ABC Bank in the Republic of Ireland

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ABC Bank is a well known bank that operates solely within in the Republic of Ireland. They have a long tradition of being a community bank and pride themselves on being a "friendly" place to do business. Since their establishment in the 1930's their aim has been to provide loans to customers looking to buy a home.

With the recent economic downturn there has been a dramatic increase in the number of mortgage customers of all banks who are falling behind on their mortgage repayments. Due to their heritage of being a "friendly" bank, ABC bank are keen to work with their customers to address the arrears and to agree an alternative repayment method (e.g. suspending repayment for an agreed period of time, lengthening the loan term).

As a result of inconsistencies in how banks were responding to this increase in arrears cases, the Central Bank of Ireland has introduced changes in legislation and codes of conduct that all financial service providers are expected to follow when dealing with customers in mortgage arrears (e.g. Code of Conduct on Mortgage Arrears and Consumer Protection Code Consultation Paper CP 47).

To ensure they deal with customers in line with the legislation, ABC Bank has increased the number of employees working in the Arrears Support Unit (ASU) and have brought in skilled external resources and redeployed existing employees from other business units.


For many years ABC Bank operated in market where financial institutions were expected to self regulate with some oversight from the Financial Regulator. However, with such well documented issues at other banks such as Anglo Irish Bank, the regulator has now been forced to implement a more hands on and intrusive style of regulation and legislation.

Due to the economic downturn, ABC Bank is now operating in an environment where the number of customers applying for new loans to purchase a home has dropped significantly. With customers uncertain about job security and their future prospects, along with a view that property prices will continue to drop, many are opting not to sign themselves into a mortgage contract.

ABC Bank has seen a reduction in competition from foreign owned banks who have withdrawn to their home countries with no plans to Ireland and also in competition from Irish owned banks.

ABC has been recognised as one of the few banks "open for business" and they continue to offer loans to new customers once they meet the credit policy requirements of the bank.


The strategy of ABC Bank had been to lend to customers buying their home whilst still offering competitive savings rates. With the so called "Celtic Tiger" resulting in an increase in demand for houses and apartments, ABC Bank changed their strategy to offer competitively priced home loan products and reduced their focus on attracting savings customers based solely on price.

In recent years, ABC Bank has returned to the savings market and has tried to lure new customers from other banks by offering competitive rates. This change in focus has in part been caused by the reduced number of customers applying for mortgages, but also by the financial crisis that has impacted the global flow of money. The cost of borrowing for ABC Bank has been steadily increasing resulting in lower margins and reduced profits for the bank. It is believed that maintaining a strong savings level within the bank will improve their ratings with international lenders and money markets and may help to improve their financial stability.

In an attempt to increase profits ABC Bank diversified to offer property developers loans to buy and develop land for houses, apartments and to buy commercial buildings throughout Ireland and the UK. This proved to be a poorly timed decision as they moved into this market near the height of property prices. Once it became apparent to ABC Bank that further loans to developers would likely be too risky, they made the decision to stop any further lending in this market.

The introduction of the National Asset Management Agency (NAMA) has resulted in ABC Bank being required to sell any impaired loans to that agency at a large discount. This has resulted in tremendous pressure on other areas of the business to drive profits, reduce costs and increase revenue to replace the loss incurred on NAMA bound loans. It is believed that the removal of toxic assets from ABC Bank will contribute to the restoration of international confidence in the financial system and enable the bank to make credit available. (ACOI, 2010)

Organisational Level Diagnostic Model for ASU

The following diagnostic model shows the forces acting "for" the Arrears Support Unit in blue, with the forces acting "against" in orange.

Source: (Cummings and Worley, 2009)


Within ABC Bank

ABC Bank has highly developed Human Resources practices and policies that apply to every area of the company. It has a dedicated internal HR department responsible for the recruitment, management and deployment of employees throughout the organisation. The HR department has embraced modern HR practices resulting in the company consistently receiving excellent results in the "Top 100 places to work" survey which is completed by the employees. In 2010, ABC Bank were rated in the top 20 large companies to work for in Ireland (, 2010).

