Departments - July/August 2010

The Insider

Customer Satisfaction
Banking Industry Benefits From Employee Rewards, Recognition

By Deborah L. Vence

ustomer satisfaction can make it or break it, if you will, when it comes to a company's success or failure. And, it's no different for the financial services industry.

In fact, "unexpected and challenging customer service situations often arise in banking, and conventional employee recognition and incentive programs might be limited in encouraging positive and proactive employee behaviors, as they tend to work best in predictable situations," according to a recent executive briefing by Naperville, Ill.-based Forum for People Performance Management and Measurement, and its companion study, "The Role of Rewards and Recognition in Customer-Oriented Citizenship Behaviors," conducted by Scott A. Jeffrey of Monmouth University in West Long Beach, N.J., and Guillermo Wilches-Alzate of the University of Waterloo in Waterloo, Ontario, Canada.

The study, which was based on personal interviews and a survey of more than 3,500 branch level employees of a Canadian charter bank, concluded that banking managers need to design, introduce and administer fair, consistent and timely rewards and recognition programs at their branch locations.

"Banking, by its nature, is a service industry. Banks also work with customers in context of some of their most personal life decisions, such as purchasing a home or saving for something of great importance. This means that establishing bonds of trust are a significant part of a banking relationship, and trust emerges to a greater degree when there is a strong customer service orientation," said Jennifer Rosenzweig, the Forum's director of research.

The study indicated that because of its uniqueness among service enterprises, the banking industry—in order to compete and attract and retain customers—requires a very high and flexible level of customer service from front-line tellers and other customer support staff. As a result, banking managers "need to find innovative ways to motivate, recognize and reward employees who demonstrate high levels of customer service."

"Providing high levels of customer service, though, is not a scripted experience. Every customer is different, and every interaction is different. Front line personnel must, therefore, be prepared to independently make assessments about how best to respond, how hard to try and how to connect in a meaningful way," Rosenzweig said.

"Recognition programs become a way for leadership to identify excellent performance of this nature and shine a light on it," she added. "When employees understand that a particular way of interacting with a customer is appreciated by their organization, it increases the ability of the employee to repeat these same behaviors with others."

One of the unique challenges, the study indicated, in a bank branch—apart from the traditional retail service model—is that customer service requests and interactions vary greatly, and unexpected and challenging situations frequently arise, such as checks and deposits not clearing properly or on time, or questions or disputes over service fees.

Since all of these situations cannot be foreseen nor all required behavior specified in advance, a traditional incentive program might be limited in its ability to create positive service interactions.

Thus, given these limitations of a traditional incentive system, banking branch managers must determine other ways to encourage positive service behaviors.

One way to encourage this type of behavior is by demonstrating that employees are valued when they address these issues and satisfy their customers. When employees feel valued by their employer and by their manager, they are more likely to act in the best interest of the firm and the customer, according to the study.

And, in order to promote this feeling of value, managers are encouraged to design, introduce, and administer rewards and recognition programs at their branch locations. Recognition programs that work the best in the banking industry are those which recognize employees for spontaneous behaviors that go above and beyond their normal job roles.