Setting branch-specific targets helps Central Bancompany achieve double-digit growth
Central Bancompany is a full-service financial institution recently named to both the ABA Top 25 List and Forbes Top 10 in the nation. It is highly decentralized, with branches in metro areas and community markets. Member banks operate somewhat independently, giving them the flexibility to respond well to local conditions. For example, a bank can react quickly to a new competitor. On the other hand, this decentralized structure presents a challenge when it comes to performance goal setting across 13 diverse banks with varied sales cultures.
Given the unique internal sales cultures and external market environments of all of its banks, Central Bancompany saw an opportunity to set more targeted performance goals. However, the bank experienced disadvantages when relying only on historical sales to determine future growth plans. Allocating goals based on historical performance tends to punish high-performing branches whose sales are affected by outside forces beyond their control. The same concept holds true for poor performers who are rewarded for performance that is lower than what it can be.