Make your incentives disappear

If you could take your magic wand and make one thing at your credit union disappear, what would it be? Some of you may come up with an interesting list of items (maybe, even people!) but our suggestion is use that magic wand to make all your incentive programs go far, far away.

Incentive programs may represent the most perplexing conundrum in our industry. What started out as well-intention has turned into highly destructive to many cultures. In many instances the intent was to stimulate growth with incentives; however, the result is stifling stagnation of performance. Seen by some as a way to motivation employees has, instead, driven many employees away from our organizations … including some of our best employees.

Two recent findings in engagements with clients related to incentives:

  1. Employees were cheating the goal attainment and incentive payout structures by sharing their sales with other employees who were lacking in their production. While the intention was to be good teammates, the result was peer pressure to share and an appearance that all employees were doing their job when, in fact, only a few actually were.
  2. A survey revealed that over 75% of employees feel their incentives are based only on exceeding sales goals and not at all on delivering great service to members. (Also, 100% of executives admitted that they had created this type of culture at their credit union.) Further, focus group meetings exposed that most employees felt immense pressure to meet goals and that pressure prevented them from going the extra step in creating positive member experiences.

We’re not suggesting that all incentives are bad or produce negative consequences but we are saying that most credit unions have at least one instance where incentive structures have perpetuated an environment that is frustrating, at best, and corrosive, at worst. Left unchecked, especially in high-focus areas like consumer loans, these environments will likely result in the two unintended negatives noted above.

So, what can you do about it? Here’s a six-pack of ideas:

  1. You may need to declare amnesty for all employees and push “reset” on your current incentive structure. Stop doing what you’re doing today, take adequate time – maybe as long as 24 months – to revise your incentive structure to make certain you are promoting the right type of production from all staff
  2. Make sure that goals are established as properly as possible, providing assurance to staff that what you’re asking them to produce is realistic and attainable. Diligently review your goal-setting methodology and actively communicate that process to staff. Full transparency in the process is a vital step in justifying the goals they are expected to produce
  3. Consider balancing all goals between individual production and team production to foster an environment where everyone is efforting and contributing to their fullest potential. If you already have both goals, make certain they are balanced as equally as possible to trumpet the point that “we’re all in this together”
  4. When creating goal categories and establishing measurable production goals, ensure employees can clearly “see” what you want them to accomplish and, most important, know how you want them to do it. Don’t assume that staff (including experienced staff) will be able to figure this out on their own – they need crystal-clear direction on the “what” and “how”
  5. Ensure there is perfect alignment between your goal and incentive programs and your strategic objectives. If you say everything is about optimal member experience, then don’t create a culture where the most ardent focus is on goal achievement and there is little or no member satisfaction measurement.
  6. We all know that coaching is important to driving positive performance but, when goals and incentives are concerned, it becomes acutely important. Managers, supervisors, and executives must be actively engaged in every step of the process – from sharing performance expectations, to strategizing on action steps to observing and providing feedback to providing the most appropriate forms of motivation. Plus, the more involved coaches are, the more auditing of the incentive culture they can do

There are more steps to success than just these six and within each of the six more micro-steps are inherent but looking at your incentive culture today in the most discerning manner will be a solid start to avoiding the two issues experienced by our client above and setting your organization on the road to the most desired performance culture.

My last note is totally self-serving and a shameless promotion but sincerely true: it’s exceedingly hard for most organization to reset their performance culture without some level of outside perspective. Some amount of unbiased, non-political, third-party viewpoint is needed, especially at the outset.

Rarely can an organization objectively see what they’re doing right and wrong and make the necessary improvements. Additionally, most employees won’t tell you the truth about what’s going on nearly as much as they will tell someone from more than fifty miles away carrying a briefcase.

If you truly want to reset your performance culture and ensure the highest level of thoroughness and confidentiality in the process, you need an outside facilitator.

For more information on my firm, please contact us at or 636-578-3280.

Paul Robert

Paul Robert

Paul Robert has been helping financial institutions drive their retail growth strategies for over 25 years. Paul is the Chief Executive Officer for FI Strategies, LLC, a small but mighty ... Web: Details