The Best Laid Incentive Plans

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The Best Laid Incentive Plans ...
By David Acevedo
The best laid plans of mice and men often go awry. This adaptation from the
poem “To A Mouse” by Robert Burns could easily speak to the state of incentive
pay within community-based financial institutions today, over 200 years from its
first use. Rewarding your employees appropriately is a challenge in the current
market—should you do group or personal incentives, reward points or dollars,
use branch goals, qualify or nonqualify referrals?
“Rewarding appropriate incentives is like steering a car—paying the right amount
for the right behavior will steer a financial institution toward its goals, whereas
making hard turns one way or another or going off in the wrong direction may
end them up in a proverbial ditch,” says Don Delves, president The Delves
Group, a Chicago-based consulting firm that specializes in executive
compensation.
To determine if your current incentive plan is steering your institution in the right
direction, consider the following key components:
Set the Right Goals and Thresholds
• Analyze the top 15 to 20 percent of staff to identify appropriate goals for the
majority of employees involved.
• Be careful of subjective criteria as disqualifiers (e.g., mystery shops, etc.).
• Consider team-based plans, individual plans or both.
Let Corporate Strategy Drive the Plan
• Ensure incentives match profitable products/lines of business and current goals.
• Define the focus of the annual plan. Does the incentive plan match the
corporate strategy?
Provide Meaningful Rewards
• Remember cash or other incentives must be meaningful to employees.
• Ask yourself if the dollar amount is too low.
• Consider time off and recognition as ways to reward.
• Ask employees what types of incentives are meaningful to them.
Keep It Simple!
• Let employees know what they need to do to both meet and exceed
expectations, AND what that means in terms of incentive.
• Remember that overcomplicated plans confuse employees and don’t help
change behavior.
Once you have the right plan in place, you still have one final hurdle to jump—
you must create an efficient means of tracking and reporting results so that
employees can see their incentive rewards at any time. Waiting weeks or even
months to determine if a referral sent has closed or resulted in new business is
no longer acceptable. The latest breed of CRM solutions has finally made this
process manageable. Other stand-alone incentive systems with CRM “lite”
features are also good, but they often lack the overall tracking and integration of
current CRMs.
The right incentive plan can drive your institution to the right results by growing
core deposits, retaining your most profitable customers, promoting the crossselling of the right services to the right customer and creating team unity, but you
must plan carefully and put the right tracking system in place to ensure your best
laid plans don’t go awry.
David Acevedo has spent 26 years as a community banker in senior-level
positions in retail banking, commercial banking, marketing, and investments and
insurance. 360 View CRM is a Web-based software solution that can be hosted
at your institution or via the Web by inBusiness Services, developer of 360 View
CRM.
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