Questions & Answers >EMG 141 Citibank_ Case Study

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1. Why has Citibank introduced a new performance scorecard? Discuss the merits and demerits of the new system vis-a-vis old system?

California Division of Citibank introduced a new performance scorecard to highlight the importance of a diverse set of measures in achieving the strategic goals of the division.

California division of Citibank strategic goals was to make banking aligned with strong relationships and services delivered to customers. Here they introduced new services like 24 hour banking, home banking which satisfy personal attention of customer.

Merits of new scorecard: 1) New scorecard focuses on customer satisfaction, hence employees are bound to treat their customer greatly and satisfy their demands. Employees need to maintain healthy relationships with the customers so that they can use it as their competitive advantage.

2) Customer satisfaction goals were common to all the branches, hence they have same criteria for evaluation, while previously financial goals were dependent on the locations so if a branch is in downtown area, they automatically did not generate enough revenue, hence lagged behind the city branches.

Demerits of new scorecard: 1) Scorecard was measuring performance of ATMs, which was outside the purview of branch manager and hence wrongly added in the evaluation of branch manager.

2) Customer Satisfaction rating has wide range for below par rating i.e 0-73, and very small range for “par” rating with only 74-79. This criteria has lead to branch managers fall in the below par rating although they have been doing good.

3) People and standard ratings are defined subjectively and completely in hand of branch manager’s boss which can be manipulated or changed based on the relationship of manager and his boss.

2. Are the performance measures objective?

Four Measures were objective in nature and have set criteria for their ratings. Their targets are pre-defined. While two out of six of the performance measures were subjective which are People and Standards. In these two measure no target was set and the performance was evaluated by the superior at this discretion.

Variables

Measures

Target

Financial Measures

Revenue, Expenses and Margin

Measured Objectively, measured on accounting system

Negotiable and can be discussed with the area manager, different for different branch managers

Strategy Implementation

Revenue from different customer segments: Focuses on retail, households,businesse s and professionals

Objectively measured by accounting numbers and data collected

Negotiable and can be discussed with the area manager, different for different branch managers

Customer Satisfaction

Branch service, 24 hour phone banking and ATM service

Measured through telephonic interviews with only 25 customers

Common target for all branch to achieve 80 score to get “above oar rating”

Control Measures

Evaluation by internal auditors

Risk

If below 4, rating was below par and branch business was considered as risk

People

Efforts by manager to communicate with subordinates, encouraging area training programs

Non quantifiable

Rating was given by Branch Manager’s Boss

Standards

Manager’s involvement in community groups, business ethics and trade associations

Non quantifiable

Rating was given by Branch Manager’s Boss

3) Assume that you are Lisa Johnson. Complete exhibit 1 to evaluate James' performance Financial Measures: Above Par,​ James had an exceptional year, growth in footfall, margin, revenue and the branch became #1 in marketplace.

Strategy Implementation: Above Par​, Household acquisition improved by 21%, Balances grew in all segments i.e retail, household, businesses and professional Customer Satisfaction: Par, ​Mixed results for every quarter but none of the quarter has more than 74 rating so below par rating but there has been improvement in the last quarter so James is working on his skills.

Control: Above Par,​ Branched two “5” audit ratings which was the highest rating.

People: Above Par, ​Excellent manager, team builder and motivates his people to go above and beyond.

Consistency in his work. Well planned and productive.

Standards: Above Par​, James Branch rated as #1 in marketplace. Out of the box thinking to close a deal led to improvement in his standards. Highly involved in trade associations, willingness to work in vacations to ensure customer satisfaction which led to high standards of his branch.

Overall Evaluation: Above Par