Mike Higgins, Jr.
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Mike Higgins, Jr. is a partner in the firm of Mike Higgins & Associates (MHA). His consultants work with clients in the financial services industry. His primary areas of focus are performance management, performance-based compensation, board education, and strategic planning to maximize member value.
Mike is also a Filene Applied Research Advisor. He has presented at numerous Filene events and guest-lectured at the inaugural Center for Performance and Operational Excellence Research Colloquium at Stanford University.
Since 1998, Mike has worked with over 300 community-sized credit unions and banks. Mike has presented his contemporary approach to managing performance to numerous state and national associations. He co-authored the book Performance Compensation for Stakeholders: 14 Prerequisites for Success.
Prior to joining MHA, Mike was a consultant at Deloitte. His areas of focus were business process design and information technology. During his tenure at Deloitte, Mike worked with clients in the financial services, retail, manufacturing, logistics, aerospace and defense, and state government sectors.
Mike received his MBA from the University of Kansas and an undergraduate degree in finance from Nebraska Wesleyan University (NWU). While at NWU, Mike was an Academic All-American and was inducted into the NWU Athletic Hall of Fame.
Mike is a founding investor in Pacific Enterprise Bank, headquartered in Irvine, CA.
Avoid the Pay and Pray Trap
Traditional incentive plans are “Pay and Pray.” Organizations pay for some activity and pray they get the desired result.
Plan designers will tell you that KISS (Keep It Simple, Stupid) is critical. It should be called KYSS (Keeps You Simple, Stupid). Instead of teaching employees what we are after, simplistic schemes are created as a replacement.
A high-functioning athletic team understands the objective of the game, how points are scored, what the rules are, and most importantly, how each person contributes to the overall success of the team. A business is no different. The most successful businesses have employees who understand the business model, what drives it, and how they contribute.
In this session, we’ll show you how to build a self-funding, performance-based compensation plan using a scorecard that balances growth, profit, quality, and productivity. It’s the presence of counter-balancing measures that teaches employees the tradeoffs that must be made and prevent “gaming” the system. We’ll start by building a Directors’ Rationale to justify the reward. We show you how to build an overall credit union scorecard, then how to break it down into sub-model scorecards – branches, lending units, business lines, support areas, etc., bringing the measures closer to where the action occurs. We’ll review typical reward pool amounts paid to various levels across the organization. We’ll also demonstrate how to communicate performance monthly. Live examples from credit unions will be used.
Performance-based compensation is not for everyone. It takes a commitment. But for those that invest energy in improving the business literacy of their employees, the payoff is worth it, both literally and figuratively.
The credit union ethos is value for members, so why do we fixate on profit when we measure our credit union’s success? There is a better way; one that balances the need to keep the financial house in order with the need to create tangible economic value for members. It is possible to meet both objectives at the same time. Join Mike Higgins as he discusses the process and these five aspects of operations:
- Member Net Worth (determining the right amount)
- Product Mix (how member net worth is leveraged)
- Productivity (why traditional measures of productivity are 100% wrong)
- Provision Expense (how effectively credit is being administered)
- Pricing (the ultimate measure of value provided to members)
In a Business of Numbers, it Helps to Understand the Numbers
Financial services like any other industry – net income is the difference between revenue and expense. Unfortunately, financial services unlike other industries – it is highly regulated and most income is derived from the balance sheet. Furthermore, as a financial cooperative, non-profit is just a tax designation – profit is not optional, it is mandatory.
In this session, we will review the six areas that drive your financial success, allow you to grow, and invest in the future to remain competitive.
- Acquire and maintain deposits.
- Originate and maintain balance of loans.
- Manage interest rates.
- Generate income from other products and services.
- Operate in a productive manner.
- Manage credit losses within tolerance.
Rather than starting with the income statement and balance sheet, we’ll finish with it as it is important to understand how income and expense impact profitability first. We’ll cover a handful of common ratios and provide context for a typical range to operate within.
As a young professional, mastering a handful of key concepts today, will prepare you for success tomorrow.
“Thank YOU! That was a great presentation just chock full of information for our members to chew on.” – Andrew Peach, Vertifi
- Measuring Your Credit Union’s Value Proposition
- Avoid the Pay and Pray Trap
- In a Business of Numbers, it Helps to Understand the Numbers