Wednesday, May 17, 2023

SECU New Direction/New Culture - People Hyping People - "Legacy" Employees And "Travesty" Leadership!

https://eventasticme.files.wordpress.com/2014/07/people-helping-people.png?w=627   The long running motto for U.S. credit unions is the phrase, "People Helping People"...

...which is an apt description of what a cooperatively-owned financial institution - a credit union - should, at heart, be about. Banks are in a different business - investor-owned, profit-driven - focused first and foremost on commerce and business. Neither form of financial institution is better or worse - the two are just different, almost opposites. Up/down, left/right, over/under, yin/yang. Both types of financial institutions play an important role in the economy of North Carolina - both have a purpose.

But today, we're following up on "Where did the money go?" from the 5/14 and 5/15/2023 posts. The question arose when looking at the $290 million increase (up 34%!) in yearly operating expenses at SECU. Noted that it wasn't in the oft-fibbed "technology upgrades" - those increased costs mostly "lie" ahead!

So what did you guess was the primary driver of a 34% increase in annual operating costs at SECU?

 Well, what is the # 1 operating expense of almost every financial institution? That's right, the compensation and benefits paid to employees - "legacy" or otherwise. Guess, we need to stop here and explain "legacy employees". Apparently now at SECU, any employee who has been working at the credit union for more than @10 years is openly derided as a "legacy" employee - out-of-touch, adverse to change, just excess baggage. More on that later...

So, who is against paying the core, "they make it happen", dedicated employees well? Why, nobody of course! But, that's not exactly what appears to be going on for the average SECU worker. As with more and more things at SECU these days: "What you see, is not what you get!" - big time!

First lets take a look at how the "average employee" is faring financially at SECU. These are the figures reported to the NCUA (that federal agency) at year-end 2021 and 2022. The average comp and benefits paid to an employee at SECU in 2021 was $83,605. At year-end 2022  (just 3 or 4 months ago!), the comp and benefits paid to the average SECU employee had "leaped dramatically" to $83,786!  

In other words, the average annual employee salary increased by a total of $181 during all of 2022, or about $15 a month! ["Wooty Hooo! - 😜"]

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At September 30, 2021, when CEO Mike Lord retired from SECU, the credit union had 6,922 full-time and 78 part-time "legacy" employees operating a $53 billion institution. Now, even if you applied that $181 jump in annual pay to the whole group (FTE and PTE), that would only amount to a $1.267 million increase in operating costs - a long way from @ $290 million!

How about new employees? Well, with assets shrinking, fewer branches, a branch employee "hiring pause" - plus all that new digital automation -, you wouldn't expect to find many new folks being added, would you? At December 31, 2022 SECU reported having 7,628 full-time employees and 511 part-time employees - over 1100 more employees in just 18 months! Do you kinda see a problem developing here?

Using that $83,786 average annual comp figure, an additional 700 full-time employees would cost @ +$58 million and 500 or so part-time folks @ +$20 million...so now we're getting somewhere. Make sense? Yep, you're right:"No it doesn't!"

Has the SECU Board realized that staffing has gone berserk? Well, the good news is apparently so, as the employee figures for March 31, 2023 have leveled to 7,629 FTE (+1) and 527 PTE (+16) over December... the only problem is that comp and benefit costs continue to climb in 2023!

Where's the "missing comp money"? This one is for you conspiracy theory readers/commenters. It's impossible to "deep dive" on superficial financial statements - there just isn't enough detail to track down a lot of questions. But the average comp and benefit figures don't quite seem to add up. For example, why would the average employee comp jump from $83,786 at 12/31/2022 to $89,505 at 3/31/2023 (just 3 months later)? Those types of quick jumps are usually associated with big dollar incentives, executive bonuses, sales quotas, or "pay for performance" type programs - which the current CEO firmly states are not practices used at SECU (and they definitely weren't in the past!) Should we take those assertions at face value?

✔  A parting puzzle for math wizards!  Lets say you had 7,600 employees whose average pay was $83,605 (see above) and you gave each of them a $175 per year raise and to the 10 "C-suite" folks you gave each a $5,000 raise (because they are that much more important; hey, check out last year's performance!) What would the new average comp and benefits be for the entire organization? 

