By Mary Ndung’u
According to data from Sacco Societies Regulatory Authority (SASRA) supervision report for the year 2016, the five largest Deposit taking Saccos based on turnover had a combined total of 39 branches.
The Sacco with the highest number of branches in this category had 15.
On the other hand, the 5 smallest deposit taking Saccos in terms of revenue had no branch network.
The Sacco with the highest number of branches in all the DT Saccos has 19 branches and was position 33 in size in terms of revenues.
These statistics point towards a trend that shows Sacco revenues have a correlation to the number of branches.
Traditionally, Saccos opened branches to take services closer to the members, service driven branches.
Currently, branches are business development and member relationship hubs that are financially autonomous and contribute to the overall bottom-line of the Sacco.
There are a number of areas to consider when discussing effective branch management, however for purposes of this article, I will focus on five key areas; Branch Feasibility study, Recruitment of branch manager, Branch management training, Performance and compensation management and Branch management system.
A Sacco must conduct a feasibility study to aid its decision on whether to open a new branch or not.
The overall objective of a feasibility study is to determine the market, financial and technology feasibility and options for establishment of a new branch in a selected location.
A Sacco that conducts a thorough feasibility study under competent individuals is more likely to reap benefits of expansion in its branch network.
The results of a feasibility study can also show negative impact of opening a new branch.
In such a case, the Sacco ought to make an appropriate decision to either abandon opening of a new branch altogether or it can seek an alternative location.
When recruiting branch managers, the Sacco has the option of to recruit from within or through external sourcing.
The branch manager recruitment exercise should follow a systematic process that ensures the right communication is sent out to attract the right talent for the position.
There are certain key attributes that a branch manager should possess in order to be effective. Some of these include high level of assertiveness, sociability and energy.
It is important to know that attributes cannot be taught as skills can.
Branch management is a very demanding job with many responsibilities and requiring many competencies for success.
Upon recruitment and appointment of branch managers, the Sacco needs to ensure that any skills gaps are filled through a branch management training program.
In general branch management is offered to cover Sacco business and related competencies, marketing and selling competencies and leadership competencies.
These training though not very common in Kenya have been seen to yield tremendous results in how branch managers perform their role.
It creates a shift from managing though “merely groping in the dark” to managing from a “competence backed approach”.
Once the appropriate skills are in place, the branch manager should be guided by a mutually agreed performance plan with SMART targets that is in in line with the Sacco’s overall targets.
For instance, a Sacco with 5 branches that has one of the key strategic objectives as growth in total revenue by Sh300 million, should equitably apportion these target to all the 5 branch managers.
A corresponding compensation plan should also be put in place for the branch managers as a key catalyst for good performance.
The top management of the Sacco needs to be well versed in these areas of performance and compensation and their support and authorization of these are crucial.
Finally we look at the area of branch management system. The Sacco’s core banking system needs to support branch accounting and branch reporting.
This is important as its aids in monitoring the performance of individual branches in terms of revenues.
It also helps in allocation and apportioning costs to each branch.
Loss making branches can be easily identified and appropriate corrective measures put in place.
Sacco applying the above approaches in their branch management will register growth in revenues.
One of the ways in which this can be done is through a framework provided by a transformation program.
Indeed, in the ever-changing retail banking environment Saccos must strive to transform how they do business and apply best practise to remain relevant in the financial services sector.
Ndung’u is a business development specialist, trainer and research consultant working within the Sacco Sector.