CU Bonus Program Results


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CU Bonus Program Results

  1. 1. BONUS PROGRAM SURVEY REPORT Conducted for Staley Credit Union Fall 2012 Compiled and Prepared by Kenneth C. Bator President Bator Training & Consulting, Inc.
  2. 2. BONUS PROGRAM SURVEY REPORT Table of ContentsExecutive Summary – Page 4Results and Interpretations from Responses: What is your credit union’s approximate asset size at the time of this survey? – Page 4 What is your credit union’s approximate number of members at the time of this survey? – Page 5 How many people do you currently employ? How many full-time? Part- time? – Page 6 How would you characterize your credit union’s field of membership, i.e. single sponsor, community, SEG-based, other? – Page 7 If single sponsor or SEG based, how would you characterize the industry you serve, i.e. healthcare, law enforcement, union-based workers, education, etc.? - Page 7 How would you describe your credit union’s geographical region, i.e. rural, industrial, mid-tier city, major metro-area, other? – Page 8 What is your geographical region? – Page 9 How often is your bonus program reviewed, i.e. annually, every three years, as needed, other? – Page 10 How involved is the board of directors in determining the bonus program? – Page 11 Does your credit union have one inclusive program for all levels of the organization or are there separate structures for management and non- management employees? – Page 12 2
  3. 3. BONUS PROGRAM SURVEY REPORT Table of Contents - Continued For management, our bonus program is based upon the following. – Page 13 For non-management employees, our bonus/incentive programs are based upon the following. – Page 14 Are there tiers to your bonus program? – Page 15 How often does your bonus program pay out? – Page 15 Is any portion of the bonus payout at the discretion of management or the board or is the entire program set by specific and unchanging parameters? – Page 15 Is your bonus program seen as a motivator to exceed goals among both management and non-management employees? – Page 16 Does your bonus program serve as an instrument in retaining key and high-performing staff? – Page 16 Are periodic updates on the status of components of the bonus program communicated with staff? – Page 16 Is your bonus program truly aligned with your credit union’s culture and brand or is it solely an extension of your strategic plan alone? – Page 16 How often is your credit union’s bonus program updated? – Page 17 When reviewing and updating your credit union’s bonus program do you consider the following? – Page 17 Does your credit union employ multiple bonus/incentive programs for different departments? – Page 18Conclusions – Page 18 3
  4. 4. EXECUTIVE SUMMARYThe bonus program survey conducted during the latter half of 2012 by Bator Training &Consulting, Inc. (BTC) was done for and commissioned by our client Staley Credit Union(SCU) in Decatur, IL. As BTC facilitated SCU’s strategic planning project, somequestions arose concerning the institution’s bonus and incentive programs. Throughthose conversations, a genuine interest developed in how other credit unionsimplemented and managed these programs.Thus, BTC and SCU worked jointly to develop a survey that was sent to nearly 1,000credit unions ranging in asset size from $75 million to $250 million. A total of 65 creditunions responded and participated giving us an approximate participation rate of 6.5%.The finding from the survey can be considered in two ways: the first being an exercise inobtaining information and possible validation among peers and the second as a researchproject. In regards to the former, there is significant value in the report for communitycredit unions under $250 million in assets with less than 25,000 members and fewerthan 60 employees headquartered in the Midwest as the data is clearly skewed towardthose demographics. As a market research study, these results are a good start butfurther data would need to be gathered from a larger sample size in order to trulydetermine trends and tendencies.RESULTS AND INTERPRETATIONS FROM RESPONSESWhat is your credit union’s approximate asset size at the time of this survey?A total of 63 of the 65 credit unions that participated in the survey reported their assetsize. The average asset size was just under $141 million. The breakdown was asfollows:13 – Larger than $200 million in assets11 – Between $150 million and $200 million in assets18 – Between $100 million and $150 million in assets21 – Under $100 million in assets 4
  5. 5. What is your credit union’s approximate number of members at the time of thissurvey?The average number of members among the 63 participating credit unions that reportedtheir member count was just over 15,500. The breakdown was as follows:9 – Between 25,000 and 50,000 members. This group ranged in assets from $185 to$239 million.34 – Between 10,000 and 25,000 members. This group ranged in assets from $75 to$250 million.20 – Under 10,000 members and ranging in asset size from $77 to $193 million. 5
