To Supercharge Employees, Try a Carrot
Financial institutions can't afford to lose the customer service edge in a recessionary environment, when the battle for market share heats up.
Thus, many banks are turning to employee incentive programs as a cost-effective and measurable way to ensure high standards of service quality.
In essence, employee incentives are rewards - of merchandise, cash, travel, even vacation days - issued by supervisors who would like to recognize their employees' performance. As many banks involved in a quest for high service quality will attest, incentives are useful with both external customers (account holders and branch visitors) and internal customers (colleagues in other departments).
A Tool for Bolstering Sales
Banks are developing separate incentive programs for each product or service "push." Many incentive programs have become quite sophisticated, with tiered point scales and the opportunity for employees to accumulate points toward more advanced awards.
Employee incentive and award programs are a natural progression for banks that are focusing more on selling and less on transacting. Spending in the total employee incentive market reached $16 million in 1990 - up 5% from the previous year.
Trade publications estimate that virtually all Fortune 500 companies now utilize some type of incentive program, especially for their sales forces.
Begin with Consumers
Delivery of quality customer service seems to be the competitive weapon for consumer banking groups.
Many banks have incentive programs to reward employees for delivering outstanding service to customers. Employees are given a choice among travel, entertainment, and store gift certificates. Branch managers can also reward line employees "on the spot" for providing customer service excellence.
Case in Point
American Express has more than 200 employee programs that honor excellent service with both incentive awards and recognition. In all of our programs, employees are nominated by their coworkers or supervisors.
The most prestigious recognition an American Express employee can achieve is the "great performers" award. The recipients are employees who achieve what we consider to be heroic levels of customer service.
Another program, the "chairman's award for quality improvement," recognizes teams of employees who have clearly demonstrated improvements in areas such as productivity, internal or external customer service excellence, or cost savings. Since 1985 alone, through this and similar quality reward programs, American Express has saved over $1 million by avoiding costs and by improving customer service.
Banks thinking about implementing an employee incentive program should consider these preliminary steps:
* Define objectives. Determine your company's goals for the year - and employee incentives can be used to achieve any of them.
* Plot a strategy. In a business plan, your strategies will tell you how your company can achieve its objectives. Very often, an employee incentive program will be one of the strategies you've been looking for.
* Choose a format. You can devise an appropriate program by matching a business objective with the employee group that is empowered to achieve it.
* Build a budget. By planning for all program costs in advance, bankers can determine the bottom-line impact of granting employee awards.
* Tailor the awards. When choosing the incentive award, keep in mind that the award should match the program. Determine the preferences of your target employees.
* Get feedback. It's important to gather employee feedback, both to gauge the success of the program and to help develop future ones.