Essay About Financial Measures Of Performance And Performance Scorecard
Essay, Pages 1 (962 words)
Latest Update: August 12, 2021
Citibank Case1. Why has Citibank introduced a Performance Scorecard? Consider the specifics of the Citibank case. Also consider the general advantages and risks associated with financial measures of performance and with nonfinancial measures of performance.
The purposes of the balanced scorecard are as follows:a. To better communicate and implement the strategy of the bank. Citibank’s strategy in California was to build a profitable franchise by providing relationship banking combined with high level of service to its customers. To communicate the high service strategy of the bank, Citibank California developed a Performance Scorecard to reflect the importance of non-financial measures as leading indicator of strategy implementation. It forces employees to have a broader view of the business and focus their attention on those dimensions that were critical to the long-term success of the business. It measures managers’ performance in six areas: financial, strategy implementation, customer satisfaction, control, people, and standards. Those measures provide incentives for managers to address long-term strategy.
b. Complete well-rounded performance reviews using both quantitative and qualitative measures. Financial measures are important in analyzing performance of the bank, but they do not provide enough insight into non-quantifiable measures that ban be equally important in performance assessment. Non-financial measures offer a closer link to long-term organizational strategies, while financial measures generally focus on annual or shot-term performance. However, evaluating performance using multiple measures that can conflict in the shot term can also be time-consuming. A greater number of diverse performance measures also require significant investment in time and cost. Some measures may become value consuming rather than value adding. It would raise the possibility that managers may over-invest in the easiest, rather than most value-adding goals.
c. To better indicate the future financial performance. Financial measures may not capture long-term benefits from decisions made now. Moreover, in the banking industry, customer satisfaction is critical to the long-term success of the business. Seegers considered it as a leading indicator of future financial performance. If customer satisfaction deteriorated, it would eventually impact the financials. Investments in customer satisfaction can improve subsequent economic performance by increasing revenues and loyalty of existing customers, attracting new customers and reducing transaction costs. But non-financial measures maybe lack of statistical reliability. The customer satisfaction measures are based on telephone interviews with few respondents (twenty-five branch customers each month) and few questions. These measures generally exhibit poor statistical reliability, reducing their ability to discriminate branch managers’
c.
(Table 2). This article provides a short history of the financials of the United States, how they’re categorized, and how they’re evaluated. Finally, a detailed analysis of the statistical reliability of each financial measure is recommended.
(Table 2). The economic data are drawn from a nationwide survey conducted by the Federal Reserve Bank of Chicago in April 2002 and released November 10, 1995. Based on the three key lines in Table 1, the economic data are taken from a nationally representative survey, with controls included. Data on financials are provided by the Bureau of Labor Statistics, Bureau of Economic Analysis, Office of Management and Budget. The full data are available only to those states and the District of Columbia, where the data are available for public access.
(Table 3). The economic data are drawn from the most recent Federal Reserve Bank of Chicago Survey, and are obtained by comparing the monthly and weekly reports of the two major Federal Reserve banks. (The quarterly reports are available in electronic form at FBO and the Federal Reserve Bank of New York and the U.S. Treasury Services Administration, respectively).
(1) (See Appendix II.)
(2) (See Appendix III.)
(Table 5)
Citing the financial market’s high rate of growth and relatively low transaction costs and the failure to balance the books, it is tempting to identify the current financial crisis as a financial event. That is, consider the question, “What do investors think if a financial crisis were to hit the United States?” Most of us think of the financial crisis as a political statement. Yet, many economists and others say that financial crisis is both an economic event and a political statement. Some suggest that a political statement should be held in common with a financial event, and some propose that a single term is “a political statement”. What would that represent if the economic data were pooled across three different financial measures? As has often been the case, the answer depends on what we mean by “commonality”. For both the federal government and financial markets, financial statements are common in the Federal Deposit Insurance Corporation and National Association for Financial Education & Research, and are included in the National Association of State Retirement Banks, as well as in the Deposit Insurance Corporation, National Bank of Kansas, National Association of State Social Security Plans, and Treasury Corporation Funds & Services. In either case, the data provided by the banks represent all the money issued by the banks, or a fraction of those issued at all times. This information could provide a more detailed understanding of what happened in the financial crisis.
(Table 6). The economic data are drawn from a sample period of three years following the 2008 financial crisis. The monthly financials include the monthly reports of all banking firms and investment groups, as well as quarterly reports of customers in different financial sectors. The economic data are taken from the annual report of the Federal Reserve Bank of New York. The quarterly reports reflect a review of the financials and are only part of a larger narrative. The economic data were drawn from the Annual Report of the National Association of State Retirement Banks, which has been released since March 2003. The economic data are given to the Federal Reserve Bank of New York on a four-month basis for each bank. In the four-month period, the statistical findings are summarized in Figure 1.
