Assignment: CitiBank: Performance Evaluation
Table of Contents
1.
Executive Summary .................................................................................. 12
2.
Problem Identification and Analysis ......................................................... 13
3.
Statement of Key problems or issues ........................................................ 16
4.
Data Analysis ............................................................................................ 16
5.
Generation and Evaluation of Alternative Solutions ................................ 18
6.
Decision/Recommendation ....................................................................... 20
7.
Implementation plan for Citibank ............................................................. 22
8.
Conclusion ................................................................................................ 23
9.
Appendices ................................................................................................ 24
10.
References ............................................................................................... 26
i
Assignment: Citibank: Performance Evaluation
12
1. Executive Summary
The City Bank of New York was founded on June 16, 1812. The first
president of the City Bank was the statesman and retired Colonel, Samuel Osgood,
ownership and management of the bank was taken over by Moses Taylor, a protégé of
John Jacob Astor and one of the giants of the business world in the 19th century.
During Taylor's ascendancy, the bank functioned largely as a treasury and finance
center for Taylor's own extensive business empire.
Citibank management identified the need to include non-financial elements its
employees’ performance evaluation, and thus caused a change in Citibank business
strategy. They implemented a scorecard to address the strategic objective of the bank
and measure both the quantitative and qualitative measures. The scorecard measured
managers’ performance in the following areas, financial measures, strategy
implementation, customer satisfaction, control measures, people and standards.
Citibank management understood that the service industry, customer satisfaction is
important to the success of the bank and Frit saw it as a leading indicator of future
financial performance of the bank.
In this case report, we identified few drawbacks that were associated with the
implemented scorecard such as the same scorecard template was implemented across
all the same branches, though different branches have different functions and in
different competitive environment. Different alternatives are identified such as
outsourcing the implementation and of the scorecard, implementing PRISM and using
the SurveyMonkey tool to conduct the customer satisfaction survey. Bothe the PRISM
framework and SurveyMonkey are ideal instruments to solve the challenges that
Citibank experienced, the customer survey and manager performance evaluation.
Assignment: Citibank: Performance Evaluation
13
2. Problem Identification and Analysis
Citibank had eighty branches compare to its biggest competitor with 400
offices. Citibank’s management changed the business strategy to focus more on
measuring non-financial elements, and especially customer service satisfaction.
Customer satisfaction is defined by (Nagel and Cilliers, 1990) as “an outcome of
purchase and user, resulting from a buyers’ comparison of the rewards and costs of
the purchase in relation to the anticipated consequences”. These changes in Citibank’s
business strategy redirected its attention to measuring performance evaluation across
all its branches and gain its competitive advantage, as the competition was becoming
more challenging. According to Ahmed et al. (2013), the methods chosen and the
instruments use to properly implemement these performance management systems are
crucial in determining whether the organisation will be able to manage it performance
successfully. Below is the SWOT Analysis of Citibank:
SWOT Analysis:
Strengths
Weaknesses

Global network

Tarnished brand name

Backing of the Citigroup

Online operations are geared

Innovative product offering

Comprehensive
selection
towards US clients
of
products and services

Strong privacy and data policies

Good Corporate Citizen
financial

Issues of Corporate Governance
Assignment: Citibank: Performance Evaluation
Opportunities
14
Threats

