March 20 - As branch volumes continue to decline (more than 45 percent in the past 20 years, according to Financial Management Solutions Inc.'s recent Teller Line Study), banks remain challenged to ensure their workforce is as productive as possible. Yet, many attempt to face this challenge with no concrete, practical strategies for improving those productivity numbers. To help banks address this concern, FMSI developed the Workforce Utilization Study, a bi-yearly analysis of the workforce utilization rates of more than 1,000 banks (and 10,000 employees) for which FMSI has collected data.
This year’s study (a free download at www.fmsi.com ), revealed that despite the fact that inadequate workforce utilization is a recognized, common issue among financial institutions, the management personnel of many banks remain unable to address their productivity issues effectively. Since the 2011 study, rates of workforce utilization have actually declined by approximately 3 percent, not only among the worst-performing banks, but also among the top performers.
This data indicates not only are poor performing banks struggling with workforce productivity issues, but even those with good productivity rates can take additional measures to improve even more. In this article, we’ll explore this methodology and analysis (and what it means for banks) and offer some strategies for achieving measurable progress in this important metric.
What Is Workforce Utilization and Why Does It Matter?
Although “workforce utilization” (WFU) is a fairly broad term with more than one possible definition, FMSI has developed a precise definition of the concept and a formula for how it should be measured. Using FMSI’s approach removes uncertainty from the equation and gives bank management a logical measurement of volume-based productivity. This number then becomes a benchmark banks can use to evaluate current achievement levels and set goals for future WFU improvements.
Specifically, FMSI considers the workforce utilization rate of an individual employee to be only those hours engaged in volume activities, e.g. processing customer-facing transactions. To determine that rate on an individual basis, FMSI divides true processing hours by payroll hours. For example, if a 40-hour-per-week employee spends 30 hours a week processing transactions and another 10 hours a week performing auxiliary tasks or waiting for customers to approach them (idle time), that individual’s WFU percentage would be 75 percent.
For the overall branch analysis, FMSI then aggregates that data per branch―not only for front-line staff but also for non-front-line personnel that only sometimes engage in transaction processing―and divides that total by the number of workers in the data sample. The result becomes the WFU percentage across the transaction-based workforce. This gives bank management a realistic idea of how much their branch productivity is being impacted by having front-line staff performing non-customer-facing activities as well as the effect of having non-front-line personnel, like supervisors and branch managers, jump on the line to process transactions.
Among the 1,000 banks the study analyzed, WFU fluctuated dramatically. One worker in the study achieved WFU rate of nearly 97 percent. This bank, which we will call Bank A, had taken proactive steps to improve its WFU and achieved an overall WFU percentage (including non-processor employees) of just over 78 percent. At the bottom end of the spectrum (a bank with a WFU of 54 percent; we’ll call it Bank B), one employee failed to achieve a WFU rate of even 24 percent.
Perhaps more importantly for banks looking to proactively improve their WFU, the WFU variation between front-line employees (those whose job focused solely on transaction processing), fluctuated no more than 25 percent―from the 97 percent high to a low of just under 73 percent at Bank A. For Bank B, the WFU variation between front-line staff was more than 50 percent―from a high of 74 percent to a low of under 24 percent. Bank A had taken proactive steps to improve its WFU percentage; Bank B had not. FMSI saw these dramatic discrepancies replicated across the entire analysis, indicating banks who engage in sound WFU-optimization initiatives not only see improvements on a per-employee basis, but also bring up productivity metrics for all the staff, as a whole.
The WFU Drill Downs
In FMSI’s experience, branch WFU numbers that average below 75 percent are problematic, impacting the economic health of the branch and the bank. No bank can achieve 100 percent WFU, because of non-volume tasks. However, it’s fairly obvious that when a bank’s workers spend too much time not processing transactions (or even worse, idle), the branch is not operating as efficiently as possible. Yet, the management of many banks doesn’t know how to pinpoint when and how they are experiencing excess non-volume time.
The WFU study probes further into a number of factors that impact WFU, including how transaction-processing personnel spend their non-volume time. By collecting reported non-volume activity time, e.g. opening and closing duties, balancing, etc. and deducting it from non-volume time as a whole, the WFU Study points out how some available technologies allow banks to pinpoint the percentage of true idle time among personnel. Identifying branch WFU percentages, using this type of precision, helps clear the fog for banks seeking ways to improve their own initiatives.
FMSI has determined, over its years performing this study, both idle time and excessive non-volume task time can be detrimental to branch profitability. The study goes on to reveal idle time, in particular, can reach levels most would consider extreme. One front-line employee in the 2014 study achieved a 65 percent rate of processing time. Assuming this individual engaged in a large number of non-volume but beneficial activities, this level might seem acceptable. However, the breakdown reveals that 23 percent of the remaining 35 percent of non-processing time was spent in idle time―hardly an acceptable percentage.
Recommendations for designing and implementing a WFU analysis and improvement initiative is beyond the scope of this article. Banks will almost always need some mechanism (usually technology based) for collecting and analyzing processing data and comparing it with total working hours and payroll data. Some companies that develop technology-based scheduling solutions also offer free trials that will help banks get a handle on the extent of their WFU issues.