…to help all of Delaware’s credit unions exist, compete, and prosper SUMMER, 2004
In David
Letterman Fashion ...
The Top Ten HR Challenges Small Credit Unions Face
No. 10. Maintaining legal HR files. Credit unions need to ensure that HR files include all the information required by state and federal regulations, as well as ensuring that inappropriate information is purged from HR files. HR files are confidential and must have restricted access. (If HR files are subpoenaed, all information in those files must be turned over – in other words, a credit union may not cull through the file to remove inappropriate documents after the fact.)
No. 9. Classifying employees properly. In a law that dates back to the depression-era, the Fair Labor Standards Act requires credit unions to ensure that they have classified employees properly (exempt or non-exempt). Once classified correctly, the credit union must insure that it does not breach these regulations in a way that negates exempt status. These requirements are regulated by the Department of Labor with potential penalties going back two years for back wages, interest, and penalties; three years for willful misconduct.
No. 8. Maintaining an up-to-date and well-crafted employee handbook. An employee handbook is your first line of defense in communicating your expectations and requirements to employees. It is a communication tool that outlines good management practice and needs to include explicit language that the handbook does not constitute a contract or promises of any kind.
No. 7. Recruiting effectively. Finding the time to do this well—ensuring that your job description is up-to-date, and classification is correct, writing effective ad copy, and evaluating ad responses—remains a challenge to credit unions without an HR professional. Yet, not carving out the time to do this well is even more time-consuming and expensive if you hire the wrong person.
No. 6. Recruiting legally. A credit union needs to ensure that all involved in the hiring process understand the pitfalls of illegal questions. Discriminatory interview questions, even when asked in innocence, expose the credit union to risk. Be sure everyone in the process knows what can and cannot be asked during an interview. This includes any questions about age, race, children, daycare arrangements, marital status/plans, sexual orientation, ethnicity, disability, veteran status, religion, etc.
No. 5. Checking references. A credit union has a responsibility to conduct reference checks of all potential employees to guard against negligent hiring. This is a requirement of the hiring process. Finding the time to do this well and appropriately is a challenge but a necessity. Be sure your hiring policies reflect your practices and then be sure you follow your practices. Start with an up-to-date employment application that is signed and provides authorization for reference checks.
No. 4. Ensuring that your performance evaluation process is defensible, fair, and ties pay to performance. This starts with up-to-date job descriptions, a consistent format that provides the employee the opportunity to reply, and a form that provides for signatures by both the supervisor and the employee to document the performance evaluation was indeed communicated. This is a minimum. A good performance management system is one that consistently provides feedback and ensures that pay is tied to performance!
No. 3. Reviewing your compensation practices for external and internal equity. A credit union’s compensation philosophy and practices need to do two things: (1) Ensure that your compensation package is solid enough to attract the right talent to your organization; and then (2) ensure that this package retains your best employees. This is accomplished through a review and analysis of salary and benefit surveys against your package and philosophy.
No. 2. Good management practices. Since many managers are promoted into their management roles, a credit union needs to provide a program of training and coaching managers and supervisors on how to manage well, fairly, and in compliance with policies. A good manager who positively motivates and mentors employees is one of your most important assets. (Conversely, a poor manager is your biggest liability.)
No. 1. Communication. Consistently, the No. 1 challenge for credit unions! Across the board, in all sizes, within all departments, employees want better communications. Employees want knowledge, information, and feedback. They want to know what they are doing well, how they can do it better, and be acknowledged for a job well-done. They want to know you are talking and listening to them.
Article provided by the HR Value Group. For HR assistance, contact the Delaware
Credit Union League at (800) 292-7875 or (302) 322-9341.
SAMPLE CU MANAGER/CEO JOB DESCRIPTION
As mentioned in #4 of the article above, it is very important to have written job descriptions for all employees of the credit union to help avoid misunderstandings about job responsibilities and from which to base performance evaluations. This includes the manager/CEO’s position.
The Board of Directors should approve the manager/CEO position and perhaps all of the credit union job descriptions. Job descriptions should reflect what duties are currently being performed. As the environment in the credit union changes, the position descriptions will have to change to reflect the new environment.
The position description of the manager should be tied to the performance evaluation that should be performed on a regular basis by the Board of Directors. Below is a sample position description for a credit union manager/CEO.
POSITION:
Manager/CEO
Reports to: Board
of Directors
General
Responsibilities: Under the general direction of the Board of Directors assumes
full responsibility for
the administration and operation of the credit union.
