Insights on Incentives has as its sole purpose the facilitation of thought and discussion on the subject of incentive compensation for banks and credit unions. Once a month NSS will be sending out an e-mail with one insight on the area of incentive compensation. The insights will come from our research, discussion with customers and finally, those of you who decide to offer an insight on this important sales management issue.
Incenting revenue growth – “moving the needle”
Driving revenue growth has been an important measurement in almost all incentive compensation programs implemented by banks and credit unions. This point is again reinforced in the front page article titled “Profitablity Drivers – How Do Eagles Soar?” in the July 5, 2005 edition of ABA Bankers News. The basis of this article is some research done by David Furnace, managing director, Sheshunoff Management Services. Furnace’s research reveals that targeting revenue growth and supporting that with incentives is one of the common traits among the stronger performing financial institutions as measured by ROA and ROE.
Be careful here. We do need to recognize new money to the organization as opposed to in-house money being moved from one product to another. Ditto with loans. Refinanced loans should be rewarded differently than new money to the enterprise. This is not always easy to track.
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