Although the majority of credit unions are providing salary increases and lifting freezes on wages, annual pay increases have stayed low for credit union employees over the last four years. The average full-time management salary increase credit unions budgeted for 2012 was 2.53%, which is up slightly from 2.44% last year. Interestingly enough, however, credit unions expect the average full-time management salary increase to drop to 2.26% in 2013, which is very near the low mark of 2.25% in 2010. These salary increases are well below the average salary increase of 4.27% in 2007 and 3.59% in 2008.

In 2012, the average base salary for a credit union CEO and president was $106,758, while the median salary was $78,000. The average total cash compensation for a credit union CEO president, including base salary, incentives and bonuses, totaled $112,243, while the median was $79,038, according to the CUNA report.

“Wage increases are still low, and they are most likely to stay that way for a while,” said CUNA Senior Research Analyst Beth Soltis. “Some compensation experts think that this is the new norm.”

For nonmanagement credit union employees, base pay increases also remain low. In 2012, credit unions budgeted an average base pay increase of 2.43%, which increased slightly from 2.36% in 2011. Additionally, it is expected that the average full-time nonmanagement base pay increase will drop to 2.23%, which may replace the lowest base salary increase of 2.26% in 2010, according to the report.

Paul R. Dorf, managing director at Compensation Resources Inc. of Upper Saddle River, N.J., agreed that average salary increases will remain low, but he is seeing average wage hikes of up to 3% at some credit unions his company serves.

“I believe it's still a matter of supply and demand in the jobs market,” Dorf explained. “Turnover is down, and it has been down since 2008 across most industries, particularly in the financial services industry where so many people had been laid off. In reality, until the economy starts improving much more than it has, and until companies start hiring additional people, salary increases will remain on the low side.”

The CUNA salary survey found that credit unions are hesitant to hire new employees. About 20% of credit unions with $1 million or more in assets plan to add full-time and/or part-time employees in 2012, which is similar to the percentage of hiring among credit unions in 2011. These credit unions plan to add nearly four full-time employees and nearly two part-time staff.

However, among credit unions with more assets, the hiring picture looks brighter. For example, about 50% of credit unions with $100 million to $200 million in assets are planning to hire full-time employees this year. That percentage jumps to 58% among credit unions with $200 million to $500 million in assets and climbs to 70% to 80% among credit unions with $500 million or more in assets.

While credit union employees may not be gaining much when it comes to wage increases, they may be making up for it in bonuses and incentives.

The CUNA report showed that variable pay, bonuses and incentives are becoming an increasing popular way among credit unions to reward their employees.

For example, half of credit unions with $1 million or more in assets offer bonuses to their full-time employees, the report said. A little more than half of credit unions (52%) provided bonuses (rewards for exceptional job performance) to management employees, while 42% of nonmanagement credit union employees receive bonuses. Those percentages, according to the report, have increased from 47% and 38%, respectively, from last year.

What's more, 30% of credit unions offer incentive payments (reward tied to achieving specific goals or targets) to management full-time employees and 31% provide incentives to nonmanagement full-time employees.

Dorf believes more credit unions will offer employees bonuses and incentives because they don't increase the employee's base wage, which in turn enables credit unions to control their regular payroll costs. Increasing the employee's base wage also increases the cost of certain benefits such as paid time off, vacation pay, life insurance and 401(k) contributions. In addition, Dorf said bonuses and incentives are effective ways to retain high performing employees.

Prevalence of bonuses and incentive payments also increase with credit union asset size, according to the CUNA salary survey report. For example, half of credit unions with $20 million to $50 million in assets have bonuses/incentives for their full-time employees. The percentage goes up to 66 percent among credit unions with assets of $100 million to $200 million, and more than 70% of credit unions with $200 million or more.

The report found that the vast majority of credit unions are prepared for the future insofar as replacing the wave of CEOs who are expected to retire over the next few years.

About 66% of credit unions have formal succession plans in effect and another 14% are expected to have succession plans in place by the end of this year. Twenty percent of credit unions, however, do not have a CEO succession plan.

When replacing their CEO, credit unions are most likely to give internal candidates first preference, followed by giving internal and external applicants equal preference, according to the CUNA Salary Survey report. Nearly half (47%) of credit unions offer the CEO position to internal applications first, while 41% post the top job internally and externally at the same time. Only 7% of credit unions prefer to hire a new CEO from the outside.

About 75% of credit unions consider their executive vice president to be qualified to for the CEO position, followed by CFO (60%), chief operations officer (50%) and chief information officer (22%).

The CUNA Salary Survey report measures compensation data for 90 full-time and ten part-time positions at credit unions with $1 million or more in assets, including base salaries, incentives, bonuses, total cash compensation and salary ranges. The survey was sent to 5,800 credit unions with $1 million or more in assets. About 1,400 surveys were returned to CUNA research.