Question

The performance of the bank branch manager is often difficult to measure. Evaluation can include such variables as loan quality, deposit growth, employee turnover, complaint levels, or audit results. However, many other factors that influence performance, such as the rate structure, changes in the market area served by the branch, and loan policy as set by senior management, are beyond the branch manager’s control. The appraisal system presently used by First Trust Bank is based on points. Points are factored in for manager’s potential productivity and for the actual quality and quantity of work. In this system, the vast majority of raises are between 4 and 10 percent of base salary.

Sales growth is a major responsibility of a branch manager. Although many salespeople are paid a salary plus bonuses and commissions, no commissions are paid on business brought in by a branch manager. therefore, one problem for the bank has been adequately rewarding those branch managers who excel at sales.

In May 1999, First Trust Bank opened a new branch in Northside Parkway, located in a high-income area. Three computing banks had been in neighborhood for same 15 years. Jim Bryan, who had grown up in Northside Parkway area, was selected as branch manager. In addition to Jim, the branch was staffed with five qualified people. Senior executives of the bank had disagreed about the feasibility of opening this branch. However, it was Jim’s responsibility to get the bank a share of the market, which at that time consisted of approximately $28 million in deposit.

After one year of operation, this branch had the fastest growth of any ever opened by First Trust Bank. In 12 months, deposits grew to$6 million, commercial loans to $1 million, and installment loans to $0.5 million. As measured by Federal Reserve reports, the new branch captured 50 percent of the market growth in deposits over the 12 months. The customer service provided was extremely good, and branch goals for profit were reached ahead of schedule. Aware of the business, Jim looked forward to his next raise.

The raise amounted to 10 percent of his salary. His boss said he would like to have given Jim more, but the system wouldn’t allow it.

1 Should Jim have been satisfied with his raise since this was the maximum raise the system allowed?

2 Do you think the bank currently offers adequate sales incentives to its branch managers ? If not, what would you recommend ?

Answer 1

1. Should Jim have been satisfied with his raise since this was the maximum raise the system allowed?

Yes, in my perspective Jim have been satisfied. Jim achieved his objectives successfully by opening a new branch. For his achievements he got his raise of maximum limit as per banks norms as 10% of his salary. He can not get more at First Trust Bank, but for his achievements he got maximum raise.

But when he think of the other 4 banks in the same area, they are offering commissions and bonuses for their employees with their salary. If he compares these factors he may not get satisfied. But he is well known about his First Trust Bank norms and he is still working for First Trust Bank. Hence Jim have been satisfied for the raise what he received.

2. Do you think the bank currently offers adequate sales incentives to its branch managers ? If not, what would you recommend ?

No, in my perspective, First Trust Bank is not providing adequate incentives to its branch managers. Their general norms are raise between 4% to 10%. They is no other monitory benefits such as bonuses, incentives or commissions for the sales growth and achievements. Monitory benefits is one of the most important motivational factor for employees in any business. Job satisfaction has a direct impact from monitory benefit for the employees for their achievements and growth. Hence to get efficient work in future, First Trust Bank should offer bonuses, incentives and commissions withe salary at their time of appraisal.