CUES Member Community

Expand all | Collapse all

pay for performance

  • 1.  pay for performance

    Posted Apr 10, 2020 11:24 AM

    Does your organization use a pay for performance model?

     

    If yes to Question 1:

    • How is your pay for performance model configured? Is it solely based upon individual performance, or does it factor in department and/or company performance? If it does factor in department and/or company performance, what is the % mix for all factored components?
    • Is individual performance measured by goals, or competencies, or a mix of both?
    • Who is eligible in your organization for pay for performance?
    • Do you use a nine box to provide input to pay for performance?  If so, what do you measure in your nine box (potential, performance, competencies, goals, etc.)?
    • Do you use pay for performance for annual merit increase, or bonuses?
    • Do you use compa ratios in any way with your pay for performance?  Are managers able to see their employees' compa ratios?
    • Are performance calibration sessions used in any way that could impact pay for performance?
    • Do you have an appeals process wherein the employee may challenge a rating or pay decision?

     



    ------------------------------
    Nora Swart
    SVP/Chief People Officer
    Lake Michigan Credit Union
    Grand Rapids, Michigan
    616-242-9769 nora.swart@lmcu.org
    ------------------------------


  • 2.  RE: pay for performance

    Posted Apr 17, 2020 07:05 AM
    I would be interested in this info also.

    ------------------------------
    Angela Holland
    HR Administrator
    Allegiance Credit Union
    Oklahoma City OK
    405.717.9041
    ------------------------------



  • 3.  RE: pay for performance

    Posted Apr 19, 2020 01:38 PM
    Nora,

    It really depends on how you want to set it up.  Generally speaking while the nine box is used generally for the merit increases, the companies I have worked with (both in credit unions and outside credit unions) have treated the pay for performance as a quarterly bonus type of structure.  While many of the goals are shared with the nine box, there are many nine box goals that are seen as part of the base job requirement and not incentivized on (i.e. attendance, accuracy, following professional standards). I'll give examples of some potential goals both individual and team I can think of for most branch based positions.  However, these are general and not specific to your credit union or sales culture.  I would strongly recommend tying the pay for performance to a profitability model for measurement and analysis as well as considering how your sales culture is to identify where it makes sense to incentivize your employees.  You will also want to review your reporting capabilities before implementing this type of program to ensure you can track results accurately for employees to reward them fairly.

    Tellers (generally individual goals)
    • Referrals for qualified new products (seen this done as a general category, also seen done with point based weighting on various referral categories to emphasize certain products/services)
      • Referrals for qualified new checking
      • Referrals for qualified new consumer loans
      • Referrals for qualified new mortgages
      • Referrals for qualified new certificates
      • Referrals for qualified member enrollment in Online Banking/Estatement
      • Referrals for qualified new members
      • Referrals for qualified new direct deposits
    • Net Promoter Score Rating

    Head Tellers/Teller Supervisor
    • Referrals as a branch (same as tellers seen both as general all qualified and specific point weighting)
    • Net Promoter Score as Branch
    • Deposit Growth as Branch

    Loan Officers/Financial Services Representatives
    • Referrals as an Individual (same as tellers seen both as general all qualified and specific point weighting)
    • Loan Volume Funded as an Individual
    • Net Promoter Score as an Individual
    • Share Growth (checking accounts opened with x transactions within 30 days of opening) as an individual
    • Credit Life Disability Success Rate as an Individual
    • Consumer Loan Volume as a Branch (generally team goals are paid only if individual goal is met)
    • Credit Cards as an individual (seen this bundled in with Consumer Loan Volume also seen it treated separately where $X is paid per credit card funded where $x is charged within 45 days)
    • Share Growth as a Branch (generally team goals are paid only if individual goal is met)

    Assistant Branch Manager
    • Net Promoter Score as an branch
    • Credit Life Disability Success Rate as a branch
    • Consumer Loan Volume as a Branch
    • Share Growth as a Branch 
    • Business Loan Volume as a Branch
    Branch Manager
    • Net Promoter Score as a Branch
    • Business Loan Volume as a branch
    • Consumer Loan Volume as a Branch
    • Real Estate Loans Funded due to Qualified Referral from Branch Employee (volume or number though generally it seems more volume based than number)
    • Share Growth as a Branch

    Generally speaking the way the pay for performance calculated is based off a math formula and really depends on how you set the program up.  You either set the program up with tiers that have a max payout (i.e. achieves goals pays $0, exceeding by x% pays $100, achieving by y% pays $250).  This is the easiest way to pay for performance as you can calculate out the max amount you will pay out per quarter/year if every employee in a specific position achieves max.  Some of the downside I have heard is the worry that once an employee achieves what motivation will they have to continue to work hard if the monetary incentive is no longer there.  I have my own personal opinion on that scenario, but I don't know your employees so that is something you will want to discuss with your team.

    Alternatively, you have tiers set up where as employees fund more loans/qualify more referrals than each additional loan funded amount over that tier pays x more than the prior.  This is more complicated and you will need a robust reporting system in place for this type of incentive program. That being said the benefit is obviously that there is always a carrot for the high achieving employees.  How you calculate the tiers will really depend on how good your reporting and tracking is.  Generally in this scenario you have rewards set up where you know not every employee will achieve, so while the high achievers will get large payouts.  Those employees are the exception and not the rule.  So the majority of employees will be paid a smaller incentive.

    To identify if you are overpaying employees, take the total number of employees for that incentive quarter/year.  Take the total amount of incentive paid for that position and divide by total employees (i.e. $180,000 incentives paid across 300 employees = $600).  Divide that by the average salary for that position (assuming $32,000 that would be 600/32000 = 0.01875 per quarter or 7.5% of salary per year).  That will give you the quarter/annual % of salary you are paying for that position.  Compare to the % of salary you are comfortable with incentivizing to determine if you are overpaying or underpaying according to your budget.  Review the incentive tracking reports to identify if you set too easy of goals or tiers for certain payouts.

    I know this is lengthy and doesn't answer every bullet point, but I hope it helps.

    ------------------------------
    Troy Del Valle
    VP, BI
    Hudson Valley Credit Union
    Poughkeepsie NY
    845.463.3011
    ------------------------------



  • 4.  RE: pay for performance

    Posted Apr 20, 2020 07:23 AM
    Thank you Troy.  I appreciate the details!   I will be passing this off to our OD team.  Have a great day and be safe!

    ------------------------------
    Nora Swart
    SVP/Chief People Officer
    Lake Michigan Credit Union
    Grand Rapids, Michigan
    616-242-9769 nora.swart@lmcu.org
    ------------------------------