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How To Create A Scorecard To Measure Branch Performance And Set Goals

With credit unions nationwide incurring high costs for new branches, facing increasing competition, and anticipating impending margin compression, there is a greater premium than ever on maximizing branch sales.

Accordingly, many credit unions are implementing or refining their branch incentive programs. But the success of any incentive program depends directly on the measures against which participants are evaluated. Although every bank or credit union should tailor its scorecard to its specific strategic objectives, several factors should remain constant to any scorecard. Our recommendations for structuring a branch scorecard follow.

The primary goals of a performance scorecard are to reinforce the behaviors taught in sales training classes, and to reward super-normal performance. Thus, the scorecard should track the major activities that occur in daily sales interactions, and should pay incentives only for volume levels that well exceed what otherwise falls under the category of “doing our job.”

Points To Consider

* For a scorecard to succeed, the branch staff must easily understand how they are being scored and compensated. Therefore, keep the number of categories manageable, to no more than the six or eight most important sales and service behaviors. Set goals that are aggressive but attainable. Aggressive goals ensure that payouts only occur for superior performance, but if goals are overly aggressive and perceived as entirely unattainable, it will discourage all sales activity.

And pay frequently enough– either monthly or quarterly–that branch staff see a direct link between their daily activities and their rewards for such activities.

* The scorecard should include only measures directly controllable by the branch staff. For MSRs and tellers, consider scoring in terms of units sold rather than dollars added or profit contributed. By focusing on units (for example, number of checking accounts opened), the scorecard removes any bias against needs-based selling. The scorecard encourages MSRs to offer whatever product best fits the consumer’s need, regardless of the product’s profitability.

Profitability should remain the province of corporate product management, and MSRs should sell whatever the member needs, secure in the knowledge that the company has priced the product appropriately to insure profitability. Further, MSRs have little control over what balances a customer brings, but much more control over what products they present to the member.

* Branch manager scorecards can include profitability measures that reward efficient operation of the office, but restrict these measures to controllable elements too. A branch manager has little control over lease payments or utility bills.

Further, if scoring on expense control, use care to insure that long-term retention is not compromised by branch managers reducing staff to meet short-term expense targets.

* Do not include sales of CDs on the scorecard. CD sales are largely rate-driven and balances will be greatly affected by decisions of the asset/liability committee well beyond the control of branch staff.

* Include some measurement of service quality or retention in order to discourage behaviors that foster high account turnover. Including a retention measure encourages needs assessment at the point of sale and follow-up service calls after the sale.

* Offer incentives for referrals to other departments. Because referral opportunities to mortgage, investment, insurance, and other departments are less frequent events, MSRs may otherwise overlook these member needs.

* Negate payouts for basic failures. No level of sales volume can offset poor administrative oversight, and insufficient audit results, excessive over/short situations, and low service quality scores should all override any sales performance level.

Steven Reider is the founder of Bancography in Birmingham, Ala. He can be reached at www.bancography.com. (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com

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