That's right $83, 786, up @ $181 or about $15 per month (see above). Beware of "averages", they're a good way to conceal statistical "outliers"...or perhaps help hide even "out and out liars"!

Just sayin'.... "C-sweet"!



 

17 comments:

  1. They want to retain those top folks from banks. Y'all think they came here for a pay cut. I wouldn't be surprised they do a sign on bonus. We have now have recruiters. What I find interesting is some of these positions were never posted. Just one day these folks showed up into a newly created EVP positions.

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    1. They are doing signing bonuses and covering moving expenses for the ones that actually decide to move to Raleigh. A quick spin around LinkedIn will also show you that these "top folk" don't have the qualifications for the jobs they are doing.

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  2. The numbers will soon stabilize because the big legacy "cleanse" is picking up steam. This by way of being assigned impossible tasks and then given bad reviews and the option to resign. We will have a much leaner legacy roster by the end of the year, between those being pushed out and those leaving because the stress is affecting their health.

    What happens when those dinosaur legacy people leave? Ask how Teller has been doing over the past week or two. Can't wait to see who the fall guy for that is. Certainly won't be the CITO who has cast all of the skilled people to the side while he hired his friends from 1st Citizens.

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    1. Oh, don't forget that the entire ALS randomly goes down.

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  3. What's "Teller"?

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    1. It is a system branches use to serve Members.

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    2. What's up with it?

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    3. Branches have not been available to complete our end of day tasks and close the office for about a week and a half at this point. Those looking into it don't seem to have any clue as far as what's going on. The emails (daily at this point) just say that if you're not able to turn your system over to the next day, to simply lock up and leave. Kind of reminds me of the phrase "Abandon Ship!"

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  4. Oh, I know, I know. They're using that new math! We know pay for performance must not be the culprit.

    But, seriously, the hiring and spending has been out of control. Ask any "legacy" employee.

    Guess what though?
    All of the new and old employees are looking for the same thing: leadership. Haven't found much of it yet.

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  5. Can confirm there were 4 and 5 figure signing bonuses doled out to some of these outside hires. We'd be in fantastic shape if SECU had actually gotten what it paid for.

    Unfortunately the results of hiring friends, cronies and going outside SECU just to block a Legacy employee from being promoted is showing clearly in the results. It's a combination of the Keystone Cops and The Three Stooges running the place.

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  6. People (execs) helping people (themselves and their friends).

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    1. I see what you did there! Lol

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  7. Wow! Thank you for posting these numbers. I had no idea the credit union had changed so dramatically. Makes me sad to see it going down hill from what it used to be.

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  8. From everything I have read since I was told to check out what's taking place down at our credit union, it sounds like SECU is now being ran by a bunch of idiots. First these 6 Directors brought in this new CEO from out of state with no knowledge of SECU or North Carolina, then allowed him to bring in others as useless as he is with huge salaries and benefits. I am quite certain if it were not for those legacy employees Hayes wants rid of, members like myself would have already pulled out. For over 40 years I have been praising SECU and the service the employees provide to us members. Due to your decision making we are losing that level of service from our credit union. This Board needs to understand, we don't want to be like a credit union in California, Maryland or Washington DC.and we don't want our credit union ran by outsiders who don't give a d**n about the people in North Carolina. Hayes & Company have made that perfectly clear with their idea of a new direction and their treatment of SECU Staff.

    To the Board, we the members built it, supported it, and still own our credit union. These concerns were brought before you at the 2022 Annual Meeting. You have clearly failed the credit union, the membership and the employees. My question for all of you is why have you allowed this to happen to our credit union?

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    1. Because I'm Chris Ayers and I answer to no one. Get back in your hole non-A paper peasant. It's my credit union now.

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    2. Chris Ayers' reputation is on the chopping block all over the great state of North Carolina. Does he care? Probably not, but others will.

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  9. I suspect that the compensation study they were doing probably has something to do with the fact that the salary schedule posted in shared docs for all employees to see is now suddenly gone. Several job descriptions under the HR shared docs no longer have a salary grade listed. Most of the job descriptions that don’t have a salary grade listed just happen to be all of those positions that were created within the last year or SVP and higher level. Also heard that there will be no merit raises this year, but the new employees probably don’t even know what that is anyways. Most new employees don’t even know the rules and policies of the credit union, and they don’t even know where to look to find it.

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