FIRST REPORT

a) Citibank is correct in shifting from a strictly financial based evaluation system to one that includes non-financial measures. Although the new performance scorecard includes a customer satisfaction section, the current method of evaluating customer service poorly designed and is inconsistent with a properly balanced scorecard. As it currently stands, measuring customer satisfaction across all clientele is too broad. The needs of the patrons vary substantially and generic questions in the telephone interviews will not suffice. Instead there should be questions geared towards business customers and a different set of questions for individual customers. It is detrimental to lump all customers into one set and assign a satisfaction rating based on the requirements of the entire group. The design of the existing system might lead James to partake in short-term actions which improve the customer service rating. By focusing all his efforts on improving the score, he may neglect satisfaction items that are not currently measured in the rating system. This will be harmful to the Financial District branch and Citibank in the long run. Bank of America and Wells Fargo, both competitors of Citibank, have branches located less than a block away from Jamess branch. Since competitors are located closely together the customer satisfaction score should take into account the fact that patrons are choosing to bank with Citibank over Bank of America and Wells Fargo. The satisfaction score should be compared to an industry benchmark as well as to the scores of Bank of America and Wells Fargo. b) The current method of performance evaluation leaves significant room for improvement. Since customer bases and banking patterns differ considerably from branch to branch, Citibank should employ a scorecard at the corporate level in addition to a scorecard at the individual bank branches. The corporate and specific bank branch scorecards should be aligned together. A majority of the customers who bank with Citibanks Financial District office are either individuals or business patrons. Since the two types of clientele vary drastically and require different services it might be beneficial to the Bank to create subcategories under the customer service performance section. The two subcategories would consist of separate goals and measures that best reflect the diverse customer groups needs. The assessment of customer satisfaction should be tied solely to items the Financial District branch and its manager James McGaran can control. Citibank can improve its method by drilling down further into the customer satisfaction section and evaluating specific criteria that reflect its strategy such as service that surpasses needs, which leads to increased customer retention and loyalty, and ultimately leads to higher market share. Continuous improvement should also be measured. It is important to link all of the individual measures together in a cause-effect manner. Once multiple ideas for the customer section are identified and measured, Citibank needs to provide rewards based on the measurements. c) According to the Nature of Measures handout, Citibanks customer satisfaction section on their scorecard is quantifiable and therefore objective. Although the survey gauges opinions of customers, the data is translated into an overall satisfaction score which is representative of an objective measure. The survey includes and focuses on items outside of the control of bank branch manager James McGaran. As a result, the measure leads to wrong conclusions regarding the performance of the customer satisfaction segment. It is an

incomplete measure since it does not fully reflect what Citibank is trying to measure and accomplish. James is both responsive and not responsive at the same time. He recognizes certain factors such as Citibanks ATM system are outside of his control and consequently ignores them. At the same time, James is a manager who wants to perform at the highest possible level. He is responsive to the customer satisfaction rating and implements changes to hopefully improve his score. Since the rating does not accurately capture all aspects of customer satisfaction for his branch, James may focus too much on the specific items that will increase his rating. This could possibly lead to dysfunctional behavior because he is not performing at the level patrons of the Financial District branch might expect. In conclusion, the path Citibanks current method of measuring customer satisfaction takes is one that is objective, incomplete and both responsive and not responsive.

SECOND REPORT
1. Analysis of the Citibanks new evaluation system In order to deeply understand the Citibanks new performance evaluation, first we need to clarify the purpose of Citibanks introduction of the new performance scorecard. Its basically an attempt to highlight the importance of a diverse set of measures instead of the single financial performance in achieving the strategic goals of the division. Specifically, from Frits Seegers point of view, the high service quality strategy and other dimensions were critical to the long-term success of the franchises. The customer satisfaction and strategy implementation indicators, therefore, were introduced into the new performance scorecard. Consequently, the new scorecard has consisted of six diverse perspectives. And the objective for implementing the scorecard performance measurement was to figure out what need to be done to meet the measurement perspectives from a balanced view. Then the targets also have been established for each perspective, for example the customer satisfaction has been set for achieving a rating of at least 80 in 1996. However, looking deep into Citibanks new evaluation method, we could spot several big weaknesses: - Subjectivity plays an important role in the new evaluation system. First there are two ratings related to people and standards that lack an appropriate objective indicator and largely be determined by branch managers superior. This leak leaves a big room in the evaluation system for causing unfair results according to personal relationship between branch managers and their superiors and other drivers instead of real performance. However, from the case, we could hardly know what James really did on these two perspectives because his high ratings on these two factors were significantly due to the Lisa Johnsons one-sided praise. Another issue is how the quarter evaluations combine into the annual evaluation. The supervisor has way too much power to change the annual evaluation.