Jeff Judy

Jeff's Thoughts - September 21, 2016

Wells I: Culture and Reward

Everyone has heard the news that one of this country's largest banks has recently fired over 5,000 employees for unethical conduct in relation to their customers. As you know, these bankers were opening deposit and credit card accounts in their customers' names without their knowledge, raiding their existing deposit accounts in the process.

No one explicitly told these employees to do that. But the institution had set up a reward system that led to this behavior. The incentives for landing new accounts were strong enough to entice many, many employees to cross the line. Bankers were rewarded for something that was in the bank's interest, part of their strategy for growing their business, and they failed to keep an eye on the customers' interests.

This bank talked "customer service" as well as any institution. But the systems, and the culture, were not properly aligned with their customers' needs.

Now, it is tempting for smaller institutions such as community banks and credit unions to gloat over this bad publicity for a large rival. But when you get done smirking, put some thought into your own incentive system. I think most institutions badly need to be more innovative around incentives.

First of all, "incentives" go way beyond cash or, at the big banks, attendance at some sort of rewards party. Explicit recognition for work well done, in front of one's peers, is a powerful reward that can definitely influence behavior.

Second, it is time we found ways to recognize long-term outcomes, not just short-term ones. For instance, opening a new account is a good thing that should be noticed. But what about anniversaries? Could you recognize a staff member for their customers who have been with the bank five years, or ten, and so on? What about average "age" of customer relationships?

You may have driven past a manufacturing facility or construction site and have seen a sign that says something like, "380 work days without an accident." Could you reward the employees who seem to have the least customer problems, whether that's related to deposits, credits, or other products?

An employee might be rewarded when a loan goes on the books. Could you recognize that same employee when that loan comes off the books, through full repayment?

There is more to building a healthy, successful culture than just accountability for mistakes. Yes, it is important to take action when things go wrong.

But I believe that as an industry, we could be much more creative about taking action when things go right, especially when they go right consistently for a given employee, or when things go right for a long time.

Take some time to re-examine what gets rewarded, who gets recognized and why, in your institution. With a little imagination, you can use incentives to benefit both your customers and your institution over the long haul.