Operations

Target Teller Time

Identifying and managing teller activities can increase productivity.

March 27, 2012
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As discussed in the first and second articles of this series, optimizing teller schedules is an assured means of controlling branch operating expenses.

However, one of the key elements for controlling branch operating expenses is identifying the percentage of nonvolume time (nonprocessing hours) and “excess waiting for work” time that occurs in the teller operations and using that information to identify periods of overstaffing.

Without implementing an automated transaction analysis and scheduling system, it’s difficult to achieve a dramatic reduction in excess waiting for work time. Nevertheless, through observation and evaluation, determined and savvy managers can identify problems and implement improvements in their branches.

Volume vs. nonvolume

The total nonvolume hours for each employee in the organization are defined as the difference between paid hours and qualifying processing hours. Credit unions that lack proactive, optimized scheduling programs encourage tellers to find work during slow times.

However, the amount of time tellers spend during these slower periods (nonvolume time) often isn’t measured and, most importantly, can be very costly for an institution.

Teller productivity
This chart represents the difference in nonvolume hours between three groups in the FMSI Workforce Utilization Study.

The FMSI Teller Workforce Utilization Study offers several measures financial institutions can take to reduce nonvolume time and improve workforce utilization.

Those methods include:

• Re-evaluating all teller nonvolume tasks. Consider streamlining or reallocating to teller supervisors some of the teller line ancillary responsibilities that may be taking too much time.

Workforce Utilization Terminology

Terms you will encounter in this article:

• Workforce utilization: A percentage achieved by dividing the total number of teller processing hours by their payroll hours.

• Processing hours: The time in which a teller performs at least one member-facing transaction, measured in 15-minute increments rather than payroll hours. If a teller performs a transaction at 8:09, for example, and then does not process another transaction until 9:57, only 0.5 hours would qualify as processing hours, even though two payroll hours passed.

• Excess waiting for work time: Those periods when too many tellers are scheduled to work for the transaction flow coming through the branch (also referred as nonvolume time and idle time).

• Transactions per hour: Total transaction volume as reported by the core processor, divided by total number of processing hours.

• Labor cost per transaction: Average labor expense per transaction. This metric does not include overhead and other nonpayroll expenses in its calculation.

Focus especially on those tasks that keep tellers away from their primary role of providing front-line transactional service to lobby and drive-through accountholders.

• Hiring more part-time tellers. Using part-time staff is an excellent workforce utilization strategy during peak-volume periods.

The reduction in administrative tasks due to having part-time staff creates a high workforce utilization percentage (90%, on average).

• Incorporating workforce optimization scheduling practices. Hold managers accountable for scheduling the right mix of full- and part-time tellers based on their branches’ specific traffic flow needs.

Branch traffic flow needs can be derived from the core processing system’s historic transaction volume data. Give managers the technological tools for scheduling to need.

When branches are properly staffed, the result is higher productivity, better workforce utilization percentages, and minimized excess waiting for work time.

Proper staffing through detailed workforce analysis also helps pinpoint areas where coaching and additional training will bring even greater productivity improvements.

W. MICHAEL SCOTT is CEO of Financial Management Solutions Inc. in Atlanta. Contact him at 877-887-3022.

Cart Before the Horse

Ken Schroeder, MBCP, VP-Business Continuity
March 15, 2012 9:29 am
I'm sorry, but I feel you have the cart before the horse. Using the transaction logs of the core processor to determine teller efficiency misses the point. Yes, its a hard number. But it isn't a good measurement. Without measuring teller queues at the same time, you cannot say that the tellers are non-productive. Yes, they may not be conducting a transaction, but in any good CU, they should also be selling. Time spend explaining new products, putting a member in touch with a loan officer or financial consultant, or trying to find a product fit doesn't ring up a transaction in the core processor. But it is most definitely productive time. The real key is to look at other tasks the tellers could do if, in fact, they are experiencing non-productive time--and in my definition that is time they have on their hands when the length of the customer queue is zero, not when the core is saying they're not productive. Thinking outside of the box for a minute, they could proofread marketing material (or even help create it), they could assist with loan processing, photo-copying (or document scanning), help in review of business continuity plans or exercises, assist in writing or editing a presentation for another officer. You get the idea. Be creative. You don't measure any of the other staff to determine "non-productive time". Why? They don't create a transaction in the core. (Is it because you have a tool to extract "non-productive" time from the core for the tellers, and that's what you push? I hope that isn't your reasoning!) But you can be well assured that there are many inefficiencies there as well. Unless you look at the overall picture (including queue time), you have the cart before the horse. The mission of the credit union is to safeguard the members money and give it to them when they need it. Tellers are one of the primary interface needed to make that happen. Looking at "priority scheduling" of the tellers for increased efficiency is a wasted venture so long as the customer queue has members waiting.


