Credit Unions Adapt to New Labor Market

Credit union CEOs have been adjusting to the new realities of the so-called Great Resignation, leveraging it as a competitive advantage to attract talented employees that can drive growth. And while government statistics showed employees in the financial services industry are not quitting their jobs at such high levels seen in other industries, anecdotal evidence and exclusive research conducted for CU Times suggested staffing issues are negatively affecting credit union member services and operations.

On Jan. 4, the U.S. Bureau of Labor Statistics reported that a record 4.5 million people quit their jobs in November for a quit rate of 3%. The quit rates among industries ranged from the lowest of 0.7% among federal workers to a high of 6.4% for employees in the leisure and hospitality industry. In the financial services industry, the quit rate was among the lowest at 1.7% in November, but slightly up from the 1.4% quit rate in November 2020. Related to the financial services industry, the quit rate among employees in professional and business services was 3.7% in November, up from 2.9% in November 2020.

The BLS numbers showed 154,000 employees left the financial services industry in November 2021, up from 120,000 in November 2020, while 798,000 people in the professional and business services industry quit their jobs in November 2021 compared to 592,000 in November 2020. For comparison, in the leisure and hospitality industry, more than one million people quit their jobs in November 2021, up from 622,000 who quit in November 2020.

While the quit rate in financial services is among the lowest compared to other industries, staffing issues have affected credit unions and banks, according to Bruce Paul, managing director of banking for Rivel Inc. in Westport, Conn. The organization’s Rivel Banking Benchmarks involve interviewing members and customers at more than 5,000 financial institutions. Rivel interviews ask members and customers a variety of questions about what they think of their current credit union or bank and what would make them leave.

Rivel recently conducted a national meta-analysis exclusively for CU Times.

“From the 319,318 banking interviews we have conducted since the start of the pandemic, we have found staffing-related complaints have grown substantially,” Paul said.

Specifically, dissatisfaction with staff training levels was up by 131%, as members encounter newer tellers and call center staff who are not yet up to speed. Proactive dissatisfaction among members/customers has also increased by 188% as staff members have been too overwhelmed to offer extra help for members/customers.

Most alarmingly, however, was that dissatisfaction with responsiveness, or how financial institutions respond to members/customers seeking help, has shot up by 275% as members/customers see the effects of understaffing, according to Rivel’s meta-analysis.

“Over 20% of credit union members are currently not happy with their credit union and are open to leaving,” Paul said. “Over one-third of those unhappy members have already started the process of moving their business elsewhere. Unhappiness grew quickly at the start of the pandemic and switching has spiked as soon as households felt comfortable seeking out new banking relationships.”

Some areas have been harder hit than others: Members of credit unions in Alabama, Rhode Island, Maryland and Pennsylvania have said they are most likely to leave, according to Paul’s research. On the bright side, credit unions in Vermont, New Jersey, West Virginia and the District of Columbia have been the best at keeping their members loyal.

Anecdotally, credit unions have found the Great Resignation is not just affecting the frontline but back-office operations as well. ­Darron Dunn, vice president of client development and operations for governance, risk and compliance technology firm ViClarity, formerly PolicyWorks, in Des Moines, Iowa, said his organization is fielding increasing calls from credit unions that are experiencing staffing issues among employees who work in governance, risk and compliance (GRC) departments. Exiting GRC professionals can cause disruptions, delays and other problems with compliance-related questions and processes such as audits, policy reviews, the timely filing of required reports and even marketing initiatives. While Dunn said ViClarity is stepping up its efforts to help credit unions with these challenges, he recommended they focus on retention efforts, cross-train employees and leverage technology solutions that can automate, record and centralize many daily and routine GRC tasks such as vendor due diligence, document management and board communication, to name a few.

While the challenges of the Great Resignation are expected to continue this year and even through 2023, some credit union leaders are seeing it as an opportunity to gain a competitive advantage.

“Why do I love the Great Resignation? Because it gives me the chance to advertise this fabulous work culture that we have at our credit union,” admitted Evan Clark, president/CEO of the $591 million Department of Commerce Federal Credit Union in Washington, D.C.

