Credit unions are paying a higher minimum wage to retain labor and ensure the best member service.
A boost in base pay can have a notable effect on a credit union’s staff without dramatically impacting the bottom line.
A raise in the minimum wage at American 1 Credit Union ($340.8M, Jackson, MI) is the result of a trickle-up strategy at the Michigan cooperative, one of many across the country boosting wages this year.
American 1 announced in May that it had raised its minimum wage by $2 to $13 an hour, paying out $954,405 more this year in salaries to its workforce of 183 FTEs, with everyone getting a bump except the CEO. ContentMiddleAd
Three-fourths of that increase went to hourly positions, says Laura Pryor, the credit union’s vice president of marketing and communications. We made the decision about the entry-level wage and then started discussions about the rest of the organization. We call it the trickle-up effect.
CU QUICK FACTS
American 1 Credit Union
Data as of 06.30.18
HQ: Jackson, MI
12-MO SHARE GROWTH: 3.9%
12-MO LOAN GROWTH: 7.9%
The current minimum wage in Michigan is $9.25 an hour. The federal minimum wage is $7.25 an hour. American 1 set the $13 base after studying its own salary structure and the labor market in which it competes. But that’s not the only perk of working at the cooperative.
We also have a fantastic benefits package, Pryor says.
That package includes health, dental, and vision insurance at no cost to full-time employees. And along with tuition assistance, American 1 pays as much a $200 a month toward employees’ student loans.
It’s an attraction and retention strategy, Pryor says. And it’s working.
It’s an attraction and retention strategy, and it’s working.
Competing For Labor
CU QUICK FACTS
Data as of 06.30.18
HQ: Winston-Salem, NC
12-MO SHARE GROWTH: 6.2%
12-MO LOAN GROWTH: 11.8%
As Labor Day arrives, the competition for labor is being felt nationwide. CUNA says in its 2018-2019 annual staff salary report that salaries are up by nearly 3% this year across the movement. But a growing number of them, like American 1, are going well beyond that.
Truliant Federal Credit Union ($2.4B, Winston-Salem, NC) is among those bumping its base pay to $15 an hour to address staffing in hot North Carolina markets like Charlotte.
There’s a lot of competition for talent in our larger markets, says Sherri Thomas, senior vice president for human resources and organizational development for Truliant, which reported 648 FTEs in its latest call report. Increasing the minimum wage is a good way to get in front of that challenge. ;
Happy Staff, Happy Members
Although the biggest impact is among entry-level and contact center employees, Thomas says, raising base pay helps attract new talent across the enterprise.
Many people don’t realize the breadth of careers we offer here, including marketing, IT, finance, accounting, training, member service, and many more, she says. Increasing our starting wage helps show this is a great place to start a career in different fields.
Paying more also is in sync with the movement’s core principles.
Credit unions are cooperatives, says American 1 president and CEO Martha Furstenau. We provide financial services to members, and when we’re as successful, we make it a priority to give back as much as we can to our members.
American 1’s second quarter ROA of 2.15% was the third highest among the 349 credit unions of $250 million to $500 million in assets nationwide, and the credit union has returned nearly $900,000 in loan interest rebates and $690,000 in bonus dividends in the past two years, Furstenau says.
Our sustained growth and incredible financial strength is driven by member satisfaction, the American 1 chief executive says. Member satisfaction is directly related to the level of service and care our staff provides to our members every day.
It shows our employees that we’re reinforcing our commitment to creating a more engaged workforce and not just paying lip service.
PR Bests Lip Service
Pay Up For PR
Credit unions that have raised their minimum pay are finding they’re not the only ones spreading the word and their brand. Here are just a few that have gotten some valuable free publicity along the way.
- Truliant coverage in the Winston-Salem Journal.
- American 1 coverage in Credit Union Journal.
- Notre Dame FCU coverage in the South Bend Tribune.
- EFCU Financial Credit Union coverage in CU Today.
- Coastal Credit Union coverage in the Credit Union Journal.
- Launch FCU coverage on Florida Today.
Offering hourly wage earners a bit more than the minimum is also a good move for public relations.
We give to the community, says Pryor at American 1. We give back to members. It makes good business sense to give back to our staff. That’s how we talk about it.
Pryor says the credit union’s announcement generated positive local media coverage and a lot of social media feedback from members pleased to hear their credit union was taking care of their employees.
Truliant had the same experience.
Some of the instant feedback we got on social media said, and these are direct quotes: That’s why when I walk in there the team members seem genuinely happy to be working there.’ Thomas says. Another said, Thank you for raising the bar! Maybe other businesses will follow your lead.’
Employee reaction also was positive, the credit union executives say, including from one teller at Truliant who told her bosses that she was now able to afford to buy a home.
Thomas says a higher wage does more than just increase quality of life and job satisfaction, it also reduces turnover and helps the credit union offer better member service.
It shows our employees that we’re reinforcing our commitment to creating a more engaged workforce and not just paying lip service, the SVP says.
Do The Right Thing
CU QUICK FACTS
Notre Dame FCU
Data as of 06.30.18
HQ: Notre Dame, IN
12-MO SHARE GROWTH: 17.1%
12-MO LOAN GROWTH: 24.7%
Tom Gryp, president and CEO at Notre Dame Federal Credit Union ($628.1M, Notre Dame, IN), says his cooperative, too, wants employees to know it backs up values with action and not just words. The minimum wage there is now $14 an hour for the credit union’s 182 FTEs. That follows a boost to $13.50 an hour last year, when the credit union also eliminated its two-tier system for paid time off for exempt and non-exempt staffers.
According to Gryp, he had an epiphany a couple years ago when he read an article about tellers being on food stamps. Indeed, according to a 2014 article from The Street, approximately one-third of bank tellers get at least one form of public aid.
It became clear to me that it didn’t matter what the minimum wage was, Gryp says. It also didn’t matter how competitive’ our wages were versus other credit unions and banks.
What mattered, Gryp says, is that the credit union expected employees to be the face of Notre Dame FCU, to be the best when it comes to delivering customer service to the member-owners. Yet, the credit union wasn’t paying them like they were the best. In fact, it wasn’t paying them enough, period, even accounting for things like referral bonuses that could boost their pay.
I was content paying them market wages even though those wages $10 to $11 an hour made it impossible for those partners to have a decent life, he says. It became obvious to me that it was morally wrong to have these partners rely on incentive pay just to get by.
How many tellers throughout your community could experience a meaningful wage increase if credit unions took it upon themselves to change the status quo?
The base pay boost affects approximately 25% of the credit union’s staff, yet the impact on the bottom line is not as dramatic as it might appear at first blush, Gryp says, since the credit union already provides annual pay raises intended to match inflation. Those bumps have been about 3% the past two years. But that’s not the real bottom line for Gryp.
Through this experience, I learned a lot about myself as a leader, he says. I’m responsible for the lives of our partners, their families, and, of course, our member-owners. I also gained a much clearer understanding of the opportunity that exists for our credit union industry.
Noting that his credit union has been able to effectively compete for talent because of its reputation as a place to work, the Notre Dame FCU CEO asks his peers to consider the collective impact that credit unions raising wages everywhere would have on the labor market.
If more of us would undertake this approach, can you imagine the positive impact it would have on the wage scale at other financial institutions? he asks. How many tellers throughout your community could experience a meaningful wage increase if credit unions took it upon themselves to change the status quo?
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