Right Idea, Wrong Incentives

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There are many ways to reward credit union staff for sales leads and opportunities. But choosing the wrong incentive strategy, credit unions risk losing sales, suffering morale problems and even creating staff turnover, according to two credit union sales experts.

David Lockhart, CUNA Mutual Group Midwest lending sales manager, and Tom Wiedl, vice president/sales and service with Sunmark FCU in Schenectady, N.Y., told attendees of CUNA Mutual's Discovery Conference that CUs won't achieve loyalty from members until they get buy-in from employees, and that starts with a well-developed incentive program.

"Try to avoid incentive programs that reward the best, or No. 1," said Lockhart. "When you make an incentive program designed to reward the top performers, 90% of your employees will think it is over before it starts. You actually demotivate people."

Wiedl suggested having team goals to involve everyone, and he noted top sellers are more willing to share ideas and plans, knowing it helps the team.

"If you give lunch awards to only the top performers then you tend to have lunch with the same person every month," said Wiedl.

He advocated the "Power of Now," suggesting that if employees are rewarded today for what they did today, they will probably work just as hard tomorrow. Wiedl said one such program he uses might pay $15 to $20 for a job well done that day, or maybe a restaurant or store gift certificate. He said it actually costs less than a monetary reward, or commission, at the end of the month, but the impact is immediate.

Both speakers agreed the goal is not to have employees compete against each other, but to have them compete against the competition.

"For someone to win, someone has to lose and that is what we are trying to avoid," said Lockhart. "We want employee versus goal, not employee versus employee."

Lockhart and Wiedl noted a good employee incentive program doesn't have to be cost prohibitive.

Wiedl said at his credit union, indirect lending costs $17 per $1,000 loan, direct lending is $18 per $1,000, while his incentive program costs only $3 per $1,000. He said the key to his incentive program is "loan stealing." "That is, moving a loan a member has at another financial institution and converting it into a more lucrative loan for the member at your credit union."

Wiedl gave an example of one member who had high credit card debt and also had a home equity loan elsewhere. Sunmark repackaged the home equity loan to absorb the credit card debt, saved the member $1,300 a month and recaptured $93,700 from another financial institution. Wiedl showed that since 1999, Sunmark Federal Credit Union has gone from $8 million in loan "steals'' to more than $108 million in 2004.

Both speakers agreed there was an attitude adjustment with some staffers who didn't think selling was part of the credit union environment.

"Selling is service and service is selling," said Wiedl. "You were hired to service members and selling is part of that. It is people helping people."

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