Clark said he believes one of the reasons why people are quitting their jobs in record numbers is because they are simply fed up with how they are being treated by their former employers. In addition to providing employees with good pay, benefits and perks, Clark has found that employees are happy and productive when their employer respects their need for work-life balance. And Clark said he enforces that work-life balance principle by blocking employees access to their work emails at 4:30 p.m. every day.

“I do it for three reasons – number one, if you are checking emails when you are off, you are telling your fellow workers you don’t trust them,” he explained. “Number two, if you are checking your emails while you are on vacation, you’re telling your family you don’t love them, and number three, the president of the United States is not sending you the codes. It’s not that important. Life is too short and too precious.”

Although Clark was initially skeptical about remote work, he has since found that his employees love it, they are more productive working remotely and it has opened opportunities to hire qualified candidates who live anywhere.

“We recruit people from D.C., Maryland and Virginia, but now we’re recruiting nationwide, and we currently have people living and working in 11 different states,” he said. “And in January, we’ll bring on board somebody from Rhode Island, so that’ll be state number 12.”

David Tuyo, president/CEO of the $954 million University Credit Union in Los Angeles, said the credit union grew 20% last year and the Great Resignation made staffing requirements even more challenging.

“I needed to grow our staff on top of the fact that the Great Resignation was happening as well,” he noted. “And while our turnover increased mainly among our new hires, there wasn’t much turnover among our longer-term employees – those who have been with us for two years and longer.”

Tuyo said the credit union initiated new programs around employee recognition and retention, which seems to be helping reduce turnover rates among young employees. But the credit union’s biggest initiative is its nationwide recruitment and hiring.

“Prior to the pandemic we had no employees outside of California,” Tuyo said. “Now, 25% of our workforce is outside the state of California.”

Because the credit union has expanded its employee recruitment nationally, Tuyo said he is finding more qualified employees who want to work from home and are seeking new opportunities because their current employer does not allow them to work from home.

Another benefit, Tuyo found, is that his labor costs are declining.

“We just onboarded a management position [from outside California] and that same management position would have cost us 25% more had we hired a new manager from the LA market,” he said.

Hiring remote employees also has reduced the credit union’s need to acquire another building, which it was considering before the pandemic.

“Instead, we are remodeling and renovating our main headquarters building to integrate with our office hoteling to accommodate our remote staff whenever they are in town,” Tuyo said. “That is a huge cost savings of about a half-million to a million dollars.”

But managing a remote workforce brings challenges in terms of keeping staff connected and working across different time zones.

“I think during the pandemic, organizations became much better at remote management and interaction,” he noted. “We make sure that our remote teams feel connected by having daily check-ins and check-outs. We also have these dialogue processes that help people feel connected and remain connected.”

Tuyo said the credit union keeps a close watch on employee surveys, satisfaction levels and engagement scores.

The $14.6 billion Randolph Brooks Federal Credit Union in Live Oak, Texas is also doing more remote hiring throughout the Lone Star state.

“When we find the talent [in Texas] we’re able to hire them, but now we’re going to expand it out to four or five states where we’ll be able to do that [hiring] as well,” RBFCU CFO Mark Sekula said. Some RBFCU employees are moving to those states because their spouse landed a new job, he said. Currently, some of those employees are retained by the credit union as contractors, but after RBFCU makes the necessary arrangements to comply with the labor laws/regulations in those states, employees who move there can hold their full-time status with the credit union.

“That’s a retention tool, which means we know you’re going to move to follow your spouse and we support that,” he said. “Hopefully, we’re able to keep you as an employee because we can support it through those states. And once we have those states on board, we can also hire new employees from those states. So we feel that it is an opportunity for us to continue to build on to seek talent in other states.”

Sekula noted that RBFCU’s culture is such that it treats all of its employees like family.

“If employees want to do something different completely out of the financial services network, they have those opportunities today because it seems everybody is hiring,” Sekula said. “Our hope is that if they do leave the organization, they understand they are still family because they are representing or promoting Randolph Brooks wherever they go. And it’s important for us to maintain those relationships because it’s about our brand and culture. We’ll take them if they wish to come back because they are more loyal to us when they realize the grass is not greener on the other side. That’s the way we choose to treat our people, they’re family.”