Sales staff in ANZ Banking Group’s branches around the country were told this week that customer satisfaction will be a more important measurement than sales targets when their bonuses are calculated.
ANZ has also dumped the use of so-called “accelerator payments”, which reward staff with a higher rate of commission as sales volumes increase. Nor will it use incentives based on cross-selling targets, or financial “gateways”, which set out conditions to be met before bonuses are paid. These forms of payment were criticised in a report this week by the independent reviewer of banker pay, Stephen Sedgwick, who said they could encourage poor selling practices to the detriment of customers.
ANZ’s new incentive plan for frontline retail sales staff will come into force on April 1 and use a “balanced scorecard” approach that gives a 70 per cent weighting to customer and teamwork metrics and a 30 per cent weighting to sales targets. Under the previous system, product sales targets were the dominant measure for determining bonuses.
Retention of some sales target component in the new scorecard comes after ANZ conducted a trial in 10 branches in the west of Brisbane that removed sales metrics completely for 50 staff to determine the impact this would have on product sales.
ANZ found overall sales numbers declined across deposit products, home loans, wealth management and business products compared to the same period before the trial. The bank therefore determined that an incentive plan assessing both customer outcomes and staff financial performance, such as the number and dollar amount of products sold, was appropriate for its new scorecard.
The customer satisfaction metrics will include the quality of so-called “A to Z reviews” with customers, an interview process to assesses customer financial goals and needs and matches them with products. The net promoter score, an index that measures customer satisfaction, will also be used.
“We recognise the need to improve our ability to look after customers and meet their expectations, so customers can trust the bank, and [know] the solutions we recommend to them are appropriate and in their best interest and not just in the best interest of the bank,” Ms Noble said.
In his issues paper this week, Mr Sedgwick endorsed balanced scorecards, which he said “are intended to allow explicit recognition to be paid to the breadth of performance that is relevant to an assessment of the performance of an individual or a team”. He said he had uncovered no evidence for recommending sales commissions be banned entirely.
But Mr Sedgwick did highlight staff scepticism about banks’ ability to transition from a sales to a service culture, pointing to one observation made during the consultation that “a true reorientation toward service will not occur until there is as much effort devoted to measuring the quality of the customer experience as there is to measuring the activities of staff and the sales generated”.
Ms Noble said ANZ’s changes would require “all of our leaders to be highly competent and capable coaches and evaluators of these more subjective measurements”.
The big four banks have pledged to implement whatever recommendations Mr Sedgwick makes in his final report in March.