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Citibank : Performance Evaluation

Presented by: K. Aditya Das Aditya Singh Shweta Jhunjhunwala Bholendra Pratap Singh Anuradha Tyagi Vishal Raju
by

Aditya Das

on 19 October 2012

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Transcript of Citibank : Performance Evaluation

Perspectives: six perspectives on enterprise performance (Financial, Strategy Implementation, Customer satisfaction, Controls , People and Standards)
Objectives: What the company needs to do to accomplish its strategy measurable objectives.
Metrics: Actionable and tangible measurements which support achieving objectives; this is what makes it real.
Targets: Performance level expectations set against the strategic plan. For each metric, set a goal or plan so progress against the objective can be evaluated. CITIBANK:
Performance
Evaluation PREFACE “Performance management is about creating relationships and ensuring effective communication. It's about focusing on what organizations, managers and team members need to succeed.” Why do even best of the strategies fail? In the early 1980s, a survey of management consultants reported that less than 10 percent of effectively formulated strategies were implemented successfully (Walter Kiechel, “Corporate Strategists Under Fire,” Fortune, Dec. 27, 1982). A study of 275 professional portfolio managers reported that the ability to execute strategy was more important than the quality of the strategy itself (“Measures That Matter,” Ernst & Young, Boston, 1998) A 1999 Fortune article, in a cover story of prominent CEO failures, concluded that the emphasis placed on strategy and vision created a mistaken belief that the right strategy was all that was needed to succeed. The authors concluded that “…in the majority of cases—we estimate 70 percent—the real problem isn’t [bad strategy]…it’s bad execution.” (R. Charan and G. Colvin, “Why CEOs Fail,” Fortune, June 21, 1999). Performance Management Q 1 : Measures Targets Objectives Standards Involvement in
Community groups Measures Targets Objectives Financial Perspective To succeed financially, how should we appear to our shareholders? Measures Targets Objectives Strategy Implementation Target customer
Segment relevant to branch strategy Measures Targets Objectives People Development To achieve our strategy, how will we sustain our ability to change and improve? Measures Targets Objectives Customer Perspective To achieve our strategy, how should we appear to our customers? Targets Risks and Control Measures Objectives Internal audits Components of a Scorecard - ROBERT BASCAL Measures Targets Objectives Standards Measures Targets Objectives Financial Perspective To succeed financially, how should we appear to our shareholders? Measures Targets Objectives Strategy Implementation Measures Targets Objectives People Development Targets Measures Objectives Target customer
Segment relevant to branch strategy Involvement in
Community groups Risks and Control Internal audits Customer Perspective Targets Measures Objectives To achieve our strategy, how will we sustain our ability to change and improve? Perspectives:
Six perspectives on enterprise performance (Financial, Strategy Implementation, Customer satisfaction, Controls , People and Standards)

Objectives:
What the company needs to do to accomplish its strategy measurable objectives.

Metrics:
Actionable and tangible measurements which support achieving objectives; this is what makes it real.

Targets:
Performance level expectations set against the strategic plan. For each metric, set a goal or plan so progress against the objective can be evaluated. Components of a Scorecard To achieve our strategy, how should we appear to our customers? Advantages of the new performance scorecard -Focus on relationship banking.

-Service was generally face to face or remotely depending on the wishes of the customers.

-Service expectations rose with a rise in net assets of customer.

-Broad range of financial products to be chosen from.

-Critical for measuring long term strategies of the firm -Focus on branch service as well as other services like 24 hours phone banking and ATM services.

-Customer survey was conducted only among 25 customers. This may lead to biased results.

-A proper time lag was not given for the implementation of the new system.

-An exceptionally good performance in one area (e.g. audit) was not enough to satisfy a marginally bad performance. Disadvantages of the new performance scorecard -James McGaran was the manager of the most important LA branch.

-Been in the banking industry since 1977. With Citi since 1985.

-Intense competition from BOA and Wells Fargo

-Varied customer base: from sophisticated retail bank needs to novices.

-Revenues of $6m; Profits of $4.3m Introduction -Has consistently been a high performer and grew rapidly within the organization.

-Emphasis on financial results

-New performance indicators showed low customer satisfaction ratings. New Performance scorecard was built around the following criteria

FINANCIAL MEASURES: Focus on total revenue and profits

STRATEGY IMPLEMENTATION: Tracks revenue from a particular segment relevant to the Bank’s strategy.

CUSTOMER SATISFACTION: Conducted through surveys. Emphasis on long term association. New Performance Scorecard CONTROL MEASURES: Based on banks internal control processes. If rating < 4, bank is said to be at risk.

PEOPLE AND STANDARDS: Focused on the efforts of the manager to develop and communicate with peers/ employees.
Rating Scale: “Par”, “Below Par” and “Above Par”

Finally, a global rating and overall rating for the manager was awarded. -Customer satisfaction and control goals common across all branches.


-Bank Manager’s bonus linked to final scorecard.

“Par”: Upto 15% bonus.
“Above Par”: Upto 30% bonus (at least par rating in all criteria needed)
“Below Par”: No bonus Performance Incentives RECOMMENDATIONS Overall Performance:
-Rated above par for 1st and 4th Quarter and at par in 2nd and 3rd Quarter

Financial Measures:
-Financial Performance 20% above par
-Highest Revenue among all branches
-Greatest margin contribution , 48% growth
-Rated exceptional by Lisa

Strategy Implementation:
-Household acquisition increased by 21%
-Balances grew in all segments
-Above par rated by Lisa in three quarters Financial District Branch Performance Customer Satisfaction:
-Performance was below target for all the 4 Quarters
-Overall score was 66/80 which was just at par

Control Measures:
-Operating and Fraud losses of $137 thousand
-Some were from previous years and others out of branch control
-Rated above par

People and Standards:
-Excellent People manager
-Rated above par for Performance Management, Team work, Training and Employee satisfaction in
-Rated above par on standards such as leaderships, Integrity, Customer focus, Community involvement, Contribution to business -James performed above par on 5/6 parameters of the scorecard

-Financial performance was the best as per industry standards and in comparison to other branches

-The customer satisfaction level improved significantly in the last quarter, so in a period of 1 or 2 quarters he may achieve the above par standards What goes in favor of James?
-Below par customer satisfaction level

-Does not meet the overall minimum requirements to be rated above par

-If James given above par rating other managers will also demand the same relaxation and they may not take new performance scorecard seriously What goes against James? -Customer satisfaction measures included the services for which branch was not responsible

-Diverse customer base, so diverse service quality requirements

-The customer base was too large, so customization of services as per requirement of customer was difficult

-Overall customer satisfaction was also hit due to absence of a teller in the third quarter Problems faced by James THANK YOU! -Award above par ratings
-Override the system and provide James
with a bonus of 30%
Consequences:
-Resentment among other Branch Managers
-Undue favor or biased decision harming national image
-Act as a precedent for deviating from defined standards
-Customer objective of the Bank would be defeated Alternatives-
1. Implement Lisa’s decision -Discuss the performance criteria with James

-Recognize his exceptional performance

-Provide Highest priority to his demands

-Specify the weights for different criteria

-Balance the over achievement in other scales with other areas 2.Follow set standards Presented By :

Yashaswi Dubey
Vishal Raju
K.Aditya Das
Anuradha Tyagi
Aditya Singh
Shweta J.
Bholendra P.Singh
Submitted to:
Dr. Payal Mehra Citibank's Performance Scorecard
Full transcript