ABC offers a wide range of benefits to ensure employees have an appropriate work life balance including flexi time, term time, home working, job sharing, employee assistance programs, reduced cost annual travel pass, bike to work schemes and many others. In general, ABC has adopted a policy of flexibility towards their staff so long as it does not conflict with the interests of the company.

ABC Bank has a dedicated internal Learning and Development department responsible for the continued development of all employees of the organisation. They run internal courses on the use of ABC systems along with courses such as "7 habits of highly effective people". In the past year, ABC Bank has made a decision not to fund any external courses other than the Qualified Financial Advisor (QFA) qualifications but did offer financial support for employees who continued their education.

Over the past 10 years the employees have moved from being largely unskilled but highly trained branch tellers to becoming highly skilled and highly qualified financial advisors who have completed industry certified examinations (Qualified Financial Advisor QFA). This area of staff development was also triggered by Central Bank of Ireland regulations that all employees who offer advice to customers should be suitably qualified to do so. The ABC Learning & Development department are responsible for ensuring all staff are suitably trained and qualified for their positions.

Within the Arrears Support Unit of ABC Bank

Employees of the ASU team are primarily permanent staff members, but most do not have a background in debt collection. Some employees in this unit have been redeployed from other areas of the business as that area no longer required their current staffing levels. Many of the redeployed employees were presented with a decision to either join the ASU or be made redundant. Although this is a difficult position to put employees in, it has had one rather fortunate result. The new staff joining the ASU team brought new and varied skills to the area.

This area is now staffed with independent, highly motivated professionals who are adept at spotting business problems and resolving them quickly and efficiently. The new skills brought to the department are project management, sales, HR skills and IT skills. The ASU team can now use their own staff to run and manage projects and continuous improvement schemes without relying on other departments to provide skilled personnel. Having these staff within the area also means that the managers can focus on the key issues impacting the area, leaving the staff to control their daily work themselves. One item that needed to be addressed was to appoint recognised team leaders and implement team structures so new employees understood the hierarchy in the area.

The ASU is different to many other areas of the organisation in that they also have a number of temporary and contract employees. The temporary employees in ASU have been hired with a view to making them permanent as soon as the economic climate stabilises. However, the contract personnel have been hired for their specialist skills (e.g. solicitors and legal assistants) and are only required for a short period.

There are three teams in ASU, early arrears, mid arrears and the serious arrears teams, each with their own team leader. Members of each team are assigned depending on workload and there is no requirement for members of the team to be balanced based on any criteria such as age, gender, background. Permanent, temporary and contract employees are mixed throughout all of the teams.

Career progression within the team is difficult as there is little job variety or job progression. The base requirement for each of the three teams is to call customers in arrears and try to ensure payments are made if the customer can do so. The only difference is that as a customer moves from the early arrears team to the mid or serious arrears team, is the amount of pressure that is applied to customers increases.

Some employees of the ASU are happy to continue in the current team structures, but some have expressed an interest in attending court proceedings. Employees who have expressed an interest in this role have been facilitated and have been given appropriate on the training to fulfil this role.

Understandably, working in an area such as the ASU can be quite stressful as employees are dealing with customers who are in arrears for a variety of reasons, some due to redundancy, but also due to bereavement, separation, divorce or even abandonment. The ASU do not offer any specific support for staff in dealing with these issues, but do encourage staff to take time out after making a difficult phone call. They meet as a team to review difficult cases to see if any other team members can come up with innovative ways to deal with the case.

The ASU has a buddy system whereby one staff member can speak with a colleague about cases that they are working on to see if their colleague has come across something similar and to share their experience.

Motivating the team is difficult given the detail of the work involved however by ensuring managers have regular one to one feedback sessions with employees ensures that good work can be recognised and that the individual's contribution to the team is identified.


Within ABC Bank

Employees of ABC Bank are on a variety of different contracts which have evolved over time. Traditionally employees were hired on a clerical scale whereby progression (i.e. pay increases) were granted depending on the number of years of service. Clerical employees also benefit from national pay agreements and gain sharing however given the current economic climate this gain sharing has not been allocated in recent years.

The clerical pay scale was not deemed appropriate for managers and specialist employees (e.g. HR personnel, IT personnel or Legal personnel). These employees were hired on salaries agreed with the employee at the time of hiring. There are no automatic pay rises other than the national pay agreements.

