Citibank: Performance Evaluation
CASE
“Citibank: Performance Evaluation”
Harvard Business School 9-198-048 rev: October 14, 1999
The Performance Scorecard: a strategic management tool
Frits Seegers, President of Citibank California, is convinced that “in a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy”1. Fulfilling customers’ expectations is a critical issue for the long term business sustainability and profitability. This realization is what underlies the decision of the top management to develop and complete the former Citibank’s performance evaluation system mainly based on financial measures. In 1996, a new Performance Scorecard integrating non-financial measures, including a customer satisfaction indicator, was introduced in order to be used as “a central management tool to implement [high service] strategy and evaluate performance.”2 This is a sign of great willingness from the California Division to broaden its business vision and control. This effort to improve the effectiveness of the organization as a whole is aligned and can be bring closer to the McKinsey 7Ss model. Indeed, “the model clearly emphasizes to managers that the soft side of managing is just as important as the hard side. Peters and Waterman suggested that the 7-S model, which included both soft as well as hard issues, was a more suitable framework than the rational model”3. Frits Seegers has obviously understood that managing people with financial measures only (rational side) would not be enough to guarantee “the long term success of his division”4. All seven of S’s -strategy, structure, systems, skills, staff (people), style, and shared values (culture) – are interconnected variables accounting for effectiveness5 as are the six performance measures integrated in the Performance Scorecard – strategy implementation, financial, control, people, standards and customer satisfaction6.
“Citibank: Performance Evaluation”
Harvard Business School 9-198-048 rev: October 14, 1999
The Performance Scorecard: a strategic management tool
Frits Seegers, President of Citibank California, is convinced that “in a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy”1. Fulfilling customers’ expectations is a critical issue for the long term business sustainability and profitability. This realization is what underlies the decision of the top management to develop and complete the former Citibank’s performance evaluation system mainly based on financial measures. In 1996, a new Performance Scorecard integrating non-financial measures, including a customer satisfaction indicator, was introduced in order to be used as “a central management tool to implement [high service] strategy and evaluate performance.”2 This is a sign of great willingness from the California Division to broaden its business vision and control. This effort to improve the effectiveness of the organization as a whole is aligned and can be bring closer to the McKinsey 7Ss model. Indeed, “the model clearly emphasizes to managers that the soft side of managing is just as important as the hard side. Peters and Waterman suggested that the 7-S model, which included both soft as well as hard issues, was a more suitable framework than the rational model”3. Frits Seegers has obviously understood that managing people with financial measures only (rational side) would not be enough to guarantee “the long term success of his division”4. All seven of S’s -strategy, structure, systems, skills, staff (people), style, and shared values (culture) – are interconnected variables accounting for effectiveness5 as are the six performance measures integrated in the Performance Scorecard – strategy implementation, financial, control, people, standards and customer satisfaction6.