case 3 - Though this performance evaluation does a good job...

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Though this performance evaluation does a good job of incorporating the strategic goals  of the organization in terms of customer service and other non-financial components, it  evaluates the managers based on unbalanced criterion, and fails to recognize  characteristic differences between properties. Performance measurement is necessary to a  company because “[it] is the key to the success of incentive plans [and] it communicates  the importance of established organizational goals” 1 . Last year, a ‘performance  scorecard’ was developed by Citibank in order to communicate these goals more  efficiently. Included in this report are my thoughts regarding the Financial District  branch’s manager, James McGaran, and the new method of managerial evaluation, as  well as my responses to the following questions:  Why has Citibank introduced a new performance scorecard? What are the pros and cons of this new measurement system? Based on my evaluation, what should James receive as a bonus? Why? As an area manager, it is my responsibility to oversee the managers of the branches in my  region. Therefore, my understanding of the posed questions is crucial to my evaluation of  them. Why Has Citibank Introduced a New Performance Scorecard? The introduction of the new performance scorecard was a positive addition to the  organization’s evaluation method because it helped emphasize the importance of our  business strategy: “to build a profitable franchise by providing relationship banking with  a high level of service to its customers” (p.2). Until the scorecard was initiated, the “high  level of service to its customers” was not included in the evaluation of Citibank’s  California managers. Citibank wants one of their primary revenue drivers to be customer  service. In fact, their current focus of the bank is on making it a “key differentiator.”  Though financial measures are important in evaluating the monetary performance of the  different properties, “non-financial measures [are] leading indicators of strategy  implementation,” 1  which, considering the revision of their business strategy, are essential.  In addition to highlighting the company’s objective to differentiate itself through  customer service, the performance scorecard also accounts for several business  components, which help to analyze the successes and failures of individual properties. In  1  Bohlander & Snell. “Pay-for-Performance: Incentive Rewards.”  Managing Human Resources . p.430
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fact, the scorecard is organized very much like the “Service-Profit Chain Audit, (SPC)”  developed by Heskett, et al. in 1994
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