Polytechnic of Namibia

Harold Pupkewitz Graduate School of Business

Financial Reporting and Control (FRC910M)

Group 7: Group Assignment: Citibank: Performance Evaluation

Group Members:

Daniel Nelumbu
Nico Mwiya
Saima Angala
Jack. E Eixab
Sem Kalumbu
Eryka Tjiueza

Date: 01 October 2015

Assignment: CitiBank: Performance Evaluation

Table of Contents

1. Executive Summary..................................................................................12

2. Problem Identification and Analysis.........................................................13

3. Statement of Key problems or issues........................................................16

4. Data Analysis............................................................................................16

5. Generation and Evaluation of Alternative Solutions.................................18

6. Decision/Recommendation.......................................................................20

7. Implementation plan for Citibank.............................................................22

8. Conclusion.................................................................................................23

9. Appendices................................................................................................24

10. References...............................................................................................26
 Assignment: Citibank: Performance Evaluation 12

1. Executive Summary

The City Bank of New York was founded on June 16, 1812. The first president

of the City Bank was the statesman and retired Colonel, Samuel Osgood, ownership

and management of the bank was taken over by Moses Taylor, a protg of John

Jacob Astor and one of the giants of the business world in the 19th century. During

Taylor's ascendancy, the bank functioned largely as a treasury and finance center for

Taylor's own extensive business empire.

Citibank management identified the need to include non-financial elements its

employees performance evaluation, and thus caused a change in Citibank business

strategy. They implemented a scorecard to address the strategic objective of the bank

and measure both the quantitative and qualitative measures. The scorecard measured

managers performance in the following areas, financial measures, strategy

implementation, customer satisfaction, control measures, people and standards.

Citibank management understood that the service industry, customer satisfaction is

important to the success of the bank and Frit saw it as a leading indicator of future

financial performance of the bank.

In this case report, we identified few drawbacks that were associated with the

implemented scorecard such as the same scorecard template was implemented across

all the same branches, though different branches have different functions and in

different competitive environment. Different alternatives are identified such as

outsourcing the implementation and of the scorecard, implementing PRISM and using

the SurveyMonkey tool to conduct the customer satisfaction survey. Bothe the PRISM

framework and SurveyMonkey are ideal instruments to solve the challenges that

Citibank experienced, the customer survey and manager performance evaluation.

 Assignment: Citibank: Performance Evaluation 13

2. Problem Identification and Analysis

Citibank had eighty branches compare to its biggest competitor with 400

offices. Citibanks management changed the business strategy to focus more on

measuring non-financial elements, and especially customer service satisfaction.

Customer satisfaction is defined by (Nagel and Cilliers, 1990) as an outcome of

purchase and user, resulting from a buyers comparison of the rewards and costs of the

purchase in relation to the anticipated consequences. These changes in Citibanks

business strategy redirected its attention to measuring performance evaluation across

all its branches and gain its competitive advantage, as the competition was becoming

more challenging. According to Ahmed et al. (2013), the methods chosen and the

instruments use to properly implemement these performance management systems are

crucial in determining whether the organisation will be able to manage it performance

successfully. Below is the SWOT Analysis of Citibank:

SWOT Analysis:

Strengths Weaknesses

Global network Tarnished brand name

Backing of the Citigroup Online operations are geared
Innovative product offering
Comprehensive selection of financial towards US clients
Issues of Corporate Governance
products and services
Strong privacy and data policies
Good Corporate Citizen
 Assignment: Citibank: Performance Evaluation 14

Opportunities Threats

Growth markets Foreign exchange fluctuations

Chinese market Market conditions
Online presence Regulatory forces
Strengthen customer relationships by Competition from other banks

community involvement
Look for acquisitions that are compelling

strategically and financially

Source: www.wikiswot.com/SWOT/4_/citibank.html

Citibank management had a different strategy in California to provide

relationship banking and high level of customer service. (Nagel and Cilliers, 1990)

defines customer service as a deed, a performance or an effort, which if needed to a

product, increase its value or utility to the customer. The change in business strategy,

initiated the implementation of performance scorecard. Proponents of the balanced

scorecard have long suggested the use of no-financial performance measures via three

additional perspectives (i.e. customer, internal business process, and learning and

innovation) to supplement traditional financial measures (Ling and Koh, 2001), (see

figure 1).

The performance scorecard had several drawbacks such as the performance

measuring elements are carrying the same weight and caused an incorrect overall

performance evaluation of the manager. The scorecard also had only three rating

(below par, pa, above par) with the below par rated from 0 74, this rating was too

big and perhaps could reduce it 0-50 rating. Customer satisfaction survey was

conducted on only 25 customers, which is a very small quantity of the total volume of
 Assignment: Citibank: Performance Evaluation 15

customer that visits Citibank. The scorecard was implemented across all various

branches and this was causing misleading information, as different branches operated

in different competitive environments. The performance scorecard was measuring

elements that were outside the scope of some managers, such as James being

evaluated on ATMs performance, 24 hour banking and home banking. The scorecard

was subjective which meant that the performance evaluation was determined by the

branch manager superior, this can easily cause unrealistic performance results as per

the relationship between the manager and their superiors. This sometimes may not

give the real performance result of a manager.

The bank management could not establish a suitable way to rate an

outstanding manager that performed poorly in an important aspect such as customer

satisfaction. Also, some branches did not have enough employees (i.e. one teller was

short in fourth quarter at a branch).

The Citibank was not measuring non-financial measures, they implemented

the scorecard and it will be able to identify non-financial measures. Non-financial

measures are important as they run ahead in comparison with the financial measures,

and thus, the management will be able to determine the future financial implications

and also prepare the company at large for the future.

 Assignment: Citibank: Performance Evaluation 16

Source: Ling and Koh, (2001)

3. Statement of Key problems or issues

As per the analysis of the Citibank case and the problems identified above,

Citibank was not able to properly measure the customer service level satisfaction and

in turn could not increase their competitive advantage. The bank was initially not

measuring the non-financial elements and focused mainly on the financial measures.

4. Data Analysis

The Citