Optimizing Branch Productivity and Performance
Tyndall Federal Credit Union changed to performance based reviews in 2005. With eight branches and staff sizes that ranged from 5 to 50 employees, executives wanted to change to a culture of building relationships and reducing operating expenses. This change allowed employees to differentiate themselves within the organization and be rewarded for their performance. Philippe Asselin, VP of HR, remarked "Companies that don't recognize top performing individuals will eventually lose them." While the transition was challenging at times, the credit union has seen great success and reduced their operating expenses by $1,000,000 in 2006.
The transition forced credit union executives to explain why performance would be the focus rather than just insist on change. Prior to this management recognized good behavior, such as attendance and attitude, equally with the credit union goals. This made for a subjective review rather than an objective look at performance. Tyndall partnered with FMSI to provide transaction data that allowed them to better measure front-line staff productivity. By utilizing the data on hand, management based their decisions on hard facts rather than anecdotal analysis.
Proactive Use of Data
By incorporating the data into staff incentive programs, credit union executives have been able to better address member needs by scheduling tellers during peak volumes. Prior to using the branch transaction data, tellers averaged 15 to 16 transactions per hour. With the implementation of incentives, the credit union averages 18.4 transactions per hour.
Financial Management Solutions, Inc (FMSI), provides the data to Tyndall and also provides all credit union clients, which allows executives to benchmark their performance against peers.
Even with the increased need for flexibility Tyndall has not implemented split shifts. In their area, a county of roughly 160,000 residents, there are a number of college students and retirees who are recruited by the credit union. Both groups offer the credit union a unique perspective to serving their respective demographic segments. They do, however, have a higher turnover rate than other applicant groups.
Throughput and Sales Incentives
Using the data allowed Tyndall to offer incentives based on performance and sales goals. Tyndall issues rewards based on both individual and team performance. Incentives range from $60 to $150 per month, or about 10% of base pay. The base incentives are calculated by throughput. Branch transaction volume can varies based on location, nearby traffic and local developments. Prior to the switch the busiest branches had the highest level of turnover. Now, tellers are requesting to switch to the busier branches to increase their incentive payout.
Tyndall rewards between $0.02 and $0.04 per transaction for tellers that exceed the targets. For team performance they reward $0.005 to $0.02. The incentive is calculated by multiplying the amount incented by the total transactions for the month. Tyndall incents $0.02-$0.04 for individual performance and $0.005 to $0.02 for team performance.
In addition to the base throughput incentives, Tyndall also incents on achieving sales goals. Each month, Tyndall has goals of adding 19 new member accounts, 19 new loan applications, and 20 "suffix accounts", such as CDs, checking with direct deposit, etc.
While the incentive program was initially received with mixed reviews, employees have adapted. Philippe Asselin, VP of Human Resources, mentioned that they saw their initial results "snowballing" into something much larger. Tyndall was able to greatly increase their number of transactions per hour. This increase led Tyndall to become one of the top ranked credit unions based on their cost per transaction, which currently averages 69 cents.
In its first full year, 2006, Tyndall's incentive program resulted in:
- A $46 million increase in loans (increase of 8.9%)
- Higher efficiency, requiring 30 less full-time employees
- A $1 million reduction in total personnel cost
Measuring performance provided benchmarks both externally (with other credit unions) and among employees. Tellers began to understand the average pace across the organization, regardless of the branch. Training needs also became clearer and employees could be coached more effectively. By setting clear, fair and consistent goals for the employee incentive program, Tyndall employees provided higher throughput and maintained member service levels. Asselin offers this advice to credit unions looking to improve performance, "We meet regularly to review the incentives and propose changes each year. The focus for us has been expense reduction, across the board. The incentives will work great for some credit unions, but not all. Consider your credit union's culture prior to changing or implementing employee rewards programs."