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Case Analysis: Citibank: Performance Evaluation
1. Why has Citibank introduced a Performance Scorecard? The implemented
performance scorecard specifies goals and measures manager’s
performance in 6 areas: Financial measures Strategy implementation
Customer satisfaction Control measures People Standards
The primary purpose of the balanced scorecard is to set goals and allow
managers to complete well-rounded performance reviews using both
quantitative and qualitative measures. While financial measures are
important in analyzing performance of the bank, they do not provide any
insight into non-quantifiable measures that can be equally important in
performance assessment. In addition, the balanced scorecard forces
employees to adopt a broader view of the business and concentrate not only
on financial measures, but on measures that are truly important to the
success of the company. In the service industry, customer satisfaction is a
particularly important measure in determining how the company is doing. A
high level of customer service is a significant component of Citibank’s
strategy in California. Frit Seegers sees it as a leading indicator of future
financial performance of the bank. From the past experiences, it was
determined that customer satisfaction ratings do not follow the same pattern
as financial performance, and it is necessary to measure customer
satisfaction separately.
2. Assume you are Lisa Johnson, complete Exhibit 1 to evaluate James’
performance. Provide an explanation for each one of the seven performance
areas evaluated. Exhibit 1: James McGaran's Performance Scorecard
Q1 Financial Revenue Expense Margin Strategy Implementation Total
Households New to bank households Lost to bank households Cross-sell,
splits, mergers households Retail asset balances Market share Customer
Satisfaction Control Audit Legal / Regulatory People Performance
Management Teamwork Training / Development Self Other Employee
Satisfaction Standards Leadership Business Ethics / Integrity Customer
Interaction / Focus Community Involvement Contribution to Overall Business
Overall Evaluation Legend: 1 - Below Par 2 - Par 3 - Above Par 3 Financial
measures: Above Par
The financial performance of James’ branch has consistently exceeded
management expectations for the last 4 years. This year was no exception.
James exceeded financial goals by 20%, thus ranking the branch #1 in the
marketplace. Strategy implementation: Above Par
This is the rating James received in quarters 2, 3 and 4. The branch met or
exceeded its growth goals in the business, professional and retail segments.
(The scorecard does not indicate the goals for this measure, which makes
analysis less dependable as we have to rely on comments only.) Control
measures: Par
This measure was assessed only in 3 quarters, and in all 3 quarters the
branch scored above par. Even though James works hard on making sure his
branch operates in compliance, there is still some room for improvement in
this area, and James can implement several measures to lower the operating
and fraud losses sustained by his branch. People: Above Par
James is an excellent people manager. His performance is consistent in this
area and always exceeds expectations. Standards: Above Par
James is a well respected leader that has high standards for himself and
people he employs. He continually works on improving himself and his
employees. He is involved in the community and encourages the same from
his employees.
Customer Satisfaction: Below Par
This is a measure that can potentially cause the most controversy as James
is concerned with the survey that is used to asses customer satisfaction. In
two quarters, James scored below par on customer satisfaction. However, he
identified the improvement opportunities and substantially improved service
scores by the end of the year. Overall Evaluation: Above Par
We understand that according to current policy James can not get an above
par overall rating due to a below par score on the customer satisfaction
measure. However, we will disregard the policy in this case due to several
reasons: This is the first year the balanced scorecard was implemented. It
will take some time to insure that all the areas are measured appropriately.
James’ concerns about adequacy of the survey used to measure customer
satisfaction might be valid. Management should review the survey and get
some input from the branch managers on what indicators should be used to
measure customer satisfaction. The current review process raises some
concerns as well. Presently, a branch manager’s supervisor subjectively
assesses performance in the non-quantifiable areas. The process can be
improved by allowing the manager to self-asses his own performance and
discuss it with his superior. This will allow the process to be less subjective.
The manager will get an opportunity to defend his performance if he does
not agree with the assessment of his superior.
If we give James an overall rating of par, disregarding his hard work, it will
lower the morale of one of our most successful managers and will possibly
result in lower performance in the future, jeopardizing the performance of
the #1 branch in the marketplace.
Management has a valid concern that if James receives an above par score
on his evaluation, employees might think that management disregards nonfinancial measures during the evaluation. However, it is easier to reiterate
the importance of non-financial measures than to negate the effects of low
morale in James’ branch. Management should communicate the importance
of qualitative measures in the balanced scorecard and the fact that it will be
taken into full consideration during the performance review after
management makes sure the survey is well suited to measure a customer
3. How would you communicate the decision to James? James should be
aware that his concerns with the customer survey and consistently
exceptional performance were the main reason for management’s decision
to give him an overall above par rating. He should also be told that in the
future he will not get an above par rating if he fails to score par on all the
measures. James should be aware that management will not disregard nonquantifiable measures in the future as steps are being taken to insure that
they are measured appropriately. 4. What do you think James will do after
receiving the communication? If James is aware of all the things mentioned in
the answer to the previous questions, he will continue to consistently exceed
the expectations of his superiors. Since James will see from his performance
evaluation that management values his efforts, he will continue to work as
hard or even harder than before to ensure that his branch remains #1 in the
marketplace. 5. Would you roll-out this performance scorecard to other
regions at Citibank? The balanced scorecard should not be rolled-out to other
regions at Citibank without some revisions. James has already raised some
concerns about the adequacy of the survey that measures customer
satisfaction. His main concern is that the survey measures not only branch
services but also centralized services such as ATMs that are out of the
control of a branch manager. The survey can be revised in order to better
meet the performance evaluation needs. It is possible that several surveys
will need to be developed in order to better assess the different branches
based on different types of customers served by them. This will result in
increased costs but will allow for closer gauging of the performance of the
bank and setting more defined performance goals for the branches. The
concerns about the current review process were also raised above. The
manager should be given an opportunity to asses his own performance on
non-quantifiable measures in order to make the performance review less
subjective. In addition, the discussion of the manager’s performance with his
superior will ensure that the manager is satisfied with his performance
evaluation and will result in increased employee morale.