Bonifacio savings and loans association

5 May 2016

The Bonifacio Savings and Loans Association (BSLA) in its last monthly consultative meeting for the year decided to embark on a one-year deposit campaign program. Dubbed as BSLA’s “Employee Motivation Program (EMP)”, the deposit campaign aimed to increase deposit levels which was BSLA’a traditional source of funds.

Mr. Danillo Lagman, VP for operations, was chosen as overall program coordinator. After a month of preparation, Mr. Lagman and his staff were ready to launch the EMP. Under the guidelines, bank officers and employees were given award credits for every account turned in. points were based on the opening balance and their average balances thereafter. The participants were divided into teams, with one branch/division representing one team.

To monitor progress of the EMP, solicited clients surrendered introductory cards given to them by the EMP’ participants. Passbooks/deposit certificates were then marked with the EMP logo. As an added incentive, aside from individual bonuses specific credit levels reached, special bonuses were given to teams if group targets were met. Personal team award credits earned were summarized and distributed at the end of each month within the deposit campaign period.

The more award credits earned, the more expensive the merchandise that could be redeemed. The list of prizes included calculators, watches, living room and dining sets and microwave ovens, among others.

Mr. Panganiban, head of the Accounting Division, took great pains to get a big budget for the program. He was the one who introduced the EMP to the board during the year-end meeting he held strongly to the belief that with the proper incentives, the employees could be enlisted to help the Bank attains its targets.

During the consultative meeting, Mr. Panganiban outlined to the managers the deposit level targets for their respective branches. Because of the EMP, increases in targets were noticeably higher than the previous years. It was only expected that the Paranaque and Sucat branches would share the bulk of the burden since from the previous records, the bigger branches (in terms of total resources and volume of transaction) were given target levels.

It was well-known fat that Mr. Lagman would take place Mr. Panganiban. But both officers and staff of the Bank could guess as to who would be promoted to replace Mr. Lagman.

According to the people at the head office, the personal files of Mr. Torres and Mr Garrido, managers of Paranaque and Sucat branches, respectively, were already on the table of Mr. Lucban, BLSA’s president and son of majority stockholder, Fransisco Lucban.

A month after the EMP was launched; there was a slight improvement of the percentage increase in volume of deposits and number of accounts. Sucat branch, BSLA’s second largest branch, was the major contributor.

On the second and third months, Sucat branch consistently topped the EMP posting and highest percentage increase in deposit levels. The head office branch which had an edge over the other branches in terms of number of team members and clients lagged a poor third.

Early in the program, Mr. Lagman projected the existing accounts of the head office branch alone could bring in substantial additional deposit. Also, the branch was situated in growing commercial district in Paranaque where were still no branches of other banks thereby representing good prospects for generating more deposits and turning in new accounts.

In BSLA’s first quarter meeting, Mr. Lagman brought up the topic by joking asking Mr. Torresif he had guards who looked like stunt men assigned at his doors. Mr.Torres just smiled and promised to remove Mr. Garrido from his lofty perch on the second half of the program period.

Mr. Lagman knew that by just bringing up Paranaque branch’s less than satisfactory performance in the EMP, he had further antagonized Mr. Torres. Mr. Lagman never really like the letter. He saw him as a do-gooder who would always interface with company polices to earn the gratitude and admiration of his staff.

It was common knowledge that the previous year Mr. Torres pushed for and was almost successful, if not for the interference of Mr. Lagman, the setting up an Employee Relations Committee. Mr. Lagman gained the support of Mr. Lucban by reasoning out that the committee might function as a mini union when opportunities present themselves in the future.

On this way home, Mr. Torres reflected over what transpired during the first quarter meeting. He had a fairly good idea why the Cash Department/Head Office Branch was behind the EMP, but because of Mr Lucban’s presence, he felt that the meeting was not the proper time to set the records straight.

Mr Torres has been with BSLA since its inception. Immediately after graduating from a big local University, he was hired by Mr Fransisco Lucban, who was then the president of the company. Mr Torres had occupied several positions, from his entry level as junior bookkeeper at the Acounting Department to his present position as branch manager which he had been occupying for the last five years.

Mr Torres was quite popular with his staff. Rising from the ranks, he has familiar with branch work and was known to pitch in and help whenever a teller, bookkeeper or some other staff was absent. Mr Torres knew that the Cash Department is grossly understaffed and that it has repeatedly requested for additional personnel.

Established in 1978, Bonifacio Savings and Loans Association is a family-owned S & L performing the basic function of thrift bank. Formerly concentrating on agricultural and real estate loans, BSLA in recent years had gradually shifted to costumers loans which are used for purchase of appliances, jeepney units and car financing. Loan portfolios of BSLA are mostly short-term loans to individuals or small-scale business.

As in the past, BSLA had relied on deposits as a major source of funds. Over the three years before the EMP was initiated, deposit liabilities had grown at an average of 12%. Performance for said period followed consistent growth pattern with net income increasing by an average of 16%.

BSLA was majority-owned by the Lucban family, a prominent clan in Mindoro.

Aside from BSLA, the clan had holdings in various small to medium-scale business which include a rural bank, a taxi-operation which presently has 30 units plying Metro Manila, a pawn shop, two gasoline-stations, a trading company and a piggery operation in Mindoro which had approximate 200 heads. The family’s patriarch, Fransisco Lucban still had the upper hand in most of the family business.

From inception to the mid-1980, BSLA was headed by the elder Lucban. Since then, his eldest son, Robert, had slowly taken over the day-to-day management of the bank. In mid-30’s, the younger Mr Lucban graduated from a local premier university and has earned his master’s degree in U.S.

Aside from managing BSLA, he is actively involved in the management of the family business. The younger Mr Lucban is known to be very fond of delivering talks at civic gatherings and club meetings and castigating with the same gusto in the Bank.

During his tenure at BSLA, Robert Lucban had created a highly centralized organization. All promotions, whether staff or officer, were screened by rum. The managers did not have loaning authorities. All loans applications, therefore, needed Mr. Lucban’s signature before they could be released.

Because of his being involved in other family business and social commitments, Mr. Lucban routinely took home papers.

The system under which BSLA operated had created slack time for the head office personnel. This, however, excluded the head office branch/ Cash Department which, aside from servicing their own clients, monitored and cash-in-vault levels of other four branches, the cash transfers and pick-ups, among others.

Despite the poor performance of BSLA’s head officer branch, the one year incentive program was considered a success. Deposit ADB levels increased by 30% and income from operation grew by 22% over the previous year (as against historical average increase of 12% and 5% respectively). Mr Lagman was quite happy with the results although he thought that they could have done better if the Paranaque branch had participated more actively in the program.

He personally felt that Mr Torres was partly to blame for the lack of support given by his staff. He knew that this had not escaped the attention of Mr Lucban although the latter did not mention anything about Paranaque’s poor performance.

That same year, the Board directors declared a bigger dividend than the yearly 10% profit. Other than the yearly merit increase and mid-year and year-end bonuses given to the employees, there were no significant adjustments in the employee’s salaries.

Due to the success of the incentive program, BSLA decided to launch another one the following year. Like in the past, the main office did not put in substantial contribution to the program. Sucat branches were still the major contributors though they did not perform as well as the past. ADB levels were expected to at least hit the previous year’s 30% increase which went up by only near historical level at 14%.

Several prizes which had already been ordered remained unclaimed. Individual and group targets, already attained the last year, were expected to be at least matched in the second EMP. They were not met.

reference: Human Behavior in Organization By: Concepcion Rodil Martinez

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