation Alignment

• As a credit union grows rapidly, aligning compensation with performance becomes even more critical. Fast growth often means more roles and responsibilities, but it can take time to scale performance management systems. Ensuring that compensation is directly linked to individual and company-wide performance metrics is critical to maintaining motivation and driving the desired business outcomes.

Addressing these concerns requires a well-thought-out, flexible compensation strategy that adapts as the credit union grows, remains aligned with business goals, and meets employees' evolving expectations. A strong CHRO with a good C&B leader is critical for winning in today's environment.

Many companies are currently assessing their capabilities in this area. If you want to ensure you have all of these boxes checked, let me know. I have advised CXOs in this area for decades.