Citibank Performance Evaluation Case Study

Case Study - Citibank Performance Evaluation

Joe Barfield

Jack Welch Management Institute

Dr. Deloris Willis

JWI520

July 31, 2016

Read the “Citibank: Performance Evaluation” case. Assume that you are Lisa Johnson. Write a 4-6 page paper in which you:

1. Complete Exhibit One to evaluate James McGaran’s performance.
2. Describe the approach you would take in your performance feedback session with James. What would you say, in what sequence would you say it, and what information would you reference to back up what you are saying?
3. Assume that as a result of your extraordinary performance in this course, Citibank California has employed you as a consultant to improve its performance evaluation system. Discuss what changes in their processes and procedures you would recommend.

Relationship Banking

    “ Is financial services in which a bank attempts to meet a customer's needs with a complete package of facilities”  The package may include but not limited to most or all of services such as cash management, credit cards, deposits, loans, money market investments, etc., that may be summarized on a single bank statement.

     What is the new Performance Scorecard? While financial measures typically were the way Citibank measured success in the past, they recognized a need to measure customer service as well, and thus developed a Performance Scorecard. The six different types of measures the Performance Scorecard evaluated were:

• Financial
• Strategy Implementation
• Customer Satisfaction
• Control
• People standards

     Citibank felt the need due to the shifting in the markets and stiffer competition it was necessary to update the previous evaluations to include non-financial measures because they recognized that these measures may in fact be more critical to the long term success of the franchise. As a result, by adding the non-financial measures to the current measures, Citibank was able to reflect competitive dimensions in the bank's strategy.

KPI Customer Satisfaction

     Customer satisfaction indicator was important not only for meeting ever-increasing expectations of highly-sophisticated clients, but also for achieving strategic goals of the division, and staying competitive. Citibank’s current strategy focused on customer service as a key differentiator. Hence, Customer Satisfaction measure is considered as critical to the long term success of the bank, as well as a leading indicator of future financial performance. If customer satisfaction were to deteriorate, it was only a matter of time before it showed in the financials. There are some gaping holes in the process used to determine the Customer Satisfaction Score and in the way the scores are being used Customer ratings for the branch include centralized services such as 24 hour banking, home banking and ATM machines. These services are not a part of the branch, and therefore should not have been included in the survey Customer survey conducted among a sample size of 25 customers is very small. There is a strong possibility that it may lead to biased results.

     The implementation of Customer Satisfaction metric is generic for the California Division. But the Financial District Branch in Los Angeles is unique and has a very specific set of clients. Because these clients demand careful personal attention, the normal rules of the performance scorecard do not apply to this branch the use of telephone for surveys may not be the best idea. Generally limited to a maximum of about 15 minutes, the longer a phone survey continues, the more people will "drop out" and not fully answer all the questions. Questions must be simply and clearly stated. Since those responding cannot see or read the questions, complicated or long questions are not appropriate for telephone surveys. So we will not get a comprehensive overview of customer satisfaction.

     After joining Citibank James McGaran went through a series of quick promotions to become Manager of largest and toughest branch in the division within seven years. Despite a highly diverse demanding customer base and stiff competition in face of two competitors, James delivered outstanding financial records for four straight years in a row. Even with limited staff of (15) staff members branch revenues and profit margins were high. He successfully operated the most important, challenging branch among the 31 branches in the division and enjoyed a sense of accomplishment in his job. Because James was operating in the financial district, a large percentage of his clientele consisted of business and professionals who demanded very high service quality. Citibank was a niche player in California and its strategy was to build a profitable franchise by providing relationship banking combined with excellent customer service.  

     In 1996, the growth in balances from business and professional customers increased $34.8 million. In fact, James’ financial performance had exceeded expectations year after year since 1992. All this would not have been possible if the customers did not receive satisfactory service at this branch. James faced competition from Bank of America and Wells Fargo, who also provided relationship banking services. If the customers were unhappy with the services at Citibank, they would have switched to these competitors. But their continued business and a year-upon-year addition of new business proves that the customers were more satisfied than the scores indicate.

President of Citibank Frits Seegers saw customer satisfaction as a leading indicator of future financial performance, and if this metric were to deteriorate, it was only a matter of time before it showed in the financials. But according to the financials, the monetary performance of the bank kept on growing. Had the customers not been satisfied, this would not be the case. Moreover, James laid a lot of emphasis on his ratings. It was a matter of pride for him to be the best. He worked very hard to improve his customer satisfaction ratings during the last quarter. James was extremely committed to the goals of the bank. It is highly unlikely that he may have overlooked something as crucial as customer satisfaction.