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“SCORECARD” Incentive Remuneration System for Microfinance
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Transcript of “SCORECARD” Incentive Remuneration System for Microfinance
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
1st Valley Bank, Inc.
Why Scorecard?
• To reward our Account Specialists for outstanding performance • To meet the Bank’s set target(s)
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
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
1st Valley Bank, Inc.
Indicators
• Loan Portfolio • Number of clients • Number of Disbursement • Portfolio-At-Risk • Target
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?
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
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%
1st Valley Bank, Inc.
This is how it looks like (front)
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
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 )
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
1st Valley Bank, Inc.
THANK YOU