  6. 6. How many people do you currently employ? How many full-time? Part-time?All but one of the respondents reported their employee totals. The average number ofemployees among the participant group was 46. The largest number of employees, 140,was reported from the sixth largest credit union to participate at approximately $230million in assets. Not surprisingly, this credit union also reported the largest number ofmembers at 50,000.The fewest number of employees reported was 13. This was reported by two creditunions. One a $95 million credit union with 6,000 members where all employees are full-time. The other an $80 million credit union with just over 9,000 members reporting 11full-time workers and two part-time.The breakdown of total employees among the participants was as follows:6 – Over 90 employees. With theexception of the credit union with thelargest number of employeesmentioned above, the number ofmembers range from 25,000 to justunder 40,000. With the exception ofone credit union with an asset size of$174 million, the other five institutionsin this sector ranged between $210million and $240 million. Notsurprisingly the $174 million creditunion had the highest percentage ofpart-time workers at 24%. The otherfive institutions had a percentage of full-time workers at 84% or higher with the highestpercentage being 97%.8 – Between 60 and 90 employees. All but one credit union in this group rangedbetween $185 million and $250 million in assets. The exception was the smallest creditunion of the eight at $145 million in assets. Unlike above, this credit union although thesmallest in the range, had a high-percentage of full-time employees at 96%. With theexception of one $240 million credit union which had 26% of their employees listed aspart-time, the percentage of full-time employees ranged between 90% and 100%. Thetotal number of members varied between 20,000 and 30,000 for this group.32 – Between 30 and 60 employees. There was a wide disparity within this sector inasset size, number of members, and percentage of full-time employees: from $75 millionto $234 million, from 8,300 to 25,000, and from 57% to 98% respectively.19 – Less than 30 employees. With the exception of one credit union, asset size rangedbetween $75 million and $140 million. The exception, a $193 million institution, had thefewest number of members (5,000) and one of the lowest totals of employees (14)among all survey participants. The remainder of this group ranged from 6,000 to 14,300members with a relatively wide range in percentage of full-time employees from 67% to100%. 6
  7. 7. How would you characterize your credit union’s field of membership, i.e. singlesponsor, community, SEG-based, other? If other, please explain.Of the 65 participants, the vastmajority characterized theirinstitution as a community creditunion – 45 (69%) to be exact. Thenext highest category was SEGbased credit unions at 23% (15).The remaining five credit unionscharacterized their organization asa single sponsor.Of the five single sponsor creditunions, there were no distinctsimilarities except for thepercentage of full-time employees. Each were between 90% to 100% in the full-timeemployment category.There were no distinct similarities among the 45 community credit unions or the 15 SEG-based credit unions. There was a wide disparity among asset size, number of members,number of employees, and percentage of full-time staff.If single sponsor or SEG based, how would you characterize the industry youserve, i.e. healthcare, law enforcement, union-based workers, education, etc.?Of the five single sponsor credit unions, two serve educational professionals. The largestof the five is a healthcare credit union. Meanwhile the other two described the industriesthey served as “other”: one as financial/agriculture and the other as insurance.The industries served by SEG based credit unions varied widely. Only two groups of twowithin labeled their institution as serving the same industry with one being manufacturingand the other being union. One credit union serves healthcare professionals whileanother serves the educational community. The remaining nine credit unionscharacterized the industries they serve under the following written categories: lifescience, multiple, municipal, government, postal, agriculture, chemical/government,municipal/government, and N/A. 7
  8. 8. How would you describe your credit union’s geographical region, i.e. rural,industrial, mid-tier city, major metro-area, other? If other, please explain.Of the 65 total participants, 61credit unions chose to answer thisquestion with the largestpercentage, 24 credit unions(39%), categorizing their locationas a mid-tier city. The next twomost chosen categories wererural and major metro area eachrepresenting 25% (15) of this 61credit union group. Of theremainders, six chose “other”while one chose the industrialcategory.Among the largest segment of thisgroup, credit unions located in amid-tier city, 11 are community credit unions. Seven of these mid-tier city institutions areSEG based and two are single sponsor. Asset sizes, number of employees, andpercentage of full-time staff varied widely among this sector. The only obviouscommonality, which would be expected among institutions located in a small to mediumpopulated city, is number of members. All but