Actionable Strategies for the Design of a High Performing Organization

What is a “High Performing” Organization/Credit Union?  Annually meets and typically, exceeds financial targets such as: growth, net income, ROA, etc.  Staff are satisfied and enjoy working at your CU – “willing to go the extra mile for the member” – “willing to try new things”  Members are satisfied and many members call you, to offer all their business

High Performance How do you get there? 1. Define Strategic Direction 2. Compensate Staff Fairly 3. Define Quality Service Standards 4. Define Performance Contracts for all Staff 5. Communicate 6. Train Staff 7. Coach Staff 8. Introduce Multi-source Feedback 9. Appraise and Reward Results 10. Monitor Program Effectiveness

High Performance How do you get there? 1. Develop a Strategic Direction  Make a commitment at the Board and management level to expect “high performance”  Know how much of your current membership do business elsewhere and develop a plan that will ensure your staff gain that business  Ensure your products and your pricing are competitive  Find out if your staff are satisfied - if not - take action  Find our if your members are satisfied - if not - take action  Know your CU’s current performance and set new targets  Define how you will measure your CU’s achievement of the new targets

High Performance How do you get there? 2. Compensate Staff Fairly  Ensure you have internal equity – using job evaluation and compensation management, pay fairly internally  External equity – know whom do you compete with for your business and your people, and set pay levels accordingly  Balance internal and external equity  Staff who are not paid fairly will be less willing to take on new duties, take risks, or support your organizational change

High Performance How do you get there? 3. Define service quality standards  What is quality service to your CU? Define your version of quality service  Know how quality service is to be demonstrated by staff  Demand quality service from those serving your internal customers

High Performance How do you get there? 4. Develop performance contracts with all staff  “Why does this job exist?” “What is it this job is to accomplish?” “How will the performance of this job support our organizational direction?’  For each job, define not only “what” is expected but, “how” the job is to be done and what is considered successful performance  Use performance contracts as a foundation for coaching all staff to be the best they can be  Ensure contracts are realistic, measurable and attainable  Ensure staff have the “span of control” they need to achieve their goals

High Performance How do you get there? 5.Communicate  Ensure staff understand “why” you are implementing these new programs  Ensure staff understand both the “big picture” and their own role in that picture  Adopt a discipline for continuous, consistent, open communication - regular staff meetings, sales meetings, etc.

High Performance How do you get there? 6.Train Staff  Train staff to understand how to build long-term relationships with their members  Provide technical training – lending, investments, etc.  Train Management to be effective coaches  Support any other training need that arises

High Performance How do you get there? 7.Coach Staff (Steps one to five are pointless unless you are going to require managers to act as coaches)  The manager’s customer is their employee  Managers must hold their staff accountable for their performance contracts  Managers must demonstrate support by being accessible and listening to obstacles raised by staff and deal with these obstacles  Give feedback informally all the time, recognize accomplishments and when necessary re-direct performance - document progress

High Performance How do you get there? 8.Introduce Multi-source Feedback  Must ensure accountability at all levels  Management, member, peer,

High Performance How do you get there? 9.Appraise Performance and Reward Results  Summarize the discussions with staff regarding performance throughout the year  Rate the staff’s demonstration of their performance contract  Reward contribution – bonuses, spot rewards, etc.  Design reward program to support your culture

Incentive Pay Why are incentive pay programs used? communicate credit union's strategic plan drive employee's achievement towards credit union's strategic plan - shapes employee behaviour make amount of rewards more motivating supports employee involvement and communication encourages employee "ownership" of the organization's success more competitive pay programs

Incentive Pay Individual Performance Individual incentives Lump-sum bonuses Spot rewards Commission based pay Group Performance Profit-sharing Gain-sharing

Incentive Pay Group Performance - For example what is Gain-sharing? – Workers share a percentage of the value of increased productivity, calculated under a prearranged formula. What are the characteristics? – Based on financial measures/business goals from strategic plan – originated in the manufacturing industry - now found in all industries – emphasizes and enhances small group teamwork – employees learn more about the "business" – defined term – fully funded reward

Incentive Pay Group Performance - For example what is Profit Sharing? – Broad group of employees share a pool created by a share of profits, usually under a prearranged formula. What are the characteristics? – "line of sight" is typically indirect for some employees – oldest type of group incentive – tied to organization's strategic plan – emphasizes and enhances organizational teamwork – employees learn more about the "business" – defined term – funded reward

Incentive Pay Individual Performance - For example what are Individual Incentives or lump-sum increases? – individualized to apply to individual contributors. What are the characteristics? – based on individual efforts – tied indirectly to organization's strategic plan – does not emphasize or enhance teamwork – depends heavily on effective performance management programs – defined term – not funded directly

Incentive Pay Individual Performance - For example what are Spot Rewards? – One-time plans to reward a limited number of key players for successful completion of a project, program or product. What are the characteristics? – not necessarily cash – improve morale – can make work more "fun" – motivate employees to meet a goal – very short life-span

Incentive Pay Individual Performance - For example what is Commission Based Pay? – Pay directly based on the achievement of a goal - typically used to compensate "sales" type jobs. What are the characteristics? – can be given instead of, or with salary – high director of behaviour – high motivator – simple to understand – funded reward – does not support teamwork

Incentive Pay Reasons alternative reward programs fail... – inappropriate measurements - either too high or too low – measurements not aligned with strategic plan – too complex for management or employees to understand – overpayment or underpayment – double payment or conflict with base pay – organization is poor at employee communication – organization is poor at performance management – not designed for the organization's level of "readiness"

Incentive Pay Organizational conditions for successful variable pay programs... clear and well understood vision and strategic plan effective management/leadership effective employee communication effective performance management high emphasis on rewards and recognition clearly defined roles employees are empowered strong commitment to teamwork

High Performance How do you get there? 10. Monitor Program Effectiveness  Did you achieve your Cu’s financial goals?  Did your managers/staff reach their goals?  Are your staff satisfied?  Are your members satisfied?  If not, what are you going to do about it next year?