Specialist/manager grades were offered bonuses based on performance from the previous calendar year but these have not been allocated in recent years.

Within the Arrears Support Unit of ABC Bank

The employees working in the ASU team are a mixture of Managers, Specialist and Clerical staff with a variety of different compensation agreements. As is common throughout ABC Bank, all of the clerical employees in the ASU Team have flexi-time however this does not extend to employees at Specialist or Manager Levels.

Currently none of the employees in the ASU team have term time working or job sharing. However, it is expected that this will change as further staff are recruited into the team from elsewhere in the organisation and also as the current employees personal lives develop.

In recent years, ABC has not granted any pay rises to employees, regardless of their grade, so the ASU management do not give much attention to compensation. In future years, where pay rises are to be granted either by duration of employment or by performance, the management team of the ASU unit will need to understand how each form of compensation works e.g. when budgeting.

The ASU unit conforms to all other standard compensation agreements common throughout the rest of ABC Bank (e.g. national pay agreements, employee assistance programs, bike to work schemes etc.).

Compensation in Arrears Support Unit



Base Pay

Over time Pay

National Pay Agreements

Incentive Pay (not currently offered due to economic climate)



Profit Sharing/Gainsharing

Legal Requirements:

Pay Related Social Insurance (PRSI)

Family + Medical Leave



Health Insurance

Employer Pension Contribution

Tuition fees

Dependent care

Work Arrangements (e.g. flexi time, job sharing)

Employee Assistance Program

Annual Flu vaccination

Bike to work scheme

Tax free annual bus & rail tickets

Optional (not currently offered due to economic climate)

Tuition fees

Source: (Mello, 3rd Edition)

Performance Management

Within ABC Bank

ABC Bank has a formal performance management system for all employees of the company regardless of grade. All managers are provided with a handbook describing how performance management in ABC Bank is done (ABCBank). A new computerised system was introduced to record the performance appraisals of employees, however after a number of years in use it was considered too complex and lacked the flexibility required so it was abandoned. The current computer system is light-weight and easy for both appraise and evaluator to understand and complete.

Managers are encouraged to meet their staff monthly to discuss progress and to ensure objectives are still valid and achievable, however they are only formally required to meet their staff twice per year. The meeting at six months and one year are a formal appraisal of employee performance with computerised forms completed and attached to employee records.

At the start of a calendar year each employee and their manager meet to agree objectives for the next review period. Performance management is only completed for new employees after their probation period has expired. Employees and their manager are both actively involved in the process.

Objectives set for employees must be Specific, Measurable, Achievable, Relevant and Time bound (SMART). Many of the objectives are individual, however others are team based. The senior management team of ABC Bank also cascade corporate objectives to all teams which must be tailored to become part of each employee's objectives.

Each objective is weighted according to its importance, the higher the weighting the more important it is deemed to be. This is used to ensure employees focus on what the manager believes to be important. Team based objectives are used to ensure members of the team are aware of the targets set for the team and understand the importance of their involvement in achieving those targets.

As each six month period expires, employees and their manager complete a joint appraisal document and submit it through a computerised system for review and collation by the HR department. Manager and Employee review the objectives and agree if they are still relevant or require adjustment or removal. It is common that the performance against each objective is not scored.

At the one year period, employees and their manager meet again to review progress against the agreed objectives. Each objective is scored out of five, with a 3.5 being average performance (i.e. meeting target, and slightly exceeding). If an employee scores below 3.0 in any of their objectives the manager is required to explain why this is the case to the employee and also to submit further detail to the HR department. The HR department review each score below 3.0 and determine if further action against the employee is required.

Managers of a team are themselves subject to the same performance management system however the evaluator is the manager to whom they report. This review process is carried out to the highest levels of the company where the CEO reviews the performance of his/her management team. ABC Bank does not operate a 360' degree model of performance management, where the employees grade their manager.

Within the Arrears Support Unit of ABC Bank

The ASU team follows the performance management system as used in the rest of ABC Bank. New permanent employees joining from outside the company complete their probation period of six months before participating in performance management. If there is greater than 3 months remaining to the next review period when the probation period expired, then the manager meets with the employee to agree interim objectives.

