Branch Productivity - A Full Court Press

Sep 12, 2016

Been There, Done That

After the financial pressure of the recession from 2008 to 2011, in most financial institutions (FIs) the productivity gains from "low hanging fruit" have already been realized. Many can say, "Been there, done that." Most likely, there are many ways that productivity might be still be enhanced in branch operations. What is left requires a combination of knowledge, creativity, commitment and technology.


Knowledge

Knowledge is a fundamental requisite for improving productivity in an environment when the easy stuff has been done. It is difficult to know where opportunities are if current activity and processes are not being measured and cannot be analyzed. Once initiatives are put in place it is impossible to know the level of efficacy if activity and processes were not measured before and after the change. Even when data is being gathered, it must be accessible both to management and the employees who are being asked to carry out changes. Too often analytics end up closeted in I.T. or senior management, instead of distributed where they can do the most good.

Quantitative data is important, but it is not the only kind of knowledge that should be gathered. In all organizations there is a great deal of institutional knowledge amongst the staff that often is not utilized. The primary reason staff knowledge is under-utilized is because no one asks for it. Only a small percentage of employees will offer suggestions of their own volition. Institutional knowledge must be gleaned through explicit efforts to ask for, encourage and gather it. This is not essentially different from gathering quantitative data. Neither one falls out of the sky on its own.

Interestingly, quantitative knowledge and institutional knowledge can have synergy. When quantitative data is distilled into understandable charts and reports, then made accessible to staff, it stimulates thinking and self-evaluation of the jobs they are doing. That awareness in turn makes it much easier to ask for input. See the article: Making Analytics Work.


Creativity

Creativity with regard to productivity enhancement means taking a wide look and thinking holistically about the operation. How do branch staff and procedures interact with back office departments: Call Center, I.T., Auditing, Loan Operations, Accounting, etc.? Are there processes and procedures that have not been re-evaluated in many years? Can technology be applied in ways that were not feasible a few years ago? What would branch staff say are the top one or two activities that have the biggest negative impact on their productivity?

The point is to look around and ask around. Focus groups are more likely to produce constructive input than a survey, and make it clear that management thinks their input has value. Not everything has to be a major initiative and many small improvements add up. All organizations, all operations and individual branches or departments gather inertia over time. Regular reevaluation is a key plank of the Continuous Quality Improvement paradigm for a reason.


Commitment

Most important is a commitment by senior management to a culture of productivity improvement. That is different from a commitment to a specific large initiative. It is different from the ongoing commitment to increase profitability and provide a good return for shareholders. There are two key aspects to management's commitment to productivity enhancement.

  1. Staff must perceive management's interest as positive, not punitive. Specifically they must not suspect, nor should it be, a smoke screen for staff reductions. Some reduction may be the natural consequence of certain initiatives, but staff reduction should not be the objective.
  2. Set a good example. If branches or departments do not think management is efficient, or think their own interaction with management is not productive, pronouncements about improving productivity will ring hollow.

The long term objective is for high productivity to become a self-sustaining practice. It should simply be the way the organization does business on a daily basis. While that is a worthy ultimate objective, few organizations will achieve it across the entire operation. That is alright since every step towards it provides benefit. The more management and staff are in this together, the more progress is likely to be made.


Technology

Technology might be applied in multiple ways. The obvious way is an investment in something that is supposed to directly impact productivity. Examples of this are: branch capture of proof items or cash automation devices (dispensers & recyclers). Evaluating the benefits of direct technology can be harder than it looks. Branch capture is actually an increase in overhead and reduction in productivity for branch personnel. Only when the total impact across the FI (reduced proof costs, improved availability, reduced courier costs, etc.) are considered is the technology a net plus.

Cash automation seems like a slam dunk for improved productivity on paper, but objectively evaluating it in the real world is more difficult. There are clear benefits as an automated vault or to reduce skill levels needed for employees who handle cash. Reduced transaction time can only be realized as a benefit when there is sufficient volume to absorb it. Improved balancing seems obvious, but is only meaningful when measured against balancing time and accuracy of tellers without it. How big a hit to productivity and customer service is incurred when a device is down and staff that has become dependent on it must revert to manual processes? Does the benefit justify the significant up-front costs?

The other way that technology can be used to improve productivity is to implement systems that improve processes. There is no end to the processes that could be included, but as with direct technology evaluating the benefit requires effort. Technology that is difficult to learn and use, won't be. Like branch capture, any process change in one area has to be evaluated across the FI to ensure that it is not causing a negative impact in another area. Is the investment justified by the benefit and how is that measured?

Examples for process improvement might include:

  • Workforce optimization
    • Track activity, trends and forecast
    • Optimize schedules
    • Automated flex scheduling or universal staff
    • Adjust branch hours
  • Performance measurement for employees, branches or departments
  • Cash Ordering and Automation
  • Business Analytics and Reporting
  • Forms and data integration
  • Compliance


Putting It Together

Achieving meaningful productivity gains after the bigger, more obvious, efforts have already been implemented requires a disciplined, open-minded and patient approach. FIs traditionally devote significant time and effort to a 25 basis point improvement in interest margin, because it is multiplied by millions, or billions, of dollars. A 2% to 5% improvement in operational productivity matters because it is multiplied by the size and cost of the overall branch operation. While the effect of a change in interest margin is easier to calculate than an incremental operational improvement, the impact of a dollar not spent is the same as an additional dollar earned.

For productivity improvement to be effective each solution has to produce benefit across multiple initiatives. There cannot be 10 different solutions to address 10 ideas, because the implementation, training and support will overwhelm the benefit. Branch staff already has things to do, most importantly servicing customers. They will not respond well to a list of several additional different things to do. That means implementing a solution that can address many, if not all, of the different ideas under a common learning curve. Each item within it must make the branch's job easier or better. If that is true it will be adopted. If not, the time effort and money spent to implement it will have been wasted.

Download as PDF