Compensation Update 2001

The past several years have been challenging in getting and keeping people. Compensation remains a cornerstone in effective recruitment and retention of employees.

 
 

Cooke/Andres, Inc. is a broad-based consulting firm serving only the credit union community. Among other consulting specialties, Rhonda is known throughout the industry as being an expert in Human Resource needs for credit unions.

The past several years have been challenging in getting and keeping people. Compensation remains a cornerstone in effective recruitment and retention of employees. Here is information to keep your compensation competitive that can also be used for 2001 budget development:

  1. Analyze your credit union jobs to the market. The labor market requires that this level of analysis be conducted no less than every two years. Use several data sources and ensure as many reported incumbents per
    position as possible.

  2. Check the unemployment rate for your area on a periodic basis. This is a good indication of how "tight" the labor market will be for a given period. During the last ten years, national unemployment "peaked" at 7.4% in December 1992, but has consistently fallen each year to reach the current low of 3.9%.

  3. Adjust an existing salary range structure by 3% to support the Consumer Price Index (CPI). The Bureau of Labor Statistics reports that CPI has increased by 2.7% for the period January-August 2000 (3.4% for the 12-month period, August 1999 to August 2000). It is anticipated that CPI will increase to approximately 3% for the 12-month period, January-December 2000.

  4. Budget for a minimum "average" salary increase of 4.5%. The Bureau of Labor Statistics reports a 4.2% change in wages and salaries for January-August 2000. It is anticipated that this figure will remain unchanged or will increase slightly for the remainder of the year. Further, a recent study conducted by the American Compensation Association indicates that organizations will continue salary growth in 2001 of at least 4%.

  5. Budget a larger "average" salary increase, if possible. We recommend that credit unions budget for an average salary increase between 5% to 8% (provided they can afford the percentage they select). Many credit unions do not compensate their employees at or near the salary range midpoint (which should represent the competitive market rate). This can result in issues, such as: (1) creating internal inequities as new hires are brought in at the same or higher rates than are currently paid to existing, experienced staff, and (2) increasing turnover of experienced staff who look to the outside for competitive market pay, often for similar types of jobs.
 

 

 

Nov. 27, 2000


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