For employees that join the team from other areas of ABC Bank, their objectives are amended to the ASU model at the beginning of the next calendar year. Employees continue to be assessed based on the objectives from their previous role. This approach was agreed by the HR department and Trade Union so as not to negatively impact any employees redeploying from other areas of the company and also to ensure a smooth transition into the new role.

Contract and Temporary employees are not required to participate in performance management as it is considered inappropriate for these employees to spend time away from the role to which they have been assigned.

Recommendations for the Arrears Support Unit

Having interviewed the manager of the Arrears Support Unit and from my own investigations, my recommendations for what could be implemented to help with the management of the area are as follow;

Implement a Stress Management scheme or offer counselling

It would appear that management of the ASU are unconcerned with the levels of stress being experienced by employees on the team. When asked in Question #15 about supporting staff members when they take a difficult phone call, the manager's response was that employees are encouraged to take time out whenever they got a difficult phone call, but nothing further is done (e.g. no offer of counselling). ABC Bank do offer an Employee Assistance Program but this might not be sufficient to defend the organisation should an employee leave and launch legal proceedings against ABC Bank for not having sufficient support structures in place for employees in difficult emotional roles.

Management should focus on positive behaviours as well as negative behaviours

It would appear that management of the area focus on negative behaviours, as shown in the manager's response to Question #11. When asked about what training new team members receive, he refers to the recording and review of phone calls that staff members make. Where improvement is required, staff members are brought through what should have been done differently. Although it is important to correct behaviour before it becomes a bigger issue, management should also focus on the positive behaviour of staff on the phone. Positive feedback will improve moral and reinforce that behaviour in the employee.

Motivation is an important role for a manager of people - make time for it

It seems that Motivation not considered necessary within the ASU team. As referenced in the response to Question #40, the manager of the area believes that employees do not need motivation as they are independent self motivators. This might be true, but it is important that people are motivated in their jobs. Having regular one-to-one meetings with team members should be higher on the manager's agenda, along with reinforcing positive behaviours of team members. I believe one change could be to add a performance objective around the number of team meetings and one-to-ones held with employees.

Performance Management

It is common practice for managers in ABC Bank to only complete performance management for new employees when the next performance period begins. New employees could find it difficult to understand their own personal targets and the targets of the group so they might not be effective in their role. Therefore, managers should complete performance management for new employees immediately.

ABC Bank does not require performance management to be completed for Temporary or Contract employees. However, many of the temporary employees have been hired with a view to making them permanent once the economic climate improves. If temporary employees are given performance objectives, even if these are informal, it will bring them more into line with the permanent employees. Contract employees can also be given performance objectives but perhaps a little less formal than those of permanent/temporary employees.

Identify key staff and ensure they are retained

Management should identify key staff in the area and try to keep them as they aid team efficiency. In the case of employees redeployed from other areas of the organisation, their skills may be required again in the future so it would be important to retain them and their knowledge. Also, some staff completed their QFA examinations and would be easily recruited by competitors.

Identify staff for progression / succession

Although the positions of team leaders and managers in the area are filled at present, it is likely that some will leave the organisation, or transfer to other departments over the coming years. It is important that staff that show leadership potential are developed so they can step into these roles should they become available. Management should find opportunities for their staff to get experience of team leader and management roles whenever possible. This will also aid in motivation for staff who are seeking a new challenge in their career.

Performance Related Pay / Gain sharing will come back at some stage - be ready for it

Although ABC Bank is not currently paying Performance Related Pay or Gain sharing, it is likely that these will return in the future. Management of the ASU area should understand how these pay structures impact each of their employees as it is likely that staff will want information themselves. The ASU is different to many other areas in ABC Bank in that it has a variety of staff at Management, Specialist and Clerical grades. This will make budgeting and planning in the area more difficult as some staff will receive different compensation depending on their grade.

Complete the Mission Statement for the area

It is important for the members of the team to know the objective for the area and how it assists in achieving the objective of ABC Bank. Management should ensure that the mission statement is completed and communicated to staff as soon as possible.

Ensure IT changes are implemented as soon as possible

The management and control of the arrears cases at ABC Bank is understandably of critical importance. Therefore, management of the ASU unit should ensure that any system changes required to manage their area effectively are implemented as soon as possible. If other system changes are prioritised it will negatively impact the ASU area and should be raised at the highest levels of the organisation.

