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.