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In similar blogs it's been discussed how competitive the job market is right now as financial institutions seek high-quality employees to guide their businesses. In March, the unemployment rate dropped to 4.5%, according to the Bureau of Labor Statistics, the lowest it’s been since 2007. Low unemployment means the job market favors employees, as businesses need to work harder to compete for top talent.
As credit unions identify executives who fit both the culture and showcase the required skill set, attracting and keeping them becomes imperative. At the C-Suite, to attract and keep high-level executives, Boards and HR teams need to create captivating packages that blend salary, benefits, bonus plans, and long-term retention plans.
1. Competitive Salary
For some employees, especially Millennials, salary is not always the end-all, be-all. That's not to say that it's not an important part of your job offer. Proper due diligence and research is needed to discover the salary range for a particular C-level position. Check with trade organizations like CUNA and NAFCU to see if they have research on salary ranges. Staying competitive is the name of the game here.
2. Benefits Package
Customizing packages tailored for each C-level candidate should be norm. Long gone are the days that an executive offer is a one-size-fits-all compensation package. However, when it comes to C-Suite talent, remember that they could be fielding multiple offers at a time. Stand out by listening to their needs and customizing a benefits package based on their needs.
For example, if you have a young candidate, while a 401(k) is a fairly standard retirement plan option, look at other options including non-qualified plans. A non-qualified plan could allow for sooner distributions to help pay for a child's college education, or for early retirement. Maybe you have a more seasoned candidate you're wooing, and a supplemental executive retirement plan (SERP) may seem like a better option. Employees at this stage of their careers are generally building savings for retirement.
Both sample candidates above may want a robust health insurance plan, sick pay, and vacation time. In addition to long- and short-term disability plans, supplemental disability can be attractive to both candidates, especially those with families.
Many of these elements could easily apply for employees moving into the C-Suite as a result of an internal promotion. It's key to remember to not fall into a cookie-cutter philosophy for benefit plans. Financial institutions see success when they get creative to attract or retain key executive leadership.
3. Incentive (Goals Based) Bonus
Creating an offer that has clear goals and a bonus structure to reward hitting those goals can be the shiny object in your back pocket to attracting high performing C-level talent. Keep the plans transparent and understandable for both your institution and the potential employee. Create incentives, or goals, that are specific, measurable, attainable, relevant, and timely. Incentive bonuses are great motivators for new executives and will go a long way to keep your offer at the top of their list.
4. Longer-Term Retention Plan
Including mechanisms to keep C-level executives over the long haul can include deferred compensations plans such as the 457(f). The plan allows top executives to defer compensation into a retirement account and defers both state and federal income taxes. The use of a 457(f) plan does not preclude the executive’s ability to contribute to the financial institution's IRA or 401(k) plan.
Collateral Assignment Split-Dollar (CASD) plans are gaining traction as an alluring piece of the offer puzzle. A CASD is a life insurance plan where the credit union covers the cost of premiums. The benefit of the CASD plan is the executive can "use the cash surrender value from the policy to withdraw tax-free income during their retirement years," according to a March CU Times article.
According to a 2016 NAFCU Executive Compensation and Benefits Survey, more than 70% of executives are age 50 and older. Nearly three out of 10 executives are, or will be, eligible for retirement in the next five years. This stat is fueling the fire for credit unions to be proactive about recruiting C-level talent and creating tailored offers to attract future leadership.
Need help crafting your next C-level offer? Call 866-454-8582 to talk to one of our Executive Benefit Representatives today!
Roger Versteeg joined SWBC in October 2007 as part of SWBC Executive Benefits. Roger has more than 33 years of insurance and financial services experience, specializing in non-qualified deferred compensation and succession planning for credit unions. As an award-winning executive benefits professional, Roger has qualified numerous times as a lifetime member of the Million Dollar Round Table™ Top of the Table. Roger is a member of the Mankato, Minnesota Chapter of the Society for Financial Services Professionals, the National Association of Independent Financial Advisors, and he has served as President for the Southern Minnesota division of each group. His humble philosophy is to make every conscientious effort to serve his clients in the same manner as he would apply to himself.