Ensure you are measuring what you want to get

In question #27, the manager of the ASU raised that staff performance was measured on the number of phone calls made. However, that they are currently moving to measure the number of effective phone calls made (this is where the employee spoke to one of the customers themselves). Management must ensure that they are measuring what really matters rather than simply what they can currently measure. If new systems or changes to existing systems are required to ensure meaningful measurement is possible then they should be made as soon as possible. Staff will quickly identify what is being measured and ensure they focus on delivering improvements in those areas. "What gets measured is what gets done" (Donovan, 2010)

Create a strong relationship with your recruitment consultants, perhaps creating "preferred providers"

Temporary and Contract staff are regularly required within the area. Management should build a strong relationship with the recruitment consultants to ensure ABC Bank receive the best applicants. This could include making one or two recruitment agencies "preferred providers" and may result in a reduced commission thus saving ABC Bank money.

Ensure new method of classifying arrears cases is communicated clearly

In question #45 it is clear that ABC Bank are going to move to a new method of classifying arrears cases based on the ability and willingness of applicants to repay their debts. This new method of classifying arrears cases must be clearly communicated to staff to ensure they understand and buy into the new structures. Staff members are ultimately the people who must explain this structure to customers.

Offer career progression

Management of the area should offer clear career progression to employees. Although the roles of team leader are currently filled, this might not always be the case. Employees that wish to experience leading the team should be facilitated.

Managers should consider implementing a Scientific Production Line Model as per (Kroll, 2010)

In Question #27, the manager of the arrears section mentions that they do record the number of calls made etc, but that they don't have daily/weekly/monthly targets. However, that they do measure staff against their peers. In his book, The Refractive Thinker, Kroll states that financial services companies should increase their focus on collection performance and that by raising the productivity of employees they will get higher cash flow and could improve employee morale and motivation resulting in lower turnover of staff.

Managers should define hourly, weekly and monthly productivity goals, ensure that there are consequences for not achieving your targets and ensure close supervision of employee's to ensure targets were met. (Kroll, 2010)

Source: (Kroll, 2010)


In conclusion, I have found ABC Bank to have a mature approach to Staffing, Compensation and Performance Management across all of its business units. Modern human resource practices have been introduced and are working well for both the company and its employees (e.g. employee assistance programs). The scores which ABC Bank regularly receives in the "Top 100 places to work" survey is testimony to this being a good place to work. However the bank is not without areas for improvement, some of which have been identified earlier in this report.

Working within the ASU unit can be very difficult for employees as they are dealing with customers with variety of emotional and financial problems. Although helping customers through this difficult period in their lives is not the responsibility of the bank, they should endeavour not to make it any more difficult than is necessary.

ABC Bank is a commercial entity with their own shareholders and ultimately the bank must make a profit or they would not be fulfilling their responsibility to those shareholders. However, the bank should not lose sight of the fact that they pride themselves on being different to other banks (perhaps by allowing more time than competitors before instigating legal proceedings).

With new regulations from the financial regulators the flexibility that ABC bank once had is being restricted and it could prove too difficult to differentiate the bank from its competitors based on how it deals with arrears cases. As ABC Bank has recently been fully nationalised, government decisions and opinions will have a dramatic impact on how the organisation operates.

The new structure for rating arrears cases based on "Ability" and "Willingness" to repay loans will undoubtedly bring new stresses and strains for employees and customers who are in arrears. It is important that this new approach is introduced carefully and that employees are fully aware of how it operates.

For employees and their families, the emotional and psychological impact of dealing with these distressing situations should not be ignored. Employee wellbeing should be a foremost concern, if not for the legal implications of employees suing the company for mistreatment, then for the impact this type of work could have on the personal lives of employees.

I believe that the recommendations above will help with the management of such a strategic area for the organisation, whilst ensuring employee morale, motivation and welfare remains a high priority.


Terms of Reference

ASU = Arrears Support Unit - a common name for the section of a bank that deals with customers who are in arrears.

QFA = Qualified Financial Advisor - an industry wide qualification required by all employees of a financial institution who offer advice or sell to customers.