CITIBANK: PERFORMANCE EVALUATION
By Group 8
INTRODUCTION
• Citibank California introduced a new balanced performance scorecard in 1996
• The scorecard includes financial and non-financial metrics
• The critical new metric is the customer satisfaction rating
• James McGaran manages the flagship LA branch
• Delivered outstanding financial results
• Scored "below par" on customer satisfaction in all quarters
Dilemma: Does McGaran deserve "above par" based on financials despite poor satisfaction scores?
The case examines the challenges of a balanced scorecard and aligning incentives.
NEW PERFORMANCE SCORECARD
•Goal was to broaden focus beyond just financial measures
•Consists of 6 performance dimensions - financial, strategy implementation, customer satisfaction,
control, people, and standards
•Each dimension scored as below par, par, or above par
•Quantitative metrics used to score financial, strategy, satisfaction, control
•Subjective ratings for people and standards
•Minimum "par" rating required on all dimensions to be eligible for "above par" overall
•Ratings tied to annual bonus payouts
•Customer satisfaction added as a new critical metric and leading indicator of future performance
• Intended to communicate and drive strategic goals beyond just short term financial target
Advantages Disadvantages
Provides a more balanced view of performance A complex system with multiple dimensions can be
beyond just financial measures difficult to understand
Challenging to weigh financial versus non-financial
Links evaluation to strategic goals and objectives
priorities
Incorporates critical non-financial metrics like Hard to set appropriate metrics and weighting of
customer satisfaction dimensions
Identifies leading indicators of future Customer satisfaction measures can be influenced by
performance external factors like ATM service
The bonus system aligns incentives with desired Difficult to balance short-term results vs long-term
behaviors indicators
Advantages Disadvantages
Improves line of sight between employee Fairness in rating subjective factors like "people" and
activities and strategic outcomes "standards"
Quantitative metrics provide clarity and reduce Has only 3 ratings with below par rated from 0-74,
subjectivity which is a very wide range
PERFORMANCE INCENTIVES
•Annual bonuses for branch managers are directly linked to their performance scorecard rating
• "Below par" on any dimension leads to an overall below-par rating and no bonus
• "Par" overall rating results in a bonus of up to 15-20% of the base salary
• "Above par" rating leads to a maximum bonus of 30% of base salary
•People and standards dimensions are subjective ratings by the branch manager's supervisor
•By tying bonuses directly to the scorecard ratings, Citibank incentives branch managers to focus on and
improve performance across all dimensions, not just financial results
Evaluation of James McGaran’s Performance
Category Evaluation Summary
James has constantly exceeded goals and ranked his branch as the best
Financial
performer in the market, achieving remarkable financial gains.
Strategy He is accomplishing objectives in this area, as seen by his strategy
Implementation implementation scores, which fall between "par" and "above par."
Customer James scored between 54 and 72 during the year, significantly below the desired
Satisfaction 80, for customer satisfaction, earning a "below par" rating.
Strong operational control was demonstrated by the branch, which obtained an
Control
audit evaluation rating of "5."
James has proven to be a capable leader who fosters teamwork and community
People & Standards
involvement, however, these evaluation criteria are arbitrary.
JAMES MCGARAN: PERFORMANCE SNAPSHOT
In Favour Against
Delivered outstanding financial results for his
Below-par customer satisfaction scores
branch - highest revenue and margins in division
Above-par ratings on financial, strategy
Service scores lagging despite strong financial
implementation, control, people, and standards
performance
dimensions
Does not meet the minimum requirement to be
Strong leadership and management capabilities
overall rated as ‘above par’
In Favour Against
The customer satisfaction level improved If James is given an ‘above par’ rating this quarter,
significantly in the last quarter, indicating positive other managers might also expect similar
performance in the future relaxation in the scorecard
PROBLEMS FACED BY JAMES MCGARAN
•Customer satisfaction measures included the services for which the branch was not responsible.
•Diverse customer base, so diverse service quality requirements.
• The customer base was too large, so customization of services as per the requirement of the customer
was difficult.
•Overall customer satisfaction was also hit due to the absence of a teller in the third quarter
RECOMMENDATIONS
•Award par rating to reinforce the importance of non-financial metrics
•Recognize exceptional financial performance in qualitative feedback
•Develop an improvement plan for customer satisfaction
• Implement measures to monitor the adequacy of the customer satisfaction survey
•Set clear expectations to exceed par on satisfaction next year
• If the plan is executed, eligible for above par rating in the next evaluation cycle
A par rating balances rewarding financial excellence while reinforcing the need to improve customer
service. This maintains the integrity of the new scorecard in its first year while providing a roadmap for
McGaran to demonstrate balance on both financial and non-financial metrics moving forward.
Submitted by: Group 8
Akshit Gulati- 24PGHR064
Amisha Ojha- 24PGHR066
Jahnavi- 24PGHR085
Jaskirat Singh Pahwa- 24PGHR086
Prerna Dumka- 24PGHR104
Saumil Goel- 24PGHR108
