Tying Staff Bonuses to Member Satisfaction Becoming Common, Contributes to More Frequent Use of Member Surveys

By Jon Haller
Director of Market Research,
Credit Union National Association

Not long ago, it wasn’t uncommon for credit unions to go three or four years between major surveys measuring members’ satisfaction, reasons for taking their loan business elsewhere, new-service needs, etc. But for many, those days are long gone.

A number of credit unions have transitioned to a two-year or more frequent member survey schedule, according to a recent study conducted by CUNA Research, with increased competition, a desire to stay on top of "hot issues" affecting the credit union, and the growing practice of employing member-satisfaction measurements to help determine staff-bonus payouts contributing to this increase.

More and more credit unions are joining the ranks of those that conduct small- to moderate-scale member surveys on an annual basis and incorporate specific member satisfaction and/or other survey measurements into their staff-bonus/incentive structure. The principle at work here, of course, is that those who feel they are treated by your employees as valued and respected members of the credit union "reward" the credit union with increased service use. The staff, on the flip-side, is then recognized and rewarded by the credit union for their role in, and contributions to, improving its bottom line.

While, overall, this practice is found in less than 20% of credit unions with assets of $20 million or more, the figure rises as asset size increases, ultimately reaching over 50% among credit unions with assets of $1 billion or more (see figure).

Also, 40% of CEOs from credit unions with assets of $100 million or more who are eligible for performance incentives list member-satisfaction levels among the criteria that help determine the incentives. This, according to the soon-to-be-released CUNA E-Scan’s 2003/2004 CEO Total Compensation Survey Report.

If you haven’t yet begun to factor member satisfaction levels into your staff bonus/incentive structure, there’s still an opportunity to do so in time for 2004.

Many credit unions are also conducting their large-scale survey projects every two or three years, but also monitoring annually--during the "off" years of their survey schedule--a subset of those topics comprising the more-pressing issues facing the credit union. These "critical" issues typically include certain member-satisfaction factors, members’ preferred delivery channels, market/wallet shares, members’ new-service needs and/or some other
issue(s) deemed important by the marketer, board, and/or management.

This has led to a situation whereby 30% of credit unions that conduct surveys do so once a year, if not more frequently, while a similar percentage do their surveys every-other year (see figure). The practice of employing an annual, or more frequent, surveying schedule rises as asset size increases, with two-thirds of credit unions with assets of $500 million or more ultimately following this type of survey cycle.

The more frequently you can monitor your members’ financial behaviors, attitudes and needs, the better position you’ll be in to identify any emerging, unfavorable trends, and to resolve the issues before they turn into outright problem areas that have a negative impact on your bottom line. And incorporating member-survey measurements into your bonus structure can be an effective way to recognize the staff’s contributions to your credit union’s overall financial success.

Next month’s topic:Credit Union CEO Benefits

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