By Ray Birch
WOODLANDS, Texas—For credit unions navigating 2026, the most disruptive shift in human resources may not be artificial intelligence, rising healthcare costs, or tighter labor markets — it may be something far simpler: explaining to employees exactly how and why they are paid.
That’s the message from Jeff Rock, vice president of compensation at D. Hilton Associates, who argues that true pay transparency has become one of the most powerful — and underused — levers available to HR leaders today.
“Posting a salary range is compliance,” Rock said. “Real transparency is walking employees through what they get paid, how the pay is determined, and why it is set as it is.”
The payoff, he added, is striking: employees who understand how their compensation is determined are eight times more likely to feel fairly compensated.
“That’s dramatic. That’s huge,” Rock said. “Perception is reality. When people see the thought, data, and fairness behind compensation decisions, they feel respected — and that changes everything about engagement and trust.”
HR’s Long-Fought Seat At The Table
Rock sees this transparency push as part of a broader transformation in the role of HR itself.
For years, HR leaders have sought a true “strategic seat at the table.” Now, Rock said, that transition is finally happening — not as a courtesy, but as a necessity.
“CEOs and executive teams are relying much more on top HR leaders to understand transparency, employee engagement, and how workforce decisions affect the entire organization,” he said. “Everything an institution does ultimately runs through its people.”
Rather than being buried in administration, leading HR executives are increasingly acting as advisors to the CEO on talent, culture, and risk — a shift Rock calls long overdue.
“If HR didn’t have a seat at the table, the old joke was, ‘grab a folding chair and pull it up yourself,’” he said. “Now, in many credit unions, that chair is already there.”
Why The Average Merit Increase May Not Be The Real Pay Budget
On compensation, Rock challenged the common practice of budgeting only for average merit increases.
Most institutions plan around an average merit budget target, which aligns roughly with expected market movement, he said. But that approach can leave credit unions vulnerable.
“The problem is that if employees have fallen behind the market,” Rock said. “you have limited flexibility to correct that. Planning for slightly more than the average merit budget builds in flexibility to be strategic with increases.”
His recommendation: plan for setting aside roughly 2% above your planned merit adjustment specifically for:
- Market adjustments
- Promotions
- Hard-to-fill roles
- Retention of top performers
- Critical workforce
Rock emphasized compensation should be precision-based — not “peanut butter” spread across everyone equally.
“Take the time to clearly define what top performance looks like in your organization, and your critical workforce” Top performers, he said, should see larger than the average target increase, while average performers track the market around the target average. Underperformers may see little or no increase.
“When employees deliver disproportionate value to members and the credit union, they should be meaningfully rewarded and recognized for those contributions,” Rock said. “Intentionally differentiating rewards for top performance and critical workforce segments positions the credit union to succeed in both strong and constrained economic environments. When all performance levels receive the same increase, it can dilute the impact of rewards and disengage those who are truly driving results.”
Simpler Structures, Smarter Pay
Rock also noted a growing trend toward simplifying pay structures.
Many credit unions are moving away from separate salary ranges for exempt and non-exempt staff, opting instead for a single unified “staff and management” structure.
“It’s cleaner, easier to administer, and gives leaders more agility,” he said.
Healthcare: A Looming Cost Shock
Beyond pay, Rock warned that healthcare costs represent one of the biggest financial headwinds for 2026, with projected increases of 9% or more.
Much of that pressure is coming from high-cost prescriptions and chronic conditions. Rock urged credit unions to rethink plan design — including tighter medical-necessity standards for expensive drugs such as GLP-1 medications.
“Smart plan design protects both the credit union’s budget and the employee’s take-home pay,” he said.
AI: The Next Excel Moment For HR
Rock compared AI’s impact on HR to what Excel did for accountants in the 1990s.
“It was an incredibly powerful tool — but only if you knew how to use it,” he said.
AI, he predicts, will transform job architecture, workforce analytics, internal equity reviews, and strategic planning.
“AI is very good at seeing the big picture across massive amounts of data,” Rock said. “But you still need skilled HR professionals to interpret it, question it, and apply it responsibly.”
Perhaps most importantly, he believes core management skills will matter more than ever.
“Whether you’re managing people or managing AI agents, the same leadership skills apply,” Rock said. “That’s where HR professionals need to invest their growth.”
The Year Of Precision
Rock’s bottom line for 2026 is clear: success will belong to credit unions that are deliberate, data-driven, and transparent.
That means:
- Using multiple data sources for pay decisions
- Refreshing salary ranges regularly
- Clarifying geographic pay philosophies
- Explaining compensation clearly to employees
- Preparing leaders — not just systems — for AI
“This is the year for precision,” Rock said. “Credit unions that get this right will be more competitive, more trusted, and more attractive to top talent.”