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The performance of a bank branch manager is often difcult to measure. Evaluation can include such variables as loan quality, deposit growth, employee...
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<br/><br/><br/><br/>The performance of a 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 a 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 2009, First Trust Bank opened a new branch on Northside Parkway, located in a high-income area. Three competing banks had been in the neighborhood for some 15 years. Jim Bryan, who had grown up in the 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 $56 million in deposits.


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 $18 million, commercial loans to $9 million, and installment loans to $2.5 million. As measured by Federal Reserve reports, the new branch captured 50 percent of the market growth in deposits over the 1 2 months. The customer service provided was extremely good, and branch goals for profi t were reached ahead of schedule. Aware of the success, Jim looked forward to his next raise. The raise amounted to 10 percent of his salary. His boss said he would have liked to have given Jim more, but the system wouldn't allow it.
 Questions
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?


Part-time Pool Personnel


Crystal Clear Pool Company builds and maintains swimming pools in a large mid-western city.
Crystal Clear handles pool maintenance through a contractual arrangement with the owners of the pools. Although individualized maintenance plans are available at a premium, the basic contract calls for Crystal Clear to vacuum the pools and adjust their chemical balance once a week. For 80 percent of the maintenance customers, the standard contract covers the months of May through September. The remaining 20 percent, who have either indoor or covered pools, require service year-round.


Because of the seasonal nature of the work, Crystal Clear hires many students during the summer. The maintenance staff is divided into three-person crews, each assigned to service six pools per day. In the summer, one permanent employee and two student employees comprise a team, with the permanent employee responsible for training the students. All maintenance crews are paid on a straight hourly basis.


The present system has been in force for several years, but it has resulted in at least two problems that seem to be getting more serious each year. The fi rst is that the students hired for the summer demand to be paid the same wage rates that apply to the permanent employees. The reason is that the college students can get other summer jobs at these rates and are simply not willing to work for less. Naturally, the permanent employees resent the idea of being paid the same wages as the students. The second major problem involves the assignment of the pools, which vary in size and geographic location. The employees claim this is unfair because of the travel time required and differences in pool size. Some pools take three to four times as long to clean as others. Thus, some teams must work harder than others to service the six assigned pools.


Questions
1 . What suggestions do you have for Crystal Clear to help remedy their compensation problems?


2. Can you think of any way to implement an incentive program at Crystal Clear? (Do not ignore the scheduling problems that might be created by such a program.)


3. In general, how do you think the problem of having to pay student employees the same rate as permanent employees could be resolved?

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