Knowledge & Skills: Managerial and administrative background with a thorough understanding of accounting principles. Good communications skills. Thorough understanding of credit union philosophy. Financial industry knowledge with a willingness to remain informed on all pertinent economic trends and financial legislation which may affect the credit union.
Specific Duties:
If the manager’s job also entails being a loan officer, a teller, or member services representative, that is what should be included in the position description. Job descriptions should not be too generic in nature because it will be difficult to use them to define accountability.
Adapted from (Almost) EVERYTHING YOU WANT TO KNOW – A Resource Guide For Small Credit Unions. For assistance with job descriptions or samples of other positions, contact the Delaware League at (800) 292-7875 or (302) 322-9341.
THE IMPORTANCE OF LOAN POLICIES
Policies set by the Board of
Directors may vary considerably from other credit unions even though boards
operate under the same law. These differences reflect the unique situation of
each individual credit union and board. Members’ needs and your credit union’s
capabilities will dictate your loan products and, to some extent, the manner in
which they are offered. You need loan policies to:
·
Specify your credit union’s lending procedures
·
Promote consistency and objectivity in loan granting
·
Increase the efficiency in loan granting
·
Limit your credit union’s risk
Your policies need to be readily accessible by your employees. As the board sets policies, they should be placed into manuals for easy reference. These policies manuals need to be kept current and updated according to the board’s minutes. Loan policies should cover:
Loan policies enable your credit committee to be consistent and act promptly when judging applications. Over time the credit committee and loan officers develop a good understanding of what does and does not work in the loan granting process. This knowledge can be helpful in making recommendations to the board.
The board has the authority to set rates for different types of loans. Those rates must be set within the confines of the law. Rates may be set based on a variety of criteria:
Adapted from (Almost) EVERYTHING YOU WANT TO KNOW – A Resource Guide For Small Credit Unions. Additional assistance and information in writing loan policies is available from your league.
?? QUESTION CORNER
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Q: How does a credit union go about removing a member?
A: There are two parts to this answer.
Member Termination. A member who knowingly and voluntarily withdraws all of his shares ceases to be a member. If a member’s share balance falls below par value without the member’s knowledge, membership cannot be automatically terminated. Federal credit union bylaws require that the member be notified and given at least six months to increase the account balance.
Expulsion. The credit union can have a policy to expel members who have caused the credit union a loss or for nonparticipation in affairs of the credit union (voting at the annual elections, purchasing shares or obtaining a loan). To enforce such a policy the credit union would have to give written notice to all members at the time the policy was adopted and provide each member with a written copy of the policy.
To expel a member the credit union must call a special membership meeting solely for that purpose and give the member an opportunity to address the membership. A two-thirds vote of the membership is necessary to expel the member.
Q: May a credit union post the names of its members who have caused it a loss?
A: No. Article XVI, Section 2 of the Federal Credit Union Bylaws requires the officers, directors and employees of an FCU to hold in confidence all member transactions and all information respecting their personal affairs. The posting of members’ names who have caused the FCU a loss would violate this provision of the Federal Credit Union Bylaws.
Q: Under the “once a member, always a member” bylaw, may immediate family members of a primary member join a federal credit union if the primary member is no longer in the field of membership, although still a member of the FCU?
A: No. If a primary member is no longer within the field of membership, a family member would not be eligible to join the credit union.
If you have a question for QUESTION CORNER, e-mail it to jane@dcul.org.
Mark Your Calendar!
Small & Mid-Sized CU Development Conference
Designed with the special needs of your credit union in mind, this year’s Credit Union Development Conference has been designed to provide information for Delaware credit unions under $20 million in assets. Topics to be covered may include: board and committee duties and responsibilities, lending issues, investment tips and collection information.
This conference is a joint venture between NCUA, Mid-Atlantic Corporate FCU, CUNA Mutual Group and the Delaware Credit Union League.
Date: Saturday, August 7,
2004
Place: Cromwell Room,
Holiday Inn
Route 273 and I-95,
Newark, Delaware
Time: 8:30 a.m. – 2 p.m.
Watch your mail for the registration information brochure.
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Essentials is
published periodically by the Delaware Credit Union League
4 Quigley Boulevard, New Castle, DE 19720
(302) 322-9341 or (800) 292-7875
Fax: (302) 322-9354
Editor: Jane Bailey
E-Mail: jane@dcul.org