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Loan Growth is Number One Incentive Criterion
Wednesday, July 22, 2015 6:55 AM

In the last year, the number one factor determining incentives paid to credit union employees was loan growth, according to the recently released “2015 Compensation Study” by the Cornerstone Credit Union League.

Incentives can be a huge part of directing organizational behavior and goal accomplishment. It is similar to the old maxim “what gets measured gets done,” except in this case it is “what gets done gets rewarded.”

For the most part, three-quarters of all credit unions use performance incentive programs. Nearly 80 percent of credit unions with assets above $250 million use these programs, while almost 75 percent of credit unions between $50 million and $250 million in assets offer incentive programs. Credit unions with less than $50 million in assets offer them the least, with only 27 percent providing incentives to employees for specific goal attainment or work accomplishments.

Most employees are eligible for incentive programs, with the CEO being the least incentivized. Lending employees, tellers, and member service personnel are at the top of the list, with 86 percent of lending employees being eligible for incentives, and 76 percent of tellers and member service personnel offered incentives.

Incentive payouts could be significant. More than 15 percent of a lending employee’s gross pay could be attributed to incentives, while four percent of a teller’s or membership service personnel’s pay could be from incentives. CEOs’ gross pay was incentivized the most, with more than 16 percent attributed from incentive payouts.

Loan growth was the number one incentive indicated by credit unions for management and non-management personnel. For management personnel, the second incentive criterion was membership growth, while for non-management employees it was products or services per member. Credit unions agreed that the third criterion for management and non-management personnel was delinquency measures.

In 2014 loan growth in credit unions over $250 million in assets averaged 11.2 percent, while in credit unions with assets between $50 million and $250 million it averaged 9.5 percent. Credit unions under $50 million averaged a loan growth of 2.7 percent.

For CEOs, the number one criterion was loan growth followed by net worth and then net income growth or ROA.

All of this information can be found in the 2015 Compensation Study authored by the Cornerstone Credit Union League. To get your copy, contact Doug Foister at dfoister@cornerstoneleague.coop or 469-385-6477.