Post-Pandemic ‘New Normal’ Brings New Talent Challenges

After dealing with excruciating recruitment and retention problems during the pandemic, credit unions are seeing in the “new normal” of the post-pandemic era new challenges related to inflation and remote work, which may be less excruciating but nevertheless problematic.

The rapid rise of inflation has made everything more expensive, including credit unions’ efforts to recruit talented executives at every level. What’s more, credit unions continue to grapple with issues around remote work, and how they can affect the organization’s recruitment and retention efforts and the core cooperative culture that drives its identity and member service. Research has suggested that going fully remote can create disadvantages for organizations, while a hybrid arrangement may help improve employee productivity and ensure employees feel connected to their colleagues and the company.

Charles Shanley, who is the CEO of Shanley Search Partners and authored a 2023 Talent Outlook report, said the spike in inflation is the biggest hiring challenge for credit unions. His organization is a nationwide financial services consulting and strategic advisory firm based in Houston, Texas that specializes in executive search, recruitment and leadership development for credit unions, banks and fintechs,

Inflation’s effects, Shanley wrote, “can be felt throughout the hiring process and have contributed to numerous other challenges in the industry from finding qualified candidates to actually getting an offer accepted and retaining talent in an increasingly competitive market.

“Inflation threatens to derail your hiring efforts every step of the way,” he noted.

The runaway rising costs of housing that occurred in most markets before inflation took hold in April 2021 also didn’t help, and inflation made mortgages more expensive as well.

“When you start looking at 6% or 5% mortgages in comparison to a couple years ago, it’s making people not want to move,” Shanley said. “That has happened in two positions this year. The candidates just backed out of the search and said it’s not a good time to make the move. It’s already a stressful situation when anyone makes a move. Ideally, we try to look at local and regional candidates. But when you have a strong, powerful C-level position to fill, in a nationwide search, there’s a good chance you are going to have more talented people.”

Although the annual inflation rate has declined recently, it will take time for inflation to drop to the manageable level of 2%. Because higher-than-average inflation may persist for a while, Shanley suggested credit unions may consider the counter measures of offering executive candidates a discounted mortgage and providing a strong sign-on bonus.

“There are some states that allow for discounted mortgages and sometimes you can offset that [cost] with a sign-on bonus, and that’s a bigger area,” he said. “A lot of credit unions are having to do that because it’s a candidate market. There’s just a shortage of candidates. And so you need to have some sizzle in your offer letter to maybe bring them over the top.”

Shawn Cole, president and founding partner of executive search firm Cowen Partners in Vancouver, Wash., has found credit unions are still struggling with the issues of remote work, which is affecting their recruitment and retention efforts.

“I think the biggest issue right now that credit unions are facing is that everyone at the credit union needs to get on the same page about remote work,” Cole said. “And what I’ve seen is that a search starts as in-office only, and then it goes to three days a week and then it goes to remote. From a culture standpoint and a standards standpoint, internally, I think a lot of credit unions are still grappling with the remote work concepts. And it really doesn’t matter if you’re remote or you’re in-office. You just need to have a policy regarding that and with regard to new hires.”

Cole pointed out that the remote work issue makes relocation expectations really tricky.

“There are a lot of candidates out there who would be interested in remote that are not interested in relocating, but if you also relocate someone and they find out half their team’s working remote, that’s a real issue too,” he said. “A lot of my candidates who are interviewing for roles really want to be in the office because they have a lot to accomplish. And they know that not only do they need to be in the office to accomplish these strategic goals, but their team needs to be in the office too.”

But Cole also noted that if a credit union can implement a remote policy and culture that works, its ability to recruit highly-talented people dramatically improves because its talent pool increases exponentially.

Maureen Wolfe, EVP for human resources and community impact at the $9.1 billion ESL Federal Credit Union in Rochester, N.Y., said continuing with a hybrid work schedule post-pandemic for its non-member facing employees has helped keep its employee turnover rate very low. ESL’s employees are allowed to work two days from home.

“It just provides flexibility that people have really appreciated,” Wolfe explained. “But most of our employees do understand that going 100% remote wouldn’t be a good thing for us, because employees know the connections they make in the office, working together and brainstorming are really important parts of work at ESL and it’s really important to our culture.”

Wolfe said ESL found its employees continue to be productive while working from home twice a week, and when they work in the office three times a week, it enables the credit union to maintain a high level of engagement with its employees.

“We really want our employees to feel that engagement, the same level of engagement as before the pandemic,” she said. “While we’ve adjusted how we do events, we still have them because employees have told us how important they are in getting people together.”

Wolfe has acknowledged that filling technology positions has become more challenging because most of those candidates want to work remotely only.

“We aren’t willing to do that,” she said. “And we also aren’t allowing, right now, employees to live anywhere, which is another trend that some organizations are allowing. It frankly causes a lot of complexity and, at this point, we don’t see a need for that.”

A highly-cited 2021 research study of more than 61,000 Microsoft employees, who went fully remote during the pandemic, found their collaboration network became more siloed, with fewer communications ties that cut across formal business units and a more inactive collaboration network.

“Previous research suggests that these changes in collaboration patterns may impede the transfer of knowledge and reduce the quality of workers’ output,” the research study, which was published in 2021 in the journal Nature Human Behaviour, found. “Our results also indicate that the shift to firm-wide remote work caused synchronous (simultaneous) communication to decrease and asynchronous (not simultaneous) communication to increase. These changes in communication media may have made it more difficult for workers to convey and process complex information.”

However, ESL and other credit unions that have adopted hybrid remote work policies may be on the right track.

In 2022, Gallup Research found, after surveying 140,000 employees across all industries, that four in 10 employees would prefer to spend two to three days a week in the office, while another three in 10 employees would prefer to be in the workplace one to two days.

“Most employees agree that a moderate amount of time in the office is important, and Gallup’s research has consistently shown that work flexibility tends to be optimal for engaging employees and reducing burnout – before and during the pandemic,” Gallup’s report read.

The top reasons why employees prefer hybrid and remote work, according to Gallup Research, is less commute time, improved well-being, flexibility to balance family needs and other obligations, having the option to work in person with coworkers, and feeling more productive and connected to the organization.

“Exceptionally led hybrid teams tend to have more engaged employees, more intentional and meaningful interactions, and, ultimately, better flexibility to integrate work and home life,” the Gallup report concluded.