one credit union fell into one of the twosmaller categories of members listed above with 25,000 or less. The single organizationwhich was above is just slightly over that total with 25,900.All of the 15 institutions in rural areas are community credit unions. Similar to thecategory discussed above, there was no distinction in asset-size or number ofemployees but, again as would be expected in this type of region, the number ofmembers for each CU was 25,000 or under. There was only a mild distinction inpercentage of full-time employees with 10 of the 15 employing less than 15% of the staffas part-time.Among the 15 credit unions located in a major-metro area, the group was split almostevenly with eight community credit unions and seven that are SEG based. Theseinstitutions have a relatively high percentage of full-time workers. All but one thatreported number of staff have 84% or more of their employees at full-time. Over a thirdof this group have 10% or less of their staff listed as part-time. The total number ofemployees, number of members, and asset-sizes varied widely.There were no distinct patterns or similarities among the remaining seven credit unionsthat reported a geographical area. 8
  9. 9. What is your geographical region? (Please circle)Nearly half of the credit unions participating in the survey are located in the Midwest(42%). Given that this survey was commissioned by a credit union in the Midwest, itwould be expected that many of this institutions peers would want to participate. Theregion with the second largest number of participants is the East Coast with 14(21%).The next two regions represented were the South and Mountain with seven (10%)and six (9%) credit unions respectively.Among the largest group, Midwest credit unions, there were no clear similarities in assetsize, employees, or members. There was a large number of community credit unionslocated in mid-tier cities among this group but that is to be expected from the datadiscussed above.All of the East Coast credit unions participating were either SEG based (eight) orcommunity (six). All but two of these institutions have a relatively high percentage of full-time staff of 85% or more. All have 25,000 or less in total members. No other clearsimilarities were found.All of the Southern credit unions have less than 25,000 members, less than 66 totalemployees, and a percentage of full-time staff higher than 85%. All but one arecommunity credit unions. Four are located in a mid-tier city, while another two are inmajor metro-areas. There was a large range in asset size from $75 million to $220million. 9
  10. 10. How often is your bonus program reviewed, i.e. annually, every three years, asneeded, other? If other, please explain.Among the 65 participants,62 credit unions answeredthis question with nearly 60%(37) stating that their bonusprograms were reviewedannually. The next largestgroup representing 14institutions (23%) answered“as needed” while anothernine responded with “other”.The remaining two creditunions review their bonusprograms every three years.None of the respondents review their bonus programs every two years.Of the 37 credit unions that review their bonus programs annually there were no specificsimilarities in any of the categories discussed above. This suggests that of thoseinstitutions that offer a bonus program it tends to be the norm that it will be reviewedannually.Of the 14 credit unions that simply stated that the bonus program was reviewed on an“as needed” basis there were no distinct similarities with the possible exception ofnumber of employees. All of these institutions employ less than 100 staff members. Onthe surface this might suggest that credit unions with a smaller staff size would be moreapt to review their bonus structure less frequently. However, 12 of the 37 participantsthat evaluate their program annually have less than 30 employees. Therefore, thefrequency of review based on staff size would not seem to be a reliable trend.Among the nine credit unions answering “other” one stated that the program has beenthe same for years and three others simply answered N/A. However, five institutionsanswered that they did not have a bonus program. Two of these five participants didstate that they did offer incentives though. Somewhat surprisingly four of the institutionsthat do not have a bonus program are community credit unions and one is SEG based.One would assume that these credit unions would be focused upon growth and wouldutilize a bonus program to motivate certain behaviors in their staff. However, the SEGbased organization and one of the community credit unions do offer incentives. Thethree credit unions offering no bonus or incentives are organizations under $120 millionin assets that have fewer than 30 employees and 12,000 members or less. The twocredit unions offering only an incentive program are $75 million institutions with less than60 employees and 14,000 members. No other distinct trends were noticed. It could besurmised from the data that small credit unions are more apt to not offer a bonusprogram or to simply offer incentives but a sample of only five credit unions would seemto be too insignificant to make that statement. 10
