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“SCORECARD” Incentive Remuneration System for Microfinance

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“SCORECARD” Incentive Remuneration System for Microfinance

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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.

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.

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“SCORECARD” Incentive Remuneration System for Microfinance

  1. 1. 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  
  2. 2. Why Scorecard? • To reward our Account Specialists for outstanding performance • To meet the Bank’s set target(s) 1st Valley Bank, Inc.
  3. 3. 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 1st Valley Bank, Inc.
  4. 4. Scorecard •  an individual progress report card for account specialists handling microfinance loans §  serves as a tool in giving incentives to account specialists 1st Valley Bank, Inc.
  5. 5. Indicators •  Loan Portfolio •  Number of clients •  Number of Disbursement •  Portfolio-At-Risk •  Target 1st Valley Bank, Inc.
  6. 6. How did we do it? •  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 1st Valley Bank, Inc.
  7. 7. 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 1st Valley Bank, Inc.
  8. 8. Selected Microfinance Indicators December 2002 December 2011 Net Change (Start of Scorecard-2003) Indicators 2002 to 2011 No. of Branches 6 25 317% No. of Account 11 40 264% Specialists 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/ 77 126 64% AS Average loan/AS P 0.5M P1.4M 180% 1st Valley Bank, Inc.
  9. 9. This is how it looks like (front) 1st Valley Bank, Inc.
  10. 10. This is how it looks like (back) Microfinance  Unit Scoring    System-­‐  Monthly Weighted   Indicators Weight,  % Value A.    NUMBER  OF  CLIENTS 20% 1.00 50  to  70 1 0.20 71  to 90 2 0.40 91  to  110 3 0.60 111  to  120 4 0.80 a b o ve  120 5 1.00 B.  LOAN  PORTF OLIO 40% 2.00 u p  to  600,000 0 0.00 600,001  to  800,000 1 0.40 800,001  to  1,300,000 2 0.80 1,300,001  to  1,700,000 3 1.20 1,700,001  to  2,000,00 4 1.60 Ab o ve  2  mi l l i o n 5 2.00 C.  PORTF OLIO-­‐AT-­‐RISK  (%) 30% 1.50 0.00  to  1.00 5 1.50 1.01  to  2.00 4 1.20 2.01  to  3.00 3 0.90 3.01  to  4.00 2 0.60 4.01  to  5.00 1 0.30 a b o ve  5% 0 0.00 D.  NUMBER  OF  DISBURSED  LOAN 10% 0.50 0  to  4 0 0.00 5  to  10 1 0.10 11  to  15 2 0.20 16  to  20 3 0.30 21  to  25 4 0.40 Ab o ve  25 5 0.50 TOTAL 25 100% 5.00 B ONUS  POI NTS  F OR  EXCEED I NG  MONTH LY  TAR GET  ON  LOANS : Exce s s S co re u p  to  50,000 0.25 50,001  to  150,000 0.50 150,001  to  300,000 0.75 a b o ve  300,000 1.00 1st Valley Bank, Inc.
  11. 11. Sample   JANUARY FEBRUARY MARCH APRIL MAY JUNE Indicators Performance Performance Performance Performance Performance Performance Score Score Score Score Score Score Data 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-­‐a t-­‐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 BONUS  POINTS  (  Exceeding  target  )              (101,636.41)   0              (140,856.95)   0                          4,314.85   .25                  (55,477.50)   0 TOTAL  SCORE,    Monthly 5.00 5.00 5.25 4.50 0.00 0.00 Average  Score,  Quarter 5.08 Average  Score,  Quarter 1.50 1st Valley Bank, Inc.
  12. 12. 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 1st Valley Bank, Inc.
  13. 13. THANK YOU 1st Valley Bank, Inc.

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