Each month employees of Umpqua Bank “wait with bated breath” to hear the bank’s evp of retail banking, Ric Carey, announce the top branches based on performance and service—from No. 1 to No. 145. He’s got their attention because the results put extra money in their pockets twelve times a year.
Carey says that approximately $100 to $500 is earned per employee per month with an average total of $175,000 in bonuses given out each month by the bank. Not too shabby for front-line employees such as tellers, greeters and customer service folks. (Though Umpqua prefers to call all these employees universal associates.)
The $8.3 billion bank, based in Portland, OR, bases the team award on service quality scores, which take into account six measurements: new account surveys, in-lobby “Your opinion counts” cards, telephone “secret shops” (a minimum of three per month), retention of existing customers, accounts lost in a month and cross-sell ratio. If they don’t get a certain score, they don’t get a team award.
“They are always striving to do excellent work at cross selling and providing unbelievable customer service because it impacts their incentive program,” says Carey, who notes that because of the incentive program the bank’s cross-sell ratio runs at 4.9 products per sales session. Sources say the industry average is about 3.5 products per sales session. “Our bank is probably a little bit unique because we measure customer service at every location,” Carey says. “Where most banks talk about customer service, we actually measure it every month.”
But Umpqua is not the only bank tying front-line employee bonuses to carefully measured customer service. Headquartered in Columbus, OH, Huntington National Bank also take this tack, says the bank’s regional banking group president Mary Navarro. Unlike Umpqua, however, Huntington uses an outside company, MSR Group, to monitor team service. The Omaha, NE-based firm surveys 15 customers from each office per month for a total of 45 surveys for the quarter.
Tellers earn a flat dollar amount every three months that can equal 15 percent of their quarterly salary, Navarro says. “I think that our service over time has improved and by getting the [survey] results on [an almost] daily basis it allows the manager to look at those results and talk to the employee [within three days of the] interaction with the customer,” Navarro says.
Tying service to incentives is important, says Rodger Stotz, a vp at Fenton, MO-based research firm Maritz. Having incentives tied solely to sales drives sales pressure too hard and can negatively impact the customer relationship, he says. Over the last two years banks have begun to appreciate the connection between service and incentives. “Many banks are looking at recognizing their front-line people for behaviors as well as incenting them for results,” he says. “Customers are looking for more than just the transaction, but looking at how they are treated.”
But there is a caveat: “Incentives are like fire—they can keep you warm or burn you,” Stotz says. “A well designed and implemented incentive program helps to really give focus to what’s important from the bank’s perspective to the bank’s employees. It’s a valuable communications tool.”
Poorly designed, however, and these bonus programs can create more headaches than they are worth. If the objectives and targets are unrealistic, employee may grow resentful. Yet, if the targets are too easily achieved employees will not be motivated to stretch themselves and banks may end up paying more for the same level of service. “Incentives are powerful,” Stotz says, “so the bank must make sure they address the right directives and that there are safeguards and audits in place.” (c) 2008 U.S. Banker and SourceMedia, Inc. All Rights Reserved. http://www.us-banker.com http://www.sourcemedia.com
