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Skilled Worker Shortages and Cost of Living Burden on Credit Unions
 

How credit unions are impacted and overcoming these challenges

As we enter a new decade, cost of living continues to outpace salaries across many of the nation’s major metropolitan areas. As not-for-profit institutions, credit unions struggle to provide competitive salaries. They are not just in a competition with banks for skilled employees, but other credit unions as well.

The 3.5% unemployment that was reported in December 2019 isn’t making things easier. That’s down from the already low 3.9% rate at the end of 2018 (U.S. Bureau of Labor Statistics [BLS]).

On the other end of the spectrum, we are seeing a significant trend in lack of skilled workers across the U.S. in mid and small-sized economies. Even if cost of living is not a problem here, finding skilled workers, such as accountants, compliance officers and IT managers to fill credit union positions has proven increasingly difficult. "Not only are skilled college graduates leaving their hometowns to find work in large cities, but the ones that do stay are often drawn to larger companies and don't consider looking at a credit union," says Nate Rogers, VP of Business Development and Marketing at CU Service Network. "Many may not even know what a credit union is."



What Credit Unions are Saying

Five credit unions from vastly different regions: Denver Metro, CO; Tucson, AZ, Pocatello, ID; Silicon Valley, CA; and Washington, D.C. have shared their pain points and what they are doing to overcome these challenges.

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Horizons North CU
Horizons North CU, Denver, CO Metro Area,  $90M assets

Krista BurnellFinding qualified workers for our industry can be quite challenging in the Denver area during this time, as workers tend to expect a larger salary range to offset the high cost of living. In recent years, even our entry level positions have increased substantially in terms of starting wages and there is a struggle to remain competitive. Small credit unions like ours tend to find it a challenge to balance a lower starting wage than banks, with fewer opportunities for growth as well.

However, there are opportunities that our industry, and specifically smaller credit unions, can provide to offset these factors. Employees highly value an environment which supports continued educational growth, and an organization who cares about them as individuals with different needs. A work environment which fosters healthy working relationships, focuses on putting employees first, and empowers them to do a great job every day will go a long way towards closing that gap and ensuring staff happiness and credit union success.  

- Krista Burnell, SVP Organizational Development

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Tucson Old Pueblo CU, Tucson AZ, $152M assets

Marianne ScarzelloTucson has a good cost of living, however salaries are lower than in other states (95% of the national average) so some employees from out of state will not take this into consideration when coming from areas with a high cost of living. The number of qualified applicants has not been at record levels either. In order to combat these issues, we have focused on three main projects: Company Restructure, Training & Development and Compensation. For the latter, I created a strategy that calculated the amount of experience each employee had and developed a percentage-based plan whereby the amount of experience in each position determines what percentage in the range they should be. The improvement of our compensation strategy has allowed us to begin offering more competitive starting salaries, as our current employees are equally compensated. We are still not the highest paying employer, but we are also able to offer great benefits, and our positive culture has created an increase in referrals.

There are other factors such as focusing on culture, engagement and retention. As long as employees feel valued, understand that their voice matters and are constantly learning, then you will have a workforce that doesn’t want to leave, that continually helps the credit union grow and makes the members happy to be a part of your community.

-  Marianne Scarzello, Human Resources Director
 

ISU CU





ISU CU, Pocatello, ID (Home of 12,000 enrollment Idaho State University), $240M assets

BJ FillingameOver the years, Idaho hasn’t been immune to the lack of skilled workers and the impact of the cost of living outpacing salaries. Idaho is one of the fastest growing states in the nation so there are many employment options available and it’s a real struggle to fill certain positions. The competition is fierce locally as well; there are many bank and credit union employment options for workers, so you really have to sweeten the pot to try and attract that skilled labor force. The way we try and bridge that gap is to offer an exceptional working culture and work-life balance. That seems to be very important to a lot of employees and potential employees. That “employee-first” strategy has had a positive impact on retaining and recruiting top talent.

-BJ Fillingame, VP of Marketing


 

A Need for Accountants

With the entire labor market tightening, the demand for accountants in particular has been fierce. The BLS is predicting that the demand for accountants will increase 6% or more through 2028, in line with the average growth rate for all occupations.

"We constantly hear about how challenging it is to find skilled accountants to staff credit unions," says Diane Parham, CFO of CU Service Network and head of Outsourced Accounting Services. "Turnover is high, and new employee training tends to be quite long due to the unique nature of credit union accounting - often six months before the accountant is fully independent."

Chabot CU






 

Chabot FCU, Silicon Valley, CA $70M assets

Christine PetroAs a very small employer in very large Silicon Valley, competing for talent is virtually impossible so I have to rely on virtual solutions!  The going rate for qualified accountants, controllers and CFOs in the greater San Francisco Bay area is more than my CEO salary and, in many cases, even double my compensation.  At best, I have found my budget, both here and at my previous, larger CU, only permits me to hire entry level accounting personnel and those candidates have no relevant experience and typically do not have even high school level writing skills. This problem exists for all management level openings as well as lending department positions, but the accounting positions are most extreme. 

The cost of living is an issue for us so much so that employees typically have very long and unreliable commutes since they live in more affordable areas 60-90 minutes away.  I’m fortunate in that my current staff all reside in a roughly 30-minute radius from our office, but nearly 100% of my candidates for openings reside much further away. I also have a fairly unique issue relating to the cost of living.  My non-exempt staff are all covered under a collective bargaining agreement, and their bay area COLA increases over the years have caused their hourly wages to end up well above market for their positions, and limits my compensation budget for new hires.

-Christine Petro, President/CEO

Georgetown CU
 


 

Georgetown FCU, Washington, D.C., $18M assets

Washington is right behind San Francisco and New York as far as housing, transportation and day care costs. You read about it all the time - people having to work additional jobs to make ends meet. It's a very challenging city when you consider that the cost of living keeps going up.

The regional salary demands make it difficult for small credit unions to hire a very strong accountant. Recent accounting graduates are asking for compensation that far exceeds the budget of many small credit unions. Furthermore, Washington is a very transient city, which lessens the number of skilled workers that a credit union our size can attract. We have to compete with the government and large companies in the surrounding areas, Virginia and Maryland, which have great jobs. These are reasons why we outsource our accounting to CU Service Network.

Our credit union is small - And I'm fortunate to live in the city and much more fortunate to have bought my house 20 years ago. I have an easy commute, but for most of my staff, they come from nearby Virginia and Maryland and have to deal with the traffic, which can sometimes be an hour or even two hours depending on weather. Because of this hardship, the credit union provides a travel voucher. We also provide an array of benefits. I make an environment that's team oriented. I try to alleviate some of the stress employees have working in an ever-changing city.

- Michael Ray, CEO


 

The credit union industry is feeling the brunt of the socioeconomic condition of the United States. We hope that this report sheds light on the challenges that many credit unions are facing and proves that your credit union is not alone in finding, and keeping, the talent you need to operate your organization.

Many credit unions are unaware of the outsourcing options that have recently become available in the market. Did you know that we offer outsourced accounting, the same service that Georgetown FCU is using, as well as a variety of other solutions? If you find it difficult to overcome the challenges this market is presenting, please reach out to see if we could be a fit for your situation.

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