The 2008 Technology Guide for Credit Unions

Vol. 2| The 2008 Technology Guide for Credit Unions
Building Member Touchpoints:
Cards and the Member Service Network
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The Member Service Network |Call Centers | Branching| ATM/Kiosk/RTS/RDC
Case Study
Optimizing Branch Productivity and
Performance
Tyndall Federal Credit Union
Panama City, FL
$844.6M in Assets
100,185 Members
9 Branches
2.3% Member Growth
12.3% Share Growth
9.2% Loan Growth
270 Employees
Operating Expenses / Ave. Assets: 3.4%
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. Tynall 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.
Cost Savings At a Glance
Tyndall Federal Credit Union
2003
2007
5 year Growth
Employee Compensation & Benefits
Total Operating Expenses
FTEs
86
The 2008 Technology Guide for Credit Unions
$11,607,983 $26,507,180 360
$12,998,899 $27,319,691 270
$500-$1B
Peer Average
12.0%
3.1%
-25.0%
www.CreditUnions.com
31.6%
31.2%
14.6%
The Member Service Network| Branching
By Lydia Cole, Callahan and Associates
How Do They Do It?
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.
Results
» Establish objective performance plans and reviews for
supervisors
» Productivity and efficiency are
essential: Train, encourage &
incent
» Track and incent throughput, cross-sales and member
service
» While there is no one solution
that works best for all, incentives in general can play a
major role in accelerating the
teams towards one goal
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%)
» Make targets the base of any
incentive program
» 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”.
www.CreditUnions.com
Tips to Guarantee Success
» Ensure targets are clearly
defined and every person or
group is accountable
» Be fair and impartial in comparing actual performance
against targets
» Avoid skirting system to
reward non-performers
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