Title: Variations on the Carrot Theme; Community Banks Tinker with Incentive Programs to Encourage Front-Line Employees to Sell
Abstract: Community banks tinker with incentive programs to encourage front-line employees to sell A few years back, Bar Harbor Banking and Trust Co. offered its employees an incentive program for mortgage lending. Employees were eligible for payments when they referred customers to the bank's mortgage unit. Maine bank's workers responded enthusiastically, recalls Sheldon F. Goldthwait, Jr., president and CEO. So enthusiastically, in fact, that finally ended up with so much business that we had to back off on the program. More recently, the $340 million-assets bank tried the same approach to trust services, paying incentives for referrals. Successful referrals garnered the referring employee with a first-year bonus tied to the size of the new trust relationship. While coming on the heels of the phenomenal mortgage program, the trust effort saw much less success. We've had some awards, they've not been widespread, says Goldthwait. think we have to do more with it. Bar Harbor Banking's experience demonstrates the evolution going on in community banks' efforts to instill more culture in their organizations. Those on the forward part of the curve have found that incentive payments alone aren't always enough to guarantee success. Take the experience of Jerry Reinert, president and chief operating officer of First National Bank, Springdale, Ark. About a year ago, the bank started a incentive program to encourage employees to make referrals to the $340 million-assets bank's loan officers. Reinert says employees receive at least $5 for every referral they make-- more if the loan is large. Referrals that result in closed loans gain them additional incentives. Under First National's program, a commercial loan made for $50,000 can result in $50 in incentive fees to the employee who made the referral. The program has certainly gotten employees to think about referrals, says Reinert, it has not been as as he had hoped. Many of the employees who have benefited from the program are repeaters--people who produce referrals time and again. These are people who have in their blood, says the Arkansas banker. As for other employees, the program has failed to spark them to action. people just go for these kinds of things and others, I don't think any amount of money will incent them, says Reinert. An awful lot of people who work in banks didn't come there to sell, observes Douglas King, president of $23 million-assets Nebraska National Bank, Kearney. King says his bank has tried incentive payment programs to boost sales, but I don't view them as 100% successful because of employee resistance. Rethinking the sales mission It may be that until an entire generation of bankers turns over in the nation's community banks, there will be people who simply decline to adapt to a more competitive environment where selling is the norm. Some bankers say that it is not necessary to wait for time to take its course. Instead, they say, change can be brought about by adjusting the focus of new efforts away from sales. At $132.8 million Founders Bank of Arizona, based in Scottsdale, president and CEO Julian L. Fruhling brought in a consultant who presents employees with the idea of as something more than huckstering. Sales, from this viewpoint, is problem solving, or, to quote the philosophy more directly, the pains. Everybody has pains, troubles of some kind, the argument goes, and bank employees can play a part in solving those of a financial nature. bank's training stresses the quest to find customer's needs. Once a banker has determined what those needs are, he or she can then set about fitting the items on the bank's menu to the customer. Essentially, Fruhling says, employees are encouraged to custom tailor an assortment of products and services for each customer they encounter. …
Publication Year: 1997
Publication Date: 1997-08-01
Language: en
Type: article
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