1. Incentives, Recognition, Bonus and Pay for Performance Michael Neill & Assoc. Inc. 1613 Mercer Ave. College Park, GA 30337 888-440-0552 mnai@att.net www.michaelneill.com

2. Why Do We Use Incentives? A credit union employee survey revealed: 73% of employees say they are less motivated. 84% say they could perform significantly better if they wanted to. 50% say they are doing only enough to keep their job. Employees listed recognition as their primary motivator.

3. Terminology Recognition - To recognize a performance or behavior that has already occurred. It may have the residual benefit of incenting others, but this is not the goal. Usually low dollar, and “high-hug.” Incentive - To motivate the subject to perform at a level higher than expected. Usually involves money. Bonus- To reward a set of behaviors once the goals have been achieved. Usually involves money. Pay for Performance – Pay is at risk based on your performance. No guarenteed pay increases. The is for the most mature sales cultures who are expert at goal setting and tracking.

4. Able Unable Willing Delegate/ Train Recognize Unwilling Coach/ Terminate Incent Four Types of Employees

5. Critical Issues in Incentive Development Understand the limitations of incentives. Incentives are not a replacement for leadership. Incentives are not a replacement for coaching. Incentives are not a replacement for training. Some people are not capable of being incented (within your level of influence)

6. Critical Issues in Incentive Development Understand the limitations of incentives. “You can’t pay people enough money to make them care!” – Mike Neill The better your lead and coach, the less you’ll need to use incentives. “Incentives work. It’s just a shame that they do.” – Mike Neill It is amazing to see credit unions that have worked to develop leadership and coaching quit on them as soon as they implement incentives.

7. Critical Issues in Incentive Development Understand the limitations of incentives. “It is amazing to see credit unions that have worked to develop leadership and coaching quit on them as soon as they implement incentives.” “I don’t have to lead and coach now. The incentives will take care of it. I can go back to normal.”

8. Critical Issues in Incentive Development Understand the limitations of incentives. Incentives are only one piece of performance management. If you don ’ t hold poor performance accountable, employees will not perceive the behavior to be of the same importance as those that create accountability.

9. The Role of Accountability in Performance Management The credit union must develop a performance management plan for sales and service. Examples: Failure to meet sales goal…  1 st month – Counseling 2 nd consecutive month – Written Counseling 3 rd consecutive month – Probation 4 th consecutive month – Subject to Termination > 5 months in a 12-mo. period – Subject to Termination.

10. The Role of Accountability in Performance Management Does this sound tough? What would you do with a teller who did not meet balancing standards for 4 consecutive months?

11. Critical Issues in Incentive Development If you can ’ t track it, you can ’ t incent it. Track external service. www.membershoppers.com Ensure internal service improvement with an extensive Internal Service Survey. Develop internal service improvement action plans based on service gaps revealed in the survey. www.internalservicesurvey.com

12. Critical Issues in Incentive Development Automate your sales tracking. Manual tracking will kill most sales cultures. Be careful what you incent because you will probably get it. If you incent based on lower wait times in the call center, you may be incenting poorer service to the member.

13. Critical Issues in Incentive Development Don ’ t let anyone tell you there is one correct way to incent. Sales and service incentives are a function of organizational Capacity, Culture and Conscience.

14. Critical Issues in Incentive Development Keep the incentives consistent. What happens if you don ’ t? They quit doing what you want. Don’t create a product-centric enviornment by incenting only on promotion products month to month. You will generate more income at the expense of member trust and relationship.

15. Critical Issues in Incentive Development Allow the employees to let you know what rewards are of value and motivating. The incentive program is only as good as your ability to track it. Every program has potential advantages and disadvantages.

16. Critical Issues in Incentive Development Ensure that everyone in the organization has an ability to receive an incentive. However, don ’ t try to create the same plan for a support and frontline employees. Incent support personnel for their delivery of outstanding service, not what the frontline employee sold. Evaluate the program each year to fine - tune the system.

17. Critical Issues in Incentive Development I recommend you begin with recognition and then move to incentives if you feel you must. Long-term recognition programs should be based on metrics. You can use short-term informal recognition program to create awareness. For example, “Whale Done.”

18. Credit Union Incentive Program-Key Features Rewards sales and service. Rewards everyone in the organization on behaviors that are important to the culture in their control. Rewards increase with higher performance. Program is consistent through the year. Goals and payouts are subject to change quarterly.

19. Mike Neill’s Program MemberShoppers Results Overall MemberShoppers Score Member Advocacy Member Eduction Member Appreciation Reward branches and individuals that exceed initial minimum expectation Additional rewards for branches and individuals that are in the top 10% of all scores

20. Mike Neill’s Program MemberShoppers Results Support Departments receive incentives when the Overall MemberShoppers Score is higher than minimum expectations. “The service we provide to the member will never be better than the service we provide to each other.” – Mike Neill Amount increases as scores increase.

21. Mike Neill’s Program Internal Service Survey Recognize(not incent) departments and employees in the top 10% of scores. Recognize (not incent) departments and employees that score above the initial minimum expectation.

22. Mike Neill’s Program Sales Pay incentives when initial minimum expectations are exceeded for New loan dollars ex. $10 for every $10,000 in new loans over IME. Product Penetration for Households in their initial 90 days. Other key credit union products and balances. Additional incentive money paid as performance increases.

23. Mike Neill’s Program Referrals To be eligible the initial minimum expectations for the number of referrals must be exceeded. Then incentives are paid based on new business that results from a referral. Incentive amounts based on the value assigned to the product. Do not pay incentives on referrals. Pay on sales that result from referrals.