Growth markets

Foreign exchange fluctuations

Chinese market

Market conditions

Online presence

Regulatory forces

Strengthen

Competition from other banks
customer
relationships
by
community involvement

Look for acquisitions that are compelling
strategically and financially
Source: www.wikiswot.com/SWOT/4_/citibank.html
Citibank management had a different strategy in California to provide
relationship banking and high level of customer service. (Nagel and Cilliers, 1990)
defines customer service as a deed, a performance or an effort, which if needed to a
product, increase its value or utility to the customer. The change in business strategy,
initiated the implementation of performance scorecard. “Proponents of the balanced
scorecard have long suggested the use of no-financial performance measures via three
additional perspectives (i.e. customer, internal business process, and learning and
innovation) to supplement traditional financial measures” (Ling and Koh, 2001), (see
figure 1).
The performance scorecard had several drawbacks such as the performance
measuring elements are carrying the same weight and caused an incorrect overall
performance evaluation of the manager. The scorecard also had only three rating
(below par, pa, above par) with the below par rated from 0 – 74, this rating was too
big and perhaps could reduce it 0-50 rating. Customer satisfaction survey was
conducted on only 25 customers, which is a very small quantity of the total volume of
Assignment: Citibank: Performance Evaluation
15
customer that visits Citibank. The scorecard was implemented across all various
branches and this was causing misleading information, as different branches operated
in different competitive environments. The performance scorecard was measuring
elements that were outside the scope of some managers, such as James being
evaluated on ATMs performance, 24 hour banking and home banking. The scorecard
was subjective which meant that the performance evaluation was determined by the
branch manager superior, this can easily cause unrealistic performance results as per
the relationship between the manager and their superiors. This sometimes may not
give the real performance result of a manager.
The bank management could not establish a suitable way to rate an
outstanding manager that performed poorly in an important aspect such as customer
satisfaction. Also, some branches did not have enough employees (i.e. one teller was
short in fourth quarter at a branch).
The Citibank was not measuring non-financial measures, they implemented
the scorecard and it will be able to identify non-financial measures. Non-financial
measures are important as they run ahead in comparison with the financial measures,
and thus, the management will be able to determine the future financial implications
and also prepare the company at large for the future.
Assignment: Citibank: Performance Evaluation
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Source: Ling and Koh, (2001)
3. Statement of Key problems or issues
As per the analysis of the Citibank case and the problems identified above,
Citibank was not able to properly measure the customer service level satisfaction and
in turn could not increase their competitive advantage. The bank was initially not
measuring the non-financial elements and focused mainly on the financial measures.
4. Data Analysis
The Citibank of Los Angeles was the most performing branch in the California
city and at a certain point they were used as a benchmark for other branches.
Although the branch manager was rated below par, he out performed in the financial
measures because of vest experience in the banking sector. Below are the summary of
the overall performance of the of the bank’s financials from quarter 1 to quarter 4.
The financial reporting looks at the Actual Revenue versus Targets (see graph 1),
Actual Expenses versus Targets (see graph 2) and Actual Margins versus Targets (see
graph 3).
Assignment: Citibank: Performance Evaluation
Graph 1: Revenue
+9
%
1,486,172
1,254,876
17
1,636,056
1,593,690
1,580,534
1,429,974
1,213,744
1,141,612
Actual Revenue
Target Revenue
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
The above graph depicts the revenue and the targets that were set by the area
managers and shows that the revenue was growing at compound average growth rate
of 9% from Q1 to Q4.
Graph 2: Expenses
421,430
436,276
403,586
+3
%
395,216
445,688
456,061 454,076
378,458
Actual Expenses
Target Expenses
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
The graph above looks at the actual expenses and the target, and depicts that
the expenses were kept below the set target this was due to good management and
accountability of the branch manager.
Assignment: Citibank: Performance Evaluation
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Graph 3: Margins
+12
% 1,215,232
1,179,995
1,126,458
1,090,956
984,286
833,446
738,026
777,468
Actual Margin
Target Margins
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Although the case study reported that the customer satisfaction rate was poor,
the profit margins of the Los Angeles branch was growing at 12% compounded
average growth rate and the margins were above the set targets.
5. Generation and Evaluation of Alternative Solutions
Alternative 1: Survey Monkey
Citibank can use the Survey Monkey web based software application to
