One data source, a focus on cash, and assumptions about your executives can quietly cost you great talent.
By J.P. O’Connor and Jen Morgan
When it comes to compensating credit union CEOs and executive teams, you can never have enough market data. You can also never know enough about your executives.
Missing information can lead to a compensation package that’s mismatched and doesn’t respond to the talent marketplace, what your executive values, or what your credit union needs.
Working with credit unions every day, we see these mismatches in executive compensation too often, and they tend to result in losing great talent, missing out on a great hire, and unnecessarily increasing the credit union’s compensation costs. For credit unions that have clear compensation philosophies, compensation mismatches often occur in three key circumstances:
1. When a CU and its board consider only “salary and bonuses benefits” instead of “total executive compensation.” You could offer a great salary, but if a competing employer also offers valuable perks, you will likely lose out.
2. When boards don’t understand what executives value most. If an executive is more motivated by variable incentive pay, the credit union can create a mismatch by putting too much of its compensation budget into base pay.
3. When the CU lacks sufficient market data to inform its decision-making. There are already several good compensation surveys in the marketplace. This year, we’ll be launching another good one. The deepest understanding of the executive compensation environment comes from looking at several good surveys, as we’ll describe in more detail later in the article. Using good compensation data will help you avoid ratcheting up compensation unnecessarily and balance your credit union’s mission with the demands of the talent marketplace.
Avoiding compensation mismatches can help you achieve the key goals of executive compensation: to attract, retain, and motivate your credit union’s leaders to drive high performance and achieve better outcomes for your organization and its members. Doing a good job with the three factors outlined above can help you succeed. This article will look at each factor in turn, then describe distinguishing characteristics of good compensation surveys.
Factor One: Know What “Total Compensation” Actually Means
Total compensation is not total cash.
It sounds simple, but this confusion comes up regularly, even among experienced HR professionals. Total cash typically refers to base salary plus incentive pay. Total compensation is much broader. It encompasses every element an executive receives: base salary, bonuses, qualified retirement plans, SERPs, health and wellness plans, and perks ranging from car allowances to club memberships.
Total Compensation = Base Salary + Variable Pay (Bonuses) + Health Benefits + Retirement + Perks
Total Cash = Base Salary + Variable Pay (Bonuses)
This distinction matters because comparing executive compensation with competing employers based solely on total cash is like comparing only the engine of two very different vehicles. You might think you’re competitive; in raw cash terms, you may be. But if your competitor is offering an executive a robust deferred compensation plan, flexible time off, or other meaningful perks, and you’re not, you may be losing talent without ever understanding why.
Market data on total compensation gives you a more complete picture. It tells you what the full range of compensation packages looks like across credit unions of similar asset sizes and in similar regions, giving your board the information it needs to make truly informed decisions.
Factor Two: Understand What Your Executives Actually Value
Here’s where things get personal. What the executive values is arguably the most important factor in compensation.
Even if your board has solid market data and your total compensation package is technically competitive, you can still miss the mark. Why? You might be offering the wrong things to the right person.
Consider retirement. Some executives tell us plainly: “I don’t care about a raise. I want to grow my retirement plan.” Others—particularly younger executives who are still decades from retirement—may feel exactly the opposite. As we briefly mentioned earlier, offering a generous SERP to a 40-year-old who is energized by current performance and today’s rewards may leave them feeling unseen, even if the dollar value of that package is excellent.
Or think about a car allowance. It may be a standard perk in your market, but if your executive lives downtown and uses public transit, it means nothing to them. In that case, what would mean something? A professional development stipend? A wellness benefit? A club membership?
Market data is just the beginning. The elements you choose to include in an executive’s compensation package should depend on the individual—their life stage, their priorities, what motivates them today, and what they’re planning for tomorrow. Total compensation gives you the menu. Your executive, and your knowledge of that executive, tells you what to order.
This requires real conversation. Boards often assume they know what executives value, without actually having frank, transparent discussions. Doing this means compensating based on guesswork. And guesswork is expensive. You might be spending generously and still losing the engagement—or eventually the person—because the package doesn’t reflect what truly matters to them.
Factor Three: Get Regional and Use Multiple Data Sources
National compensation data is useful. But if your credit union operates in a market with unique local conditions, national averages may not tell the whole story.
We work regularly with credit unions in regions where local pay practices diverge significantly from national norms. In some places, compensation runs well above national averages, and the relationship between pay and tenure or asset size looks different than you might expect. Understanding these regional nuances matters, both for setting competitive packages and for advising boards who may otherwise assume they’re behind when they’re actually right in line with local market reality—or vice versa.
This is one reason why using multiple compensation surveys, rather than relying on any single source, is considered best practice. Different surveys draw from different participant pools, weigh different data points, and reflect different methodologies. No single survey captures the full picture. Taken together, a carefully selected set of credible surveys can give you a much more reliable view of the market, helping you identify trends, spot anomalies, and make decisions you can defend to your board.
When evaluating which surveys to use, look for ones that stay away from vague position hierarchies in favor of ones that actually describe the job duties to which they assign specific compensation data points, that rigorously check data points for accuracy, and that are designed specifically for credit unions. The more specific (and of course accurate) the data, the more useful it is.
What a Good Survey Gives You—and What It Doesn't
Market data is foundational. It tells you what’s reasonable, where your credit union stands, and what peers across the industry are doing. A good total compensation survey should give you insight into all elements of the package, not just cash (remember, that’s salary plus variable pay). In addition, a good survey will help you get meaningful benchmarking data in return for contributing your credit union’s compensation data.
Still, data alone can’t tell you whether your compensation package is truly competitive for your executive. It can tell you whether your package is reasonable in the context of the market. Whether it’s the right fit for the person sitting across from you is a conversation only you can have.
The best compensation strategies are built at the intersection of good market data and a genuine understanding of the executive. Boards that combine both have a significant advantage: They can make compensation decisions that are defensible to stakeholders, meaningful to their executives, and aligned with the long-term goals of the credit union.
If your board isn’t already tracking total compensation—not just salary, not just total cash, but the full picture—now is a good time to start. Pull data from multiple credible surveys, including the new PARC Total Compensation Survey. Have real conversations with your executives about what they value. And use both to build a package that truly reflects what it costs to attract, retain, and motivate the leaders your credit union needs.
This article was originally featured on CUInsight.com
About the Authors
Senior Compensation Consultant
J.P. helps credit unions build compensation strategies that align with organizational goals and support long-term success. He works directly with CEOs and boards to ensure pay decisions are transparent, data-driven, and designed to strengthen leadership retention.
With years of experience in compensation consulting, J.P. has guided organizations through complex pay challenges with a focus on fairness and strategic outcomes.
Senior Compensation Consultant
Jen Morgan, Senior Compensation Consultant, partners with credit unions to design data-driven compensation strategies that help boards make confident, transparent pay decisions. She specializes in salary surveys, benchmarking, and total rewards planning, ensuring executives and boards have the clarity they need to align pay structures with organizational goals.
Jen brings more than a decade of experience in human resources and compensation across both public and private sectors, giving her a balanced perspective on pay practices and organizational strategy. Her background allows her to navigate the complexities of executive compensation with both analytical precision and practical insight. In addition to her consulting expertise, Jen is pursuing a Juris Doctor at Lewis & Clark Law School, further strengthening her ability to advise clients on regulatory, compliance, and governance considerations in compensation design.
Jen holds a bachelor’s degree from Western Washington University, a master’s degree in human dimensions of organizations from the University of Texas at Austin, and a certificate in human resource management from Cornell University.