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Another Perspective

Phil
March 15, 2012 8:57 pm
Greetings! ***This is my perspective, from my experience as a financial institution executive, and as a business unit and multi unit operator for over 20 years. In other words, I could be wrong! Interesting comments. I believe there are great points made by Ken that are applicable to some credit unions. However, I also believe some financial institutions don't have the horse before or after the cart, because the cart is in the ditch. Quite simply, some are struggling to make money, and in most businesses that is a bad thing. People that do not perform well share a similar attribute- they do not like to be measured. Conversely, top performers love to be measured, because they pride themselves in the space between them and the rest of the pack, or horses... I will refrain from diving in to a complete dissertation on why some financial institutions are not making money, because the article is about workforce utilization. This postulation- "The mission of the credit union is to safeguard the member’s money and give it to them when they need it. Tellers are one of the primary interface needed to make that happen. Looking at "priority scheduling" of the tellers for increased efficiency is a wasted venture so long as the customer queue has members waiting." Quick question- how will they know when to schedule employees to achieve this Shangri-la? Instinct? What do you recommend? One strong credit union in our area has a different mission: "We exist for the benefit of our members." They believe the mission is to benefit all of the members, not just the ones who choose teller lines over home banking, mobile banking, ATM's, contact centers, iPads, etc. The use of workforce optimization tools reduced their operating expenses by millions of dollars while improving service, employee morale, member returns, employee pay, and rates for consecutive years- and they are growing branches. They believe it is the member's money, and employees standing around waiting for work are a waste of the member's hard earned dollar. It seems to work for them, and they continue to make money. It was also mentioned "in any good CU, they should also be selling." Most would say that is correct- they should be, but are they, and how do we know? What is the measure? How long should that interaction take? What should an appropriate cross sell ratio be? I have observed teller lines, contact centers, dialogue and platform sides on and off for years, and can say that at this particular financial institution most people that came in last Thursday at 1 pm to deposit or cash a check will be back at the same recurring schedule. Should they be sold the same products every visit? What products are they selling? Do they even qualify for what we are pushing on them, or would they get the "other" rate? How many like to be sold to, and how many would rather be left alone and just shown billboards and advertisements of the best rates instead? Does it matter what they want? Does rate drive sales better than salespeople? If they don't qualify for what we are selling, how does that make them feel? Would a trusted consultant approach in a better environment than a teller line be perceived as more professional and yield better results? Would pre-qualifying members avoid the Dear John break up letter telling them we are sorry for telling them about a great product they cannot have because their credit stinks? My observations on the teller line, contact centers, platform sides, and dialogue environments are not exhaustive, so I do understand that differing demographics may create differing results. Financial institutions measure most every area of their profit and loss statements very carefully. Should the largest expense- personnel costs- be an exception? Would it be different if payroll was coming out of our checking account than the organizations deep pockets? I learned a lesson at an early age about workforce utilization from an unsuccessful entrepreneur that didn't get it, and from several that did. A business will not be around long if the team is not gainfully employed while they are on the clock, because the competitor- in physical or online presence- will beat the price and steal the business because their cost of doing business is lower. Yes, look at the reports, but also walk around and see for yourself. What are they really doing?


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Use multiple metrics

Ken Schroeder
March 16, 2012 1:00 pm
Thanks, Phil. I would never say that metrics should be ignored. But rather that the branch manager should not be making staffing decisions based on a single metric calculated on core data with also evaluating the other metrics available to him or her. A blind reduction in teller staffing levels based on some calculated metric ignores other metrics such as customer queue lengths based on time of day, types of transactions conducted by the tellers (yes, some transactions take longer than others), staffing and workforce utilization of others working in that same branch. Each branch is different. Some are staffed by only a couple of people, while others might have 5 teller lines, two drive thrus, a loan office, 3 member service representatives, and maybe even an IT person. It all depends on the demographics of that branch. One branch may service mainly walkins by little old ladies cashing their social security checks, while another may service commercial clients or a specific SEG with payroll processing or deposits that take additional time. Metrics are absolutely vital. The author only ever mentioned a single metric in all three articles. Saying the same thing three different times doesn't make it any more valid. Any manager worth his or her salt should be looking at the entire operation, not just determining teller staffing based on a single metric extracted from the core. A single metric is only a statistic, and taken alone or out of context is dangerous. Without knowing or analyzing what drives that statistic, one can easily make a wrong decision. To imply one should be adjusting staffing levels based on a single metric isn't giving that branch manager or credit union CEO the respect they deserve for balancing their resources. Yes, some branches have too many tellers. Some have too few. The number changes based on day of week and time of day. A good manager should be using the judgment necessary to make best use of those resources. That judgment should come from a holistic approach to managing the branch, include a tool-box full of metrics, not just a single one.


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