  11. 11. How involved is the board of directors in determining the bonus program, i.e. theydetermine the program, they collaborate with management, they approvemanagement’s proposal, they are not involved, other? If other, please explain.Six credit unions did not answer this question. Meanwhile, 17 participants gave multipleanswers. Nearly half (48%) of those answering the question stated that the boardapproves management’s proposal of the bonus program. A board and managementcollaboration was chosen by 30%. Of the remaining respondents 10% answered “other”,8% stated that the board determines the bonus program, and only 4% claim that theboard has no involvement in determining the program.Among the 48% group, there were no discernible similarities or trends based upon thedata discussed above. This would simply suggest that it is a norm among credit unionsthat management would present a proposal to their board of directors for approval orfurther review. While 27 of the credit unions participating chose only this answer, sevenchose “collaborate with management” suggesting that the board would do more thansimply say “yes” or “no”. In other words, the proposal would not merely be “rubberstamped”. 11
  12. 12. The next largest section of respondents of 30% also showed no discernible similaritiesor trends based upon the data above. One possible minor correlation among these 21credit unions comes in the area of size of staff as all of these institutions have less than100 employees. This could suggest that there is more of a family style culture, ratherthan a corporate style culture, among credit unions with a smaller staff that lends itself toa higher level of collaboration with the board. However, other factors within this groupsuch as region, asset size, number of members, etc. vary widely. An additionalcorrelation would lead to a stronger conclusion of this theory. Of these 21 credit unions,13 solely chose this answer while seven also chose “approves management’s proposal”.One credit union chose three answers, the two aforementioned choices and that theboard determines the bonus program.As over 75% of the respondents chose either solely or a combination of the two answersof “collaborate with management” and the board “approves management’s proposal” it isreasonable to assume that credit unions between $75 million and $250 million in assetswill generally have a high level of management involvement in the determination of thebonus program. This may not be a significant revelation as sound business practicewould have management play a leadership role with the board in place for “big picture”oversight.There were no clear similarities among the six credit unions that solely or partially statedthat the board of directors determines the program. One possible exception lies in thatthree of the four credit unions that answered 100% that the board determines theprogram are located in rural areas. However, that is much too small of a sample to makeany assumptions with any certainty.There were no obvious trends among the remaining respondents. Of the remaining 10credit unions seven answered a version of “other” while three stated the board was notinvolved at all in determining the bonus program.Does your credit union have one inclusive program for all levels of theorganization or are there separate structures for management and non-management employees?A total of 55 credit unions answered this question with the result being almost an evensplit: 29 institutions stated that their bonus programs were all inclusive while 26answered that they have separate programs for management and non-managementemployees. There were no discernible trends based on the data above for either group.One possible exception may be that 23 of the 29 institutions with one inclusive programfor the entire organization have less than 60 employees. On the surface this could lendsome credence to the theory of the “family” culture among credit unions with less staff inthat an all-inclusive bonus program creates a sense of “we are all in this together”.However, given that nearly 80% of all respondents to this survey employ less than 60people, this finding is difficult to substantiate. Furthermore, seven of the 26 credit unionsthat stated they implement separate bonus programs for management and staff havefewer than 30 employees. 12
  13. 13. For management, our bonus program is based upon the following: (Circle all thatapply)Earnings, Loan Growth, Membership Growth, Corporate Goals, IndividualPerformance, OtherAs expected, the majority of respondents answered with a combination of the choicesgiven. A composite of the answers show the following overall basis for a managementbonus program:23% - Earnings20% - Corporate Goals19% - Loan Growth14% - Membership Growth14% - Individual Performance10% - OtherNot surprisingly more than75% of management bonusprograms are based upon keyfactors of financial healthsuch as earnings, loangrowth, and membershipgrowth. It is assumed that corporate goals will include most if not all three of thesefactors. While individual performance is a component in management’s bonus amongthe respondents it is not only a low percentage but also only one credit union respondedthat individual performance is the only factor in determining the bonus.Of the 53 credit unions responding to this question, 16 participants responded that theybase their management bonus program on one specific criterion. The highest number,five, base their program on corporate goals. This is aligned with the findings above. Fourcredit unions responded that they base management’s bonus purely on earnings. Oneuses only loan growth as the basis while another is on individual performance. Theremaining four replied “other”. 13
