The Bottom Line: Employee Incentives and Credit Union Results (part 1)

Credit unions are receiving national recognition as attractive places to work. Incentive programs to motivate and reward staff are a big reason why.


Credit unions are receiving national recognition as attractive places to work. Last month, The Great Place to Work ® Institute and the Society for Human Resource Management (SHRM) published the top 25 Best Small Companies to Work for in America and the top 25 Best Medium Companies to Work for in America. These two lists included a total of four credit unions.






Best Medium Companies


Spokane Teachers Credit Union





Digital Federal Credit Union





North Island Credit Union




Best Small Companies


Pacific Service Credit Union




Source: The Great Place to Work ® Institute

The companies were chosen based upon results of an employee survey, materials submitted by the company; and other media sources.

Staff incentive programs are a common thread among these credit unions. These programs not only reward and motivate staff but also help create and maintain a fun work environment for their employees.

Pacific Service Credit Union, for example, offers an incentive program that allows employees to earn between 6% and 16% of their annual salary. The program is part of the credit union’s philosophy of running lean and paying well. According to Tom Smigielski, CEO, the credit union operates with only one-third the number of employees compared to credit unions its size.

The fundamentals of PSCU’s plan revolve around a few long-term goals (i.e. growth, phone service, financial performance, and service penetration). Each long term goal is assigned a few target areas; for instance, an initiative to gain youth members. If the credit union were to increase youth members by a certain percentage, employees would receive a weighted portion of their individual participation percentage (with a 16% maximum). Every quarter, the employees receive updates demonstrating what portion of their individual participation percentage they would receive if the bonus were to be distributed at that time. Ideally these updates inspire interactive participation, productivity, and continued focus towards a target goal necessary to achieve full incentive payout.

Digital Federal Credit Union also offers an employee-wide incentive program. Six years ago, Digital implemented its incentive program to motivate every employee and link their efforts to the bottom line. The program revolves around five or six company-wide goals with each goal consisting of six levels of success. If the credit union accomplishes the highest level of success, he or she receives a check for 15% of their annual salary. The success of this program is evidenced by the fact that Digital has paid out close to the maximum each year since the program’s inception. While some executives may be hesitant to pay such large bonuses, the case of Digital shows that a clear, concise, and result-driven plan has enabled the credit union to become one of the fastest growing and successful credit unions.

Through a slightly varied approach, Spokane Teachers Credit Union’s incentive program aims to develop a sense of cooperation among employees to work towards a common goal. Rather than offering individual incentives, Spokane feels that employee productivity is better allocated to the success of the credit union as a whole. The amount of an employee’s semi-annual bonus is determined by the following factors affecting credit union success: net income (30%), loans (30%), deposits (30%), and other (10%). These three main goals remain fairly constant, while the other category can be changed to direct employee efforts toward a few key goals pertinent to the credit union at that time.

Each of these three incentive programs has influenced the selection of these organizations as best places to work. But, how successful are these credit unions in overall operating performance? Next week we will explore data to determine if the investment in employee bonuses is supported by improved results.

Learn more about these programs and others in the webinar recording What’s in It for Me? Aligning Credit Union Goals and Employee Incentives, sponsored by The Callahan Center for Credit Union Leadership.



Aug. 15, 2005


  • EXCELLENT points that I hope convinves many who say "why pay incentives - they are SUPPOED tobe doing their job already" to GET outside that box. Why pay incentives? Because it encourages & energizes the employees who are willing to do more than the minimum to keep their jobs. Aren't those the kind of people you want to retain since they are the only ones who are emotionally capable of delivering World Class Service, which is the only competitve edge there is now! Carolyn Warden, CCUE
  • It would be nice to include or complete another article on under 50 million asset size credit unions. Smaller credit unions can not afford 15% of salaries let alone 6%. Please think about your small credit union readers also.
  • We use employee incentives by function and for the credit union in total. All incentives exceed our plan. Monthly progress is posted on graphs and paid when achieved. Our employees love it and it allows them to focus extra attention in the proper areas. Every employee can achieve bonuses equating to 10% of salary. John Coleman Pres I.L.W.U. CU