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Citibank: Performance

Evaluation

PPAk Trisakti 28
Kelompok 6
o Aditya Pramananda
o Denny Wahdini
o Kevin Pradana
o Silviani

Company Profile
Citibank is a consumer division of financial service
multinational group (Citigroup)
Founded in 1812 as City Bank of New York later First
National City Bank of New York
Reported revenue of USD32,7 Mio in FY2015
US is its largest market generating 51% of its revenues
Covers standard banking transaction and markets
insurance, credit cards, and investment products

Characters in the Case


James McGaran Manager of the important LA Branch
(Financial District)
Working in Banking Industry since 1977. Joined Citi since 1985
Intense competition from BOA and Wells Fargo
Diverse customer base: sophisticated retail bank needs to
novices
Delivered impressive financial result for four years in a row
since 1992
Lisa Johnson Area Manager of Los Angeles
Joined the Citi in Chicago in 1978, moved to California in
1988
Her area was the largest division (include 2 regions that
previously separated)
Supported by managers and was well versed with the
events in branch

New Performance Scorecard


Citibank Strategy

In the past financial


measures were the most
important factor in
Citibank Performance
Evaluation
To reflect the importance
of non financial measures
as leading indicators of
strategy implementation,
new Performance
Scorecard was developed

High level of servicedepending on


customer wishes
Provides broad array
of services

New Performance
Scorecards
Financial measures
Strategy
implementation
Customer satisfaction
Control measures
People and standards

New Performance Scorecard


Criteria:
Financial Measures: focus on total revenue and profits
Strategy Implementation: tracks revenue from particular
segement of consumers relevant to Banks strategy
Customer Satisfaction: measured by surveys. Emphasis on long
term association
Control Measures: Based on internal control. Less than 4 means
the bank to be at risk
People and Standards: Focused on the effort to develop and
communicae with employees

New Performance Scorecard (contd)


Each component of scorecard was scored independently into one
of three rating categories (below par, at par, above par)
Managers superior gave a global rating for each of the six
components of the scorecard and overall rating for the branch
manager
The scorecard determines Performance and Incentives
Performance: various dimensions are considered to evaluate the
performance of employess
Incentives: bonuses are given based on scores of performance

Performance and Incentives


Performance:
Performance plan is
negotiated between Citibank
exec and area managers on:
financial, strategy
implementation, customer
satisfaction and control
targets
Scores are given based on
actual numbers compared
with quarterly objectives

Incentives:
Below par means no bonus
Par rating can have a
bonus up to 15% of the
salary
Above par rating could
mean as much as 30%
bonus

Performance of Financial District Branch


Overall performance
Rated above par for 1st and 4th quarter and at par in 2nd and 3rd quarter
Financial measures
Perform 20% above par
Highest revenue among all branch
Greatest margin contribution, 48% growth
Rated exceptional by Lisa
Strategy implementation
Household acquisition increased by 21%
Balance grew in all segment
Rated above Par by Lisa in the last three quarters

Performance of Financial District Branch (contd)


Customer satisfaction
Performance was below target for all 4Q
Overall score was 66/80 which just at par
Control measures
Operating and Fraud loss of USD137,000
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, Teamwork, Training and
Employee Satisfaction
Rated above Par on Leadership, Integrity, Customer focus, Community
involvement and Contribution to Business

Good news and Bad news for James


In favor
Performed above par for
5/6 parameters
Financial performance was
the best in industry
standards and in
comparison to other
branches
Customer satisfaction level
improved significantly in
the last quarter

Against
Below par customer
satisfaction level
Does not meet the overall
minimum requirements to
be rated above par
Should James given above
par rating other managers
will also demand the same
relaxation treatment

Question and Answer


1. Why has Citibank introduced its Performance Scorecard? What benefits does
Citibank expect the Performance scorecard to provide?
. MACS (Management Accounting and Control System) helps decision makers to
assess and determine whether organisation, business and operating level
strategies are being met.
. To set goals and allow managers to complete well rounded performance reviews
using both quantitative and qualitative measures.
. Forces employees to adopt on a broader view of the business and concentrate not
only to financial measures.
. Measures the most important success factors. Service company customer
satisfaction
. Citibank execs think that high quality services critical to long term success of the
company.

Question and Answer (contd)


2. What cause and effect linkages are implied in Performance Scorecard
. Thereisclearlyacauseandeffectlinkagesbetweenthedifferentcategories.For
example,successinthefinancialcategorycanonlybeachievedbydeliveringinth
eothercategories,likedeliveringwhatcustomerswant.
. Therefore,itisbasicallyawebof
interlinkedobjectives.TheobjectivesintheLearningandGrowthPerspectiveandt
he InternalProcessPerspectivesupporteachother.
. Inaddition,theobjectivesintheInternal
ProcessPerspectiveandtheCustomerPerspectivesupporteachother.

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