Question

Your Neighborhood Community Bank recently decided to adopt a balanced scorecard system of performance evaluation. There is a list of primary performance goals for four major performance categories that have been identified by corporate executives and the board of directors.

Learning and Innovation (improve market differentiation)

Be quicker in the introduction of new products to the market than competitors

Introduce innovation products to customers for enhancement of customer service

Receive recognition in the industry as an innovator

Internal Perspective (improve internal processes)

Enhance employee promotion opportunities

Achieve best practices for processing transactions

Improve employee satisfaction

Customer Perspective (maintain and grow the customer base)

Elevate customer satisfaction

Increase the number of depositors and customer retention

Improve the quality of deposits

Financial Perspective (maintain and grow the bank financially)

Expand customer deposits

Manage financial risk

Generate profits for stockholders

Requirements:

For each of the 12 goals above suggest at least one measure of performance to measure the achievement of the goal.

Address the following questions related to the role of the balance scorecard within an organization like the one described above:

1) How does the Balanced Scorecard help to focus managers’ attention on strategy?

2) How does a Strategy Map support the Balanced Scorecard’s purpose? It represents a cause-and-effect diagram of the relationship among the BSC perspectives.

3) Name and briefly explain how two cost management techniques covered in this course can be used to enhance the customer satisfaction element of the Balanced Scorecard?

Answer 1

Learning & Innovation
Introduction of Products	No. of Products introduced
Innovative Products for enhancement of Customer Service	No. of Schemes Launched & Customer Retention & No. of new Customers
Recognision as Innovator	Market Share in all Major Markets
Internal Perspective
Enhance Employee Promotion Opportunities	No. of employees got promoted
Achieve best practices for processing transactions	Time spent by customers in queuing for processing their payment
Improve Employee Satisfaction	No. of Employee Complaints
Customer Perspective
Elevate Employee Satisfaction	Customer Satisfaction Rate
Increase No. of depositors & Customer Retention	No. of Discount Vouchers Redeemed
Improve Quality of Deposits	% of Customers making Deposits
Financial Perspective
Expand Customer Deposits	No. of New Customers
Manage Financial Risk	Operating Income
Generate Profits for Stockholders	Return on Capital Employed

1. In following ways the Balanced Scorecard help to focus managers attention on Strategy:

• It enables managers to review past and predict future performance.
• It let the managers recognize useful measures.
• It let the managers understand the big picture of enterprise strategy execution.
• It let the managers to translate the objectives and measures into different levels within an organization.
• It empowers the front line employees with the collaborative tools necessary to encourage the swift implementation of improvement initiatives.

3. The two Cost Management Techniques covered that can be used to enhance the Customer Satisfaction element of the Balanced Scorecard are:

• Market Share
• Customer Retention & Customer Acquisition.