  14. 14. For non-management employees, our bonus/incentive programs are based uponthe following: (Circle all that apply)Earnings, Loan Growth, Membership Growth, Corporate Goals, Product Growth,Individual Performance, Referrals, Satisfaction Ratings, Job Responsibilities, OtherAlso as expected, in terms of non-management bonus and incentive programs, themajority of respondents answered with a combination of the choices given. A slightlyhigher percentage of those responding to this question chose a combination of factorsrather than a sole criterion. A composite of the answers show the following overall basisfor an employee bonus program:19% - Individual Performance14% - Loan Growth13% - Earnings11% - Corporate Goals10% - Membership Growth8% - Product Growth7% - Satisfaction Ratings6% - Referrals6% - Other5% - Job ResponsibilitiesUnlike management bonusprograms, incentives foremployees are weighted moretoward individual performance.Not surprisingly, the second highest category is loan growth as that is one of the primarydrivers of financial health. Earnings, corporate goals, and membership growth round outthe top five factors. There seems to be some alignment between employee andmanagement bonus programs in that the top five criteria are the same. However, theyare in a different order of importance suggesting that employee rewards are weightedmore toward individual performance and management bonuses are based more oncorporate or team success.Of the 52 credit unions responding to this question, 13 participants responded that theybase their employee bonus program on one factor only. Three stated that the bonus isbased on individual performance alone. However, three also base their program oncorporate goals while another three answered “other”. Among the remaining four, twoanswered product growth, one answered earnings, and one answered loan growth. 14
  15. 15. Are there tiers to your bonus program - for example threshold, goal, and stretch?A total of 47 respondents answered this question with 31 stating that they do offer atiered bonus structure. There seemed to be only one discernible trend in that 12 of the16 credit unions that did not implement a tiered structure have an all-inclusive programfor employees and management. Meanwhile only 10 institutions with a tiered structurewere all-inclusive.How often does your bonus program pay out, i.e. annually, semi-annually,quarterly, other?Of the 58 participants respondingto this question 40 (69%) pay outa bonus annually. The only othersignificant category was just that“other” with 22% answering inthis manner. Of the remainingcredit unions, three pay outquarterly, one pays out monthly,and one pays out weekly.Among the 13 credit unions thatanswered other, the commentarygiven was related to different payout timing for the separatemanagement and employeebonuses. Nine of these respondents stated that the management bonus is paid outannually while employee rewards are paid out on a quarterly or monthly basis.Is any portion of the bonus payout at the discretion of management or the boardor is the entire program set by specific and unchanging parameters? (Circle one)YES NOOf the 53 respondents to this question, only 17 responded that neither the board normanagement had any discretion to change the program. This suggests that the majorityof credit unions have some flexibility to change the bonus throughout the year givencertain circumstances. However, 11 of the 17 do review the program on an annual basisand 12 have all-inclusive programs. 15
  16. 16. Is your bonus program seen as a motivator to exceed goals among bothmanagement and non-management employees? (Circle one) YES NOOf the 56 respondents to this question all but 10 feel that their bonus program acts as amotivator. One credit union stated that their program is a motivator for employees butnot for management. This credit union does have separate programs for the two groupswith tiers.The expectation would certainly be that a bonus program if implemented properly wouldbe a motivational tool. Eight of the ten credit unions stating that it is not are communitycredit unions. This is also surprising as these institutions are generally focused ongrowth. Fortunately, all but two of these credit unions review their programs annually andcan possibly retool the program to create a higher incentive.Does your bonus program serve as an instrument in retaining key and high-performing staff? (Circle one) YES NOA lower percentage stated that their bonus program served as an instrument forretention. Only 36 of the 58 respondents claim that the bonus is a factor in keeping keyand high-performing staff. This