Tri-Cities Community Bank Case Study

Tri-Cities Bank MEMORANDUM TO: Tri-Cities Bank; Board of Directors FROM: Chris Billings; SD President DATE: April 11, 2013 SUBJECT: BSC Performance Measurement I have proposed a plan to get what’s best out of our wonderful employees and make Tri-Cities Bank the most desirable bank to host customer’s deposits. It will increase financial performance from the bottom, up. The program is called the Balanced Scorecard (BSC). It works by using four business perspectives and lead/lag indicators and has several performance measures that fall into one of the four business perspectives.
Below is a table that labels which measures I believe would fall into which perspectives for Tri-Cities Bank. FINANCIAL PERSPECTIVE| CUTOMER PERSPECTIVE| INTERNAL BUSINESS PERSPECTIVE| LEARNING & GROWTH PERSPECTIVE| Outstanding loan balances| Customer satisfaction| Customer retention| Employee training hours| Deposit balances| Thank-you calls/cards| New Products introduced| Employee retention| Non-Interest Income| | Referrals| New loans created| | | Cross-sales| Employee turnover| | | Number of products per customer| | | Sales calls to potential customers| | | | Number of new customers| | | | New accounts| | Why each measure placed in its particular perspective? Here is some criteria: Financial Perspective includes the financial objectives of the company Customer Perspective includes ways customers view the company Internal Business Perspective includes actions that must be improved or implemented to improve bothe financial and customer perspective. Learning and Growth Perspective includes ways to craft employees and internal structure to create a better business environment.
CAUSE & EFFECT CHAINS LEARNING & GROWTH INTERNAL BUSINESS CUSTOMER FINANCIAL Employee Training Hours Sales to customers Customer Satisfaction Decreased outstanding loans Employee Happiness Number of new customers LEARNING & GROWTH INTERNAL BUSINESS CUSTOMER FINANCIAL Employee Retention Referrals, Cross-sales Customer retention rate Increase deposit balances New accounts

The cause and effect chains show that begging with “learning and growth” and “internal business” comes customer satisfaction and retention and leads to better financial standing for the Bank. Better trained employees make more sales to customers which leads to satisfaction in those customers. Also, the same employees for long periods makes a home feel and will create referrals from existing customers and will create new accounts. The customers will stay and deposit balances will increase. Analysis of BSC in branches Branch A: moderately effective B: effective C: effective
D: moderately effective E: ineffective Report to the Board of Directors In each branch A-D, the BSC program was implemented as a trail run. Branch A shows to have moderately improve performance as the system was effective. Customer service rep Mary Richards says, “The BSC helps clarify our strategy. ” Branch B also shows to have had a positive effect using the new system. They use it there as a motivational tool to get better at each task. “I think the BSC is being used to encourage us to do better. We are rewarded when we improve” says Glenda Smalley –Teller.
Branch C’s implementation of the BSC showed to be effective. They saw it as a way to clarify the goals of the branch and how to get the most out of the entire branch. “The scorecard taught us how everyone has a part in achieving branch goals by selling, cross-selling, serving as a communication port, and making customers feel welcome” says Mortgage Loan Organizer Debbie Henson. Branch D had a moderately effective result from the trail of the BSC. They saw it as a way of charting growth within the branch. Individual incentives were awarded for better performance.
Customer Service rep Al Taylor stated, “For example, we can earn $50 each month if we meet our individual BSC goals. Our branch president is always looking for better ways to reward us for good BSC performance” Branch E was the only branch that didn’t seem to get a good grasp on what the BSC has to offer. Participation in developing the scorecards wasn’t offered. They didn’t see it as “a big deal” and that tangible rewards aren’t associated with doing well on the BSC. Loan representative Tim Vines exclaims, “It’s difficult to get an idea of our strategy from management.
Maybe what I do helps (or does not help) us achieve our strategic goals. ” Recommendations Branch E may not have implemented the BSC properly which could have made the program ineffective for them. To avoid this problem again, each branch needs to clearly state the objective of the program. Each employee must be able to participate in developing the scorecard. Each goal must be reasonable but also challenging. All of this is up to the branch manager and their job of adding the BSC to his/her branch.