“scorecard” incentive remuneration system for microfinance
DESCRIPTION
Ms. Vivian Lim of First Valley Bank shares their bank experience on using the EAGLE Scorecard to optimize the bank's microfinance operations during the 2012 RBAP-MABS National Roundtable Conference on June 7.TRANSCRIPT
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Session 2: “SCORECARD”
Incentive Remuneration System for Microfinance
Vivian Lim 1st Valley Bank, Inc.
2012 RBAP-MABS National Roundtable Conference June 7-8, 2012
Hyatt Hotel Manila
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1st Valley Bank, Inc.
Why Scorecard?
• To reward our Account Specialists for outstanding performance • To meet the Bank’s set target(s)
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1st Valley Bank, Inc.
Background
• Introduced in 2003 • Dubbed as Account Specialist’s “Report
Card” (like a student’s report card in school & MABS Eagle Scorecard for RBs..)
• A tool for performance management
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1st Valley Bank, Inc.
Scorecard
• an individual progress report card for account
specialists handling microfinance loans § serves as a tool in giving incentives to account
specialists
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1st Valley Bank, Inc.
Indicators
• Loan Portfolio • Number of clients • Number of Disbursement • Portfolio-At-Risk • Target
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1st Valley Bank, Inc.
• Defined indicators and parameters • Set weights and scores for each indicator • Pilot-tested the “scorecard” and modified
some parameters • “Sold” the scheme to the staff • Monitored the scheme’s performance and
made adjustments
How did we do it?
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1st Valley Bank, Inc.
Impact
• Regular documentation and monitoring of AS monthly performance
• Organized system in weeding out
“unproductive” AS from the “performers” • Healthy competition among employees and
team effort is encouraged • Use of scorecards in other loan products
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1st Valley Bank, Inc.
Selected Microfinance Indicators Indicators
December 2002 (Start of Scorecard-2003)
December 2011
Net Change 2002 to 2011
No. of Branches 6 25 317%
No. of Account Specialists
11 40 264%
No of Supervisors 1 4 300%
Total Micro Loans P 5.7M P55.6M 875%
No. of Clients 849 5,063 496%
Total loan disbursed 3,331 9,770 193%
Total disbursements P 31.4M P220.6M 602%
Average accounts/AS
77 126 64%
Average loan/AS P 0.5M P1.4M 180%
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1st Valley Bank, Inc.
This is how it looks like (front)
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1st Valley Bank, Inc.
This is how it looks like (back)
Indicators Weight, %Weighted Value
A. NUMBER OF CLIENTS 20% 1.0050 to 70 1 0.2071 to90 2 0.4091 to 110 3 0.60111 to 120 4 0.80above 120 5 1.00
B. LOAN PORTFOLIO 40% 2.00up to 600,000 0 0.00
600,001 to 800,000 1 0.40800,001 to 1,300,000 2 0.801,300,001 to 1,700,000 3 1.201,700,001 to 2,000,00 4 1.60Above 2 mi l l ion 5 2.00
C. PORTFOLIO-‐AT-‐RISK (%) 30% 1.500.00 to 1.00 5 1.501.01 to 2.00 4 1.202.01 to 3.00 3 0.903.01 to 4.00 2 0.604.01 to 5.00 1 0.30above 5% 0 0.00
D. NUMBER OF DISBURSED LOAN 10% 0.500 to 4 0 0.005 to 10 1 0.1011 to 15 2 0.2016 to 20 3 0.30
21 to 25 4 0.40
Above 25 5 0.50
TOTAL 25 100% 5.00
BONUS POINTS FOR EXCEEDING MONTHLY TARGET ON LOANS:
up to 50,000 0.25
150,001 to 300,000 0.75above 300,000 1.00
50,001 to 150,000 0.50
Microfinance UnitScoring System-‐ Monthly
ScoreExcess
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1st Valley Bank, Inc.
Sample
Performance Performance Performance Performance Performance PerformanceData Data Data Data Data
A. Number of Clients 121 1 124 1 125 1 118 0.8
B. Loan Portfolio 2,074,022.12 2 2,069,487.22 2 2,284,030.30 2 2,258,923.58 2
C. Portfolio-‐at-‐Risk ( % ) 0.00% 1.50 0.00% 1.50 0.00% 1.50 1.69% 1.20
D. Number of Disbursement 33 0.5 42 0.5 42 0.5 26 0.5
Target on Loans 2,175,658.53 2,210,344.17 2,279,715.45 2,314,401.08 2,349,086.72 2,383,772.36
(101,636.41) 0 (140,856.95) 0 4,314.85 .25 (55,477.50) 0
5.00 5.00 5.25 4.50 0.00 0.00
Average Score, Quarter 5.08 Average Score, Quarter 1.50
MAY JUNE
IndicatorsJANUARY FEBRUARY MARCH APRIL
Score Score Score Score Score Score
TOTAL SCORE, Monthly
BONUS POINTS ( Exceeding target )
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1st Valley Bank, Inc.
Success stories of 1st Valley
• Effective tool because indicators are objectively measured
• Used the scorecard not only for micro but also for other loan products
• Designed another scorecard to measure branch performance based on 2012 Target
• Allows additional compensation for deserving employees
• Encourages team work, a spirit of collaboration and social cohesion among employees in a branch
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1st Valley Bank, Inc.
THANK YOU