conduct its survey to measure customer satisfaction amongst others. According to
(Knussen and McFadyen, 2010), SurveyMoneky is an online tool that has built in
format for asking questions (multiple choice, true false, open-ended, etc.).
(Knussen and McFadyen, 2010), identified few advantages and disadvantages,
the advantages, it has the ability to track respondents and re contact non-respondents.
Can export data into programs like SAS or SPSS for more complex analysis. Great
tool for attracting large number of respondents and another ethical advantage is that of
the IP addresses are not collected; there is no way of tracing the respondents. No need
to use emails and there is less likelihood of invading privacy
Assignment: Citibank: Performance Evaluation
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Disadvantages, survey monkey has few ethical issues. 1. Anonymity; by
default this option is set to ‘Yes’. This means that anonymous option is not activated
and user/customers information will be visible. 2. Confidentiality; all survey monkey
users seem to have access to the data from all surveys. 3. Informal consent; it’s not
possible to provide oral presentation. 4. Right to withdraw and omission of items;
customers cannot withdraw any responses that have been made at the point of exit.
As per the above advantages and disadvantages, SurveyMonkey is a reliable
information gathering tool and inexpensive when conducting survey such as customer
satisfaction. It is able to reach the different customers in different geographical
environments.
Alternative 2: Performance of Routine Information System Management
Framework (PRISM)
The proponents of the performance prism Adam and Nelly (2002), argue that
“one of the greatest fallacies of measurement design is that performance measures
should be derived from strategies. It is the wants and needs of stakeholders that must
be considered first and consequently the strategies can be formulated.” Furthermore
they submit the advantages of the prism management system are that it considers:
stakeholder’s satisfaction, stakeholder contribution, organisation strategies, processes
and capabilities and most importantly suitable for organisation which creating
stakeholder value is first priority (Najmi et al, 2011).
Assignment: Citibank: Performance Evaluation
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Alternative 3: outsourcing theerformance evaluation to a reputable
company.
Clearly, Citibank does not have the necessary skills and capacity to implement
a proper performance evaluation system they can opt to outsource this project. Key
dimensions that influence the degree of outsourcing are: expertise of vendor, the
environmental stability and physical barriers (Banerjee, 2009). Advantages are; lower
cost, According to Mary Amiti, et al. (2005), firms that have outsourced may become
more efficient and expand employment in other lines of work. Sankalp Pratap, (2014),
has identified these advantages, 1. Cost benefits; 2. Access to innovation and niche
capabilities. 3. Greater focus on core competencies. Outsourcing is seen as an
essential component of a firm’s competitiveness in the new millennium (Pratap,
2014).
Disadvantages, such as fear of losing jobs and as per Sankalp Pratap, (2014),
in practice, numerous studies have shown that a high proportion of outsourcing
arrangements delivered results unacceptable to the client. Sometimes cost are not
reduced but rather increased. Threat of confidential information revealed to
competitors.
In the case of Citibank, Outsourcing might not be an ideal solution, as the
disadvantages as stipulated above are to high risk. If Citibank’s confidential
information is revealed to its competitors, they will lose their competitive edge.
6. Decision/Recommendation
Citibank had two challenges, conducting a properly survey for customers and
implementing a proper performance evaluation system that can include non-financial
measures in its rating or evaluation.
Assignment: Citibank: Performance Evaluation
21
It’s clear that Citibank did not conduct a survey that included a large portion
of its customers, thus causing unreliable results; its recommended for them to use the
SurveyMonkey web-based survey tool to conduct customer satisfaction survey. This
tool has easy to use inbuilt quality survey templates that are designed to produce
reliable and accurate information. With this, Citibank management can use it for
accessing most of its customers all at once and does not need to call the customers
when conducting interviews, and this turn out to be cost effective for Citibank in a
long run.
The recommendation for dealing with the performance evaluation for
managers and include non-financial measures is to use the prism evaluation tool. As
per the above analysis, this tool will be able to identify both the financial and nonfinancial measures for each manager evaluated. Citibank changed they business
strategy to include non-financial measures in performance evaluation. Main reason for
this is that non-financial elements run ahead as compared to financial measures, this
will help the management to make calculated and informed decisions for the current
and future business decision. Apart from the technical factors such as number and
type of indicators, data generation architecture, and decision support that PRIMS