leads to a question of whether the incentives areinsufficient or if other factors such as salary or culture serve as a better instrumentamong the other 22 credit unions for retention.Are periodic updates on the status of components of the bonus programcommunicated with staff, i.e. posted on the intranet or bulletin board, discussedduring all staff meetings, reported during one-on-one meetings, etc.? (Circle one)YES NOAll but 11 of the 54 respondents stated that the status of bonus components arecommunicated to staff on a periodic basis. All of the 11 credit unions that do notcommunicate progress on factors related to the bonus pay out annually or morefrequently. One would assume that this group would also have a negative response tothe motivator and retention questions but that is not the case as the percentages of “no”answers for each are 45% and 55% respectively.Is your bonus program truly aligned with your credit union’s culture and brand oris it solely an extension of your strategic plan alone? Please explain.Ten credit unions answered this question in the optimum fashion in that their bonusprogram is aligned with the brand, culture, and strategy. Another 22 respondents statedthat bonuses are aligned with the strategic plan which is a common and acceptablepractice. Twelve feel their incentives are tied properly to the credit union culture andbrand. 16
  17. 17. How often is your credit union’s bonus program updated, i.e. annually, every threeyears, after every strategic planning session, other? If other, please explain.The majority (71%) of respondents update their bonus programs annually. Given theanswers to the earlier question of “How often is your bonus program reviewed,” it wouldbe expected that 42 out of 59 credit unions would answer in this manner. It is somewhatsurprising that only one credit union stated that bonus structures are updated inconjunction with their strategic plan.When reviewing and updating your credit union’s bonus program do you considerthe following? (Check all that apply)Success of the program in conjunction with exceeding corporate goals, Managementfeedback, Employee feedback, Financial health of the organization, OtherOnly five of the respondents stated that one lone factor provided the basis for updatingthe bonus program. Three stated that updates were solely made based upon thefinancial health. One said that the success of the program in conjunction with exceedingthe corporate goals is the determining factor while the other attributes updates tomanagement feedback.The majority of the participants, as expected, explore a number of factors when updatingtheir bonus programs. The following is the overall breakdown of the factors:30% - Financial health of the organization25% - Success of the program in conjunction with exceeding corporate goals22% - Management feedback17% - Employee feedback6% - Other 17
  18. 18. Does your credit union employ multiple bonus/incentive programs for differentdepartments, i.e. lending, business development, frontline, etc.? YES NOOf the 57 respondents to this question, slightly more than half answered that they do notemploy multiple programs for different departments. Not surprisingly all 30 credit unionsthat answered “no” have fewer than 100 employees suggesting that the smaller the staffthe less likely the need or desire for multiple programs. Fifteen of this group of 30 haveall-inclusive structures. All 30 pay out their bonuses annually or more frequently.CONCLUSIONSAs inferred in the summary and comments on the responses, the small sample size andthe slant towards a certain set of demographics make it difficult to determine trends andtendencies with great confidence. While the data provides a good beginning from amarket-research perspective, further information from a larger and more diverse samplewould be necessary. However, for credit unions that fall squarely within the sample – i.e.Midwest financial cooperatives with less than 25,000 members and fewer than 25employees – some valuable information and validation can be gained.From a validation perspective, there were few surprises in the responses. The practiceof conducting an annual review of bonus structures by more than half of the respondentswas to be expected. The vast majority, over 70%, also update their structure on anannual basis. Reviewing bonus programs “as needed” by nearly a quarter of the surveyparticipants was also anticipated as it was assumed that smaller institutions would staywith a program that is perceived to be working. However, based on this sample, therewas no reliable correlation in that the fewer employees resulted in a lesser need toreview a bonus program on an annual basis.Somewhat surprising was that five of the 65 credit unions participating did not offer abonus program. That may seem like a small number on the surface but that stillrepresents 8% of the total sample. If implemented properly, bonus programs can be oneof the key drivers in proliferating the brand, enhancing the culture, and executing thestrategy. While two of these five institutions do provide incentives to frontline employees,even eliminating them represents 5% of the sample that do not offer any type of variablepay.Over 75% of respondents reported a high level of management involvement in thedetermination of the bonus and incentive structures. This was to be expected as it is theboard’s responsibility to provide guidance and oversight while it is management’s job tolead the institution. Only 8% stated that the board of directors controls the process ofdetermining the bonus structure. From the data, one could assume that boards of ruralcredit unions would be more apt to control the process. However, the sample size is toosmall to state this assumption with any confidence. 18
