Scoring branch performance: a workable branch scorecard system needs to assess three components of growth: new customer acquisition, cross-sell of new accounts to existing customers, and the retention of existing accounts.

• Author: Reider, Steven
• Position: Branch Banking

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Despite the growth of the Internet, ATMs and other remote channels, banking remains fundamentally a person-to-person business. And while alternate channow support a significant share of consumer transaction activity, the physical branch remains the overwhelming choice for account openings. In this environment, it remains critical for bank to both develop strong branch staffs and to retain top employees The branch performance scorecard can assist in both of these critical efforts.

A branch performance scorecard is a reporting tool used to measure performance across various retail banking activities and to award incentive payments to personnel at top-performing branches. Though the scorecard offers a useful reporting tool and can assist branch administrators in comparatively evaluating their branches, these represent ancillary benefits. At its core, an effective scorecard has two primary functions:

* Reinforces the behaviors taught in the bank's sales training program (and if your institution lacks a formal sales training program, you can stop reading right now; a scorecard absent a sales training program simply reinforces random chance).

* Rewards super-normal performance. Note the word "super" in the prior sentence. A sound scorecard program will allow a bank to identify top-performing branches and reward them accordingly; but these rewards should accrue only for performance above baseline performance. Remember, rewarding employees for the baseline performance that's already reflected in their salaries simply raises costs with no benefit.

Though there are numerous approaches to a performance score-card, a sound program should address three areas: new customer acquisition, cross-sell of new accounts to existing customers, and the retention of existing accounts.

Characteristics of an effective scorecard

Before considering what specific elements to measure on your institution's scorecard, there are six principles to keep in mind:

* The scorecard must be simple, with a limited number of measured categories. Limiting the number of measured performance attributes (for example, number of new checking accounts sold) serves to focus the branch staff on those few behaviors that are responsible for the bulk of the branch's success or failure.

* Similarly, an effective scorecard is understandable, to the point that branch personnel can replicate the calculations on which their incentive payments are determined.

* The scorecard should contain goals against which performance is measured, and these goals must be attainable. Performance targets set beyond a reasonably attainable reach will create a disincentive, as personnel are unlikely to pursue an unattainable goal.

* All measureson the scorecard must be controllable. Remember that the purpose of the scorecard is to reinforce desired sales and service behaviors, so anything beyond the control of branch staff is...