assessment comprises, it also includes behavioural and organisational factors that are
influencing performance.
However, since performance evaluation deals with humans the following are
few advises for Lisa, the area manager and management of Citibank. The
management should develop a scorecard or evaluation system that will measure each
branch individually as each branch is in a different competitive environment. Also, as
for the ratings a proper customer satisfaction rating should be established that can be
meaningful and informative to the management and as for the overall rating, the
Assignment: Citibank: Performance Evaluation
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management should classify the ratings and not only focus on customer satisfaction as
the overall performance indicator.
7. Implementation plan for Citibank
Implementing the SurveyMonkey is going to cost citibank U$779 per annum
and utmost period 7 weeks and 4 days to complete. The implementation schedule is
as follows;
No. Project Phase
Responsible
Entity
Lisa and
Citibank
management
(mgt)
Focal team, mgt
1
Identify a focal team
implement the
surveyMonkey tool
2
Determine the type and
format of the questions,
what to ask the
customers
Identify the
Focal team
SurveyMonkey
vendor/supplier
Procure the
Vendor and
SurveyMonkey tool
focal team,
finance
department
Edit the templates
Focal team,
survey question to
Lisa, vendor
Citibank
recommendations
Deploy the
Focal team,
surveyMonkey
vendor
Create awareness of
Focal team,
the survey link for the
marketing
customers’ to
participate
3
4
5
6
7
Duration
Cost implication
1 week
none
2 weeks
none
3 days
none
2 weeks
2 weeks
U$ 779
(platinum
version) per
year
none
1 day
none
On-going
none
Implementing the PRISM will not cost Citibank since it will be done internally
and utmost it will take 2 months and 3 weeks to complete. The implementation
schedule is as follows;
Assignment: Citibank: Performance Evaluation
No. Project Phase
Duration
23
Responsible
Entity
Frits Seegers
Cost implication
2 weeks
None
1
Convene a high level
management meeting and
deliberate on the revision
of the performance
scorecard to improve
customer satisfaction.
2
Draft a working / white
paper on the intended
revision of the scorecard to
included management
prism and redesign the
scorecard.
Lisa Johnson
1 Month
None
3
Prepare a brief for the
Board of Directors on the
intended revision of the
scorecard.
Frits Seegers
2 Weeks
None
4
Formally adopt a
resolution to amend the
scorecard.
Lisa Johnson
2 Weeks
None
5
Implementation
Lisa Johnson
1 Week
None
8. Conclusion
Lisa and Fritz should first talk to James and explain their dilemma and why
they have to give him a par rating, this will prevent losing James as a competent and
excellent manager for the whole company, however giving James an above par would
likely decrease the morale of the other managers. Since Frit has identify the need to
change the banks business strategy include and measure non-financial measures this
will be very helpful information for future planning purposes because the non-
Assignment: Citibank: Performance Evaluation
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financial measures run ahead of the financial measures, these can be simply put as
qualitative measures run ahead of the quantitative measures. This will be able to
prepare the business for the future in terms of financial implications that may arise in
the future. This is what Frit has identified and decided to act on it by implementing
the balanced scorecard.
9. Appendices
Appendix 1: Assets/Liabilities of Citibank
Source: Citibank Annual Report, 2008
Assignment: Citibank: Performance Evaluation
Appendix 2: Net Income
Source: Citibank Annual Report, 2008
Appendix 3: Prisms
25
Assignment: Citibank: Performance Evaluation
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10. References
Sankalp Pratap, (2014),"Towards a framework for performing outsourcing
capability", Strategic Outsourcing: An International Journal, Vol. 7 Iss 3 pp. 226 –
252
Mary Amiti, Shang-Jin Wei, Jonathan Haskel and Emmanuelle Auriol Source:
Economic Policy, Vol. 20, No. 42 (Apr., 2005), pp. 307-347
Sankalp Pratap, (2014),"Towards a framework for performing outsourcing
capability", Strategic Outsourcing: An International Journal, Vol. 7 Iss 3 pp. 226 –
252
Arindam Banerjee, Scott A. Williams, (2009) "International service
outsourcing: Using offshore analytics to identify determinants of value‐added
outsourcing", Strategic outsourcing: An International Journal, Vol. 2 Iss: 1, pp.68 – 79
Christina Knussen, Angus McFadyen, (2010), Ethical issues involved in using
Survey Monkey
Imtiaz Ahmed Ineen Sultana Sanjoy Kumar Paul Abdullahil Azeem,
(2013),"Employee performance evaluation: a fuzzy approach", International Journal
of Productivity and Performance Management, Vol. 62 Iss 7 pp. 718 - 734
Khim Ling SimHian Chye Koh, (2001),"Balanced scorecard: a rising trend in
strategic performance measurement", Measuring Business Excellence, Vol. 5 Iss 2 pp.
18 - 27
Pieter J.A. Nagel Willem W. Cilliers, (1990),"Customer Satisfaction: A
Comprehensive Approach", International Journal of Physical Distribution & Logistics
Management, Vol. 20 Iss 6 pp. 2 - 46
www.wikiswot.com/SWOT/4_/citibank.html
https://www.citigroup.com/citi/investor/quarterly/2015/annual-report
Assignment: Citibank: Performance Evaluation
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