Motivated finance employees means more payments … but what’s the best way to measure success?
Finance pros know there’s more than one way to motivate staffers to improve their performance. Chances are you’ve tried incentive programs and training tactics to get your teams to collect.
There’s a variety of carrots to dangle based on what staffers care about and your budget will allow. And by the same token, there are all kinds of performance metrics for you to choose to evaluate employees.
There’s no one-size-fits-all menu of metrics that works for everyone. What’s most important is to follow the KISS (Keep It Simple) principle:
- four or fewer metrics are enough for everyone to focus on
- data needs to be up-to-date, and
- individual and team results need to be measured.
What’s working for your peers in collections?
Failure to achieve goals in the early going shouldn’t necessarily lead to staffers earning no rewards. To avoid de-motivating some folks, err on the side of caution by basing rewards on a sliding scale. That way the better they do, the more benefits there are for them to reap.
Ty Knox, director of credit & risk at EFCO Corporation, shared the secrets to success his team is experiencing with the National Association of Credit Management:
“We have a weekly meeting with a scorecard [up on a screen] that shows our metrics. … You can see if you’re winning or you’re losing. Are you meeting the objective or are you behind? If you’re behind, what can we do to help? Or was the objective not reasonable? We might reevaluate [if that’s the case].”
The metrics Knox uses are:
- percent current
- cash application
- electronic payments, and
- other tasks not directly related to credit & collections.
Staffers earn bi-annual bonuses, based both on individual and team performance. “People will help each other if they think it will help them and the team as a whole.”
Knox stresses his the annual attainment bonus pot of $20,000 “isn’t a lot of money” in the grand scheme of things. With a team of 10, he couldn’t hire a new employee for $20,000 annually to improve collections.
Instead of cash, Cody Christensen, credit manager at Waxie Enterprises, offers remote work privileges. The better employees perform, the more time they’re eligible to work off site.
Metrics are tailored to Christensen’s team and the company’s financial priorities:
- days sales outstanding
- average days to pay beyond terms
- percent over 60 days, and
- the collection effectiveness index.
Staffers are graded based on the accounts they handle or help with. For example, those who meet the mark in two metrics can work remotely for two weeks per month. If they’re at or above goals in all four categories, they can work at home four weeks per month.
Clear metrics coupled with incentives workers want are boosting cash flow for both companies.
Free Training & Resources
Webinars
Provided by Yooz
Webinars
Provided by Insightsoftware
Resources
You Be the Judge
Excel Tips