Citibank Case Study
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Are the items assessed in the performance scorecard fair? Do they fit Citibank’s stated goals & culture? Should measures that have “hard” data be treated differently from those that are more subjective? Why or why not?
Are the items assessed in the performance scorecard fair?
YES, they include important factors to the bank that should be understood by the professional managers and if they know the rules in advance then it is fair.
Particularly scorecard template is clear and easy to understand. 7 specific blocks of targets (financial, strategy, customer satisfaction, control, people, standards and finally overall evaluation) shows what is most important for Citibank in this year. Except figures and data (Key Performance Indicators – KPIs) there is also a place for comments and opinions which is very important to evaluate managers and employees. In addition to 4 quarterly performance assessments McGaran has received year-end performance as a summary of all KPI and supervisor’s opinions. We think that in this matter scorecard is clear and fair.
However, the way of measurement of customer satisfaction can be questioned (the sample is too small, 25 seems to be not representative). 80% satisfaction target also seems to be high for this specific branch (it assumes that in 1996 McGaran’s branch must improve customers’ satisfaction from around 66 to 80 per-cent on diversified and demanding customer portfolio) – however, it was almost reached in Q4. In order to avoid any doubts related to the customer satisfaction indicator, it is advised to exclude in the next year the ATMs and other services centrally managed from the customers’ survey (otherwise it should be well explained that customer satisfaction from all services is joint responsibility of all employees and that goals of central team responsible for e.g. ATMs include customer satisfaction).
Do they fit Citibank’s stated goals & culture?
“Citibank’s strategy in California was to build a profitable franchise by providing relationship banking combined with a high level of services to its customers”
YES, partially – in the part where strategy says to concentrate on relationships with customers in order to build up the long term business connections. For instance, customer satisfaction was included into the new scorecard in order to reflect the importance of non-financial measures as the long term goal of the Division.
On the other hand profitable franchise is a key. Scorecard doesn’t show what is the most important KPI. Equal weight of all goals does not show priorities of the company and that is why managers have to concentrate on everything and not on the most important items.
Looking on the financial results of McGaran’s branch we can see that he has exceeded annual budget in all the lines. Especially margin is very impressive. Almost 700 000 USD above the plan means over 16% better performance.
Should measures that have “hard” data be treated differently from those that are more subjective? Why or why not?
NO, in order to achieve company goals subjective data (e.g. customer satisfaction) should be treated and monitored in the same way as the hard data are (e.g. financial data). This is extremely important to sustain coherency of the strategy implementation process. For instance, if some of those measures would be treated differently this could cause only partial strategy execution. Also for subjective measures some supporting measurable indicators can be defined e.g. internal certification programme for training and development or number of training days, etc. Good example of such approach is using customer survey to monitor their satisfaction.
Describe what you see as the main advantages and disadvantages of giving McGaran a “par” versus an “above par” rating.
Par: Keeping the rules – to show integrity and consistency of the bank’s strategy supported by