Credit unions looking for growth in 2012 need to do a far better job on succession planning and retirement compensation given the impact of benefits shortfall in the economy, according to a CUNA Mutual Group specialist speaking to Montana credit union leaders.
Jay Petty, CMG’s executive benefit specialist, in remarks before the annual meeting recently of the Montana Credit Union Network in Billings, cautioned credit unions they need to “maintain a compensation package that is equal to or better than the competition” which might include supplemental executive retirement plans.
“Defined benefit pensions are a thing of the past and a 401(k) alone is not enough,” said Petty stressing it is hard to get a meaningful pay replacement at retirement from just a 401(k).
Petty said if a credit union has skilled, trusted managers, “you can put in a plan that rewards them and makes it very difficult for them to leave your credit union.”
Credit unions may have a CEO succession plan in place, but unless that plan has an executive development component along with financial incentives to retain top talent, credit unions risk losing potential CEO replacements to other organizations, including credit unions, he said.
Credit unions need to take a hard look at their succession plan determining if they have a real one in place or simply a “Break in Case of Emergency Plan,” Petty said.
In essence, credit unions “need to avoid being caught in a fire drill,” he warned.
Overall, said Petty, it is vital that credit unions reward senior staffers for their long tenure considering these are the ones that generated success. And so a dignified retirement package has to be extended to recognize those years of service, he concluded.