Case Analysis:

Citibank: Performance Evaluation

Elena Wellard

MBA 620 - 02

Professor Peter Frischmann

November 23, 2008

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 ScorecardQ1 Q2 Q3 Q4 Average Year End

Financial 3 3 3 3 3.00 3Revenue 3 3 3 3.00 Expense 2 3 2 2.33 Margin 3 3 3 3.00

Strategy Implementation 2 3 3 3 2.75 3Total Households 2 3 2 1.75 New to bank households 2 2 2.00 Lost to bank households 2 2 2.00 Cross-sell, splits, mergers households 2 3 2.50 Retail asset balances 2 3 2.50 Market share 3 3 3.00

Customer Satisfaction 2 1 1 2 1.50 1

Control 3 3 3 3.00 2Audit 3 3 3.00 Legal / Regulatory 3 3 3.00

People 3 3 3 3 3.00 3Performance Management 3 3 3 3.00 Teamwork 3 3 3 3.00 Training / Development 3 3 3 3.00

Self 3 3 3 3.00 Other 3 3 3 3.00

Employee Satisfaction 3 3 3 3.00

Standards 3 3 3 3 3.00 3Leadership 3 3 3 3.00 Business Ethics / Integrity 3 3 3 3.00 Customer Interaction / Focus 3 2 3 2.67 Community Involvement 3 3 3 3.00 Contribution to Overall Business 3 3 3 3.00

Overall Evaluation 3 2 2 3 2.50 3

Legend:1 - Below Par2 - Par3 - Above Par

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 non-financial

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 satisfaction.

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 non-quantifiable 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.