  19. 19. There was no true distinction in a preference for an all-inclusive program formanagement and staff versus two separate structures as the sample was split almostevenly down the middle. While at first the data seemed to suggest that the feweremployees the more apt an institution would be to have an all-inclusive structure. Giventhe characteristics of the sample and upon further examination, this assumption couldnot be substantiated. Over 25% of the participants with less than 30 employeesimplement separate structures for management and staff. There was some mildcorrelation in that credit unions with fewer employees were less likely to implementmultiple programs for different departments, i.e. a separate program for businessdevelopment, lending, frontline staff, etc.Not surprisingly more than 75% of respondents base their bonus program on key factorsof financial health such as earnings, loan growth, and membership growth. Most alsoimplement a tiered structure. Tiers are generally a wise practice as it allows the team todivide goals into stages rather than viewing them as one large and audacious whole.Also as expected, in terms of non-management bonus and incentive programs, themajority of participants base their structures on a combination of factors rather than asole criterion.While there could have been some confusion in the question as to how often bonusesare paid, it would seem safe to assume that the majority of credit unions will pay out abonus on an annual basis while incentives will be paid more frequently. It is a commonlyaccepted practice that individual incentives, such as sales commissions, will be providedon a weekly or monthly basis. This is based on the axiom that providing thecompensation as close in timing to the completion of the rewardable action createsgreater motivation.As expected the vast majority of respondents felt that their programs served as amotivator for staff. Although still a majority, a lesser number reported that the bonusand/or incentives served as a tool for retaining key staff. More data would need to beobtained to determine why there wasn’t a better correlation between motivation andretention. An assumption could be made that other factors, such as salary or upwardmobility, play a greater role in retention but that cannot be fully determined from thisdata.It was assumed that most survey participants that offer bonuses and incentives wouldreport on a regular basis key financial data and accomplishments that provide thefoundation for these programs. This was the case but still 11 out of 54 (20%) stated theydid not provide this information to staff. This is rather surprising as a key component toemployee engagement is involvement and communication.Employee engagement is also critical in creating alignment among the brand, culture,and strategy of an organization. To that end only ten respondents stated that theirprograms were based on all three aspects. Aside from the sample size of this project,this seems to be the norm as the interconnectivity of the brand, culture, and strategy isn’tcommonly discussed during planning sessions or board and management meetings. 19
  20. 20. Finally, as expected, when reviewing and updating bonuses and incentives for thecoming year, the respondents take multiple factors into account. The leading factors ofcourse being the financial health of the credit union and the success in exceeding goals.Although lesser percentages, management and employee feedback do come into playas well.Again, while the sample size of this survey project may not lend itself to determine keytrends among the industry, the data does provide some validation in regards to theimplementation of bonus programs among credit unions employing less than 60employees. Here are some key takeaways from the report for credit unions that matchthe demographics of this study: 1. Most credit unions do implement a bonus program. Therefore, it is a wise practice to have one and to update the structure on an annual basis. 2. Management should be the driver in the process of implementing bonus and incentive programs. The board may provide some guidance as well as ensure that the structure is aligned with the brand, culture, and strategy. 3. Whether an all-inclusive program or separate structures are implemented is not determined by the size of the institution. It is more important that the programs, whether single or multiple, are properly aligned with the unique brand, culture, and strategy of the institution.Bator Training & Consulting, Inc. and StaleyCredit Union sincerely thank all surveyparticipants for their feedback andparticipation. 20