Low unemployment and increased salaries are making attracting and retaining talent more difficult.
When advancement opportunities are not available, credit unions are offering more in-depth training and face time with senior management.
CU QUICK FACTS
Directions Credit Union
HQ: Toledo, OH
Data as of 03.31.19
12-MO SHARE GROWTH: 16.2%
12-MO LOAN GROWTH: 17.7%
With the unemployment rate hitting a 50-year low of 3.6%, credit unions across the nation are competing like never before in a highly fluid job market. A 2018 Gallup poll found that 51% of U.S. workers were looking for or applying for a new job, and with several top-tier banks raising their minimum wages to $15 per hour, wage pressures are growing.
Average turnover rates for banks and credit unions peaked at 19.7% in 2018, according to BalancedComp’s annual salary and incentive survey. Average pay increase projections for 2019 reflect “the fastest market rate movement we have seen in eight years and definite proof that the typical 3% labor budget is not going to be adequate to stay competitive.”
The community-focused mission of credit unions does a lot to increase loyalty among employees, but these days, employee retention, training and development, and succession planning are front-burner issues for many HR executives.
“The reality is we’re not the Googles and Amazons of the world,” says Kathy Martin, senior vice president of development and support at Directions Credit Union ($880.7M, Toledo, OH). “Employees, particularly younger employees, are looking for fast advancement, but there’s not always constant movement upward. We’re focused on investing in employees, giving them more depth in what they’re doing for the credit union, and getting them in front of senior management.”
CU QUICK FACTS
HQ: Liberty Lake, WA
Data as of 03.31.19
12-MO SHARE GROWTH: 8.9%
12-MO LOAN GROWTH: 18.2%
Employee training and leadership development programs go hand in hand with succession planning. They help ensure a steady pool of future leaders. Whereas most succession activities are directed by the board and focused on the CEO, credit unions such as STCU ($3.1B, Liberty Lake, WA) have broadened standards to include other senior leaders.
“The succession plan started with a focus on the CEO, but it has now extended to any senior leadership team member or ‘key contributor’ in the organization,” says Laura Wood, vice president of human resources and organizational development at STCU.
Building an effective retention program involves an end-to-end approach to training, from new hire onboarding to development of senior-level competencies.
Directions provides a multi-tier program that includes:
A three-week new hire training program that introduces the credit union’s value statement, purpose, and products and includes a mock teller line to train new tellers on how to perform transactions and work with members.
A branch ambassador that mentors and coaches new hires.
Online development training and continuing education for which employees can earn pay raises, additional vacation, or even an associate’s, bachelor’s, or master’s degree from the credit union’s Star University.
A career pathing program that prepares employees to move to a new role. Employees can train for new roles in advance of a job opening, which puts them in a better position when a role does become available.
Monetary rewards — such as a $50 gift card — for receiving or renewing financial counselling certification.
A three-year, three-tiered leadership development program that covers basic leadership skills, long-term strategic planning, and high-level leadership competencies, all of which prepares participants to serve as a senior leader in the future.
“We believe heavily in education,” says Martin, whose credit union employees 330 people across 23 branches in Ohio and southern Michigan.
New Leaders. Existing Staff.
Training and development programs naturally feed into succession planning, where the first step focuses on evaluating internal candidates.
“Our preparation starts with identifying high-potential candidates who have the ability to work at the next leader level or above within two years,” says Wood, who recently helped revamp the STCU board’s succession planning and standards.
When a vacancy occurs at the president/CEO level, the board’s human resources committee assesses STCU’s current and five-year strategic challenges to determine the skills and attributes needed for the next chief executive. Focusing on key competencies, career experiences, and qualifications, the board reviews and updates the job description.
STCU’s plan also calls for an ongoing executive leadership development program that includes an annual status report from the president/CEO to the committee. The status report provides an evaluation of potential leaders according to a nine-box grid that separates high-potential candidates from moderate- to lower-performing ones based on factors such as past performance reviews, key project achievements, and success with development assignments.
“We typically give these high-potential candidates opportunities to accelerate development of additional leader competencies,” Wood says. “This can include assigning a mentor, creating development assignments, joining external boards and committees, or identifying continuing education programs and degrees.”
Right Skills. Right Attributes. Right Hire.
When a vacancy occurs at the executive level, STCU focuses on key competencies, career experiences, and qualifications to determine the skills and attributes needed for the new hire and updates the job description.
Setting vision and strategy
Problem solving / Decision making
Building and maintaining relationships
Business/Personal Affiliation Accomplishments
Senior Management/Financial Services
Credit Union Financial Business Model
Information Management Concepts
Source: STCU Succession Plan Policy and Standards
3 Tiers Of Development
The leadership development program at Directions offers open enrollment every year for up to 25 employees who have manager approval and at least one year of tenure. The program is in its third year, and, so far, more than 70 participants have participated in it. Of those, approximately 25% have decided not to pursue the next level of leadership training.
“We didn’t want to dub someone a future leader; we wanted to open it to the organization,” Martin says. “If someone goes through it and decides it isn’t for them, that’s OK. They don’t have to go on to the next tier.”
For those who want to attain a higher level of leadership, the program offers a natural progression for the development of their skills.
Tier 1: Leadership And Team Skills
Tier 1 covers financials, presentation skills, and team leadership. The class breaks into teams to address how to make interactions easier for members. At the end of the course, each team presents to senior management. The credit union has implemented a number of the teams’ projects, including a text message tool for indirect loan members, a round-up deposit account targeted to 18- to 30-year-olds, and an electronic process for online banking members to manage transaction disputes.
Tier 2: Strategy And Development
Tier 2 dives deeper into the financial statement and focuses on strategic thinking. A professor from Lourdes University helps participants evaluate their leadership skills. Second-year participants mentor first-year ones and work on business case studies in which they must build a three-year strategic plan for the organization. These plans, which participants also present to senior leadership, have included market expansion, mobile banking, lending growth, and member data insights.
“In the first year, participants create a singular project,” Martin says. “In Tier 2, they build a much bigger plan across multiple teams.”
Tier 3: Leadership Circle
In Tier 3, participants read Strategy for Credit Unions and The Art of Engagement, then pair up to teach one another what they’ve learned. The Lourdes University professor uses a self-evaluation and reviews completed by direct reports, peers, and other managers to survey each participant’s key leadership attributes. Participants learn how they view themselves versus how others view them and create a plan to close identified gaps in leadership skills.
“You might score yourself lower than your group did on a particular attribute; that gap might provide some enlightenment,” Martin says. “Three people from our senior team said they wished they had that feedback years ago. People learn a lot of positive things.”
The third year also includes a project in which participants participate in a ‘Shark Tank’-style pitch for a new strategy to improve the organization or engage staff and members.
“They have to use everything they’ve learned over the past three years to develop the strategy behind the idea, research it, and demonstrate the impact it would have,” Martin says.
Directions launched the leadership development program three years ago, and turnover has held steady at 6%. Only two of the program’s 70 participants have left the credit union. More noteworthy, some participants have received promotions and others have received rave reviews for leadership within their departments.
“We had one employee who was ready to leave and now is one of the strongest employees we’ve got in that department,” Martin says. “They’ve taken it to heart to be a leader. It’s been interesting to watch.”
Ultimately, Martin says, it’s up to each individual to put their training into action.
“It’s hard to measure whether someone will be a great leader,” she says. “Leadership is all about people. You can teach someone how to read a financial statement, but all the leadership training in the world isn’t going to help if you can’t get people to believe in you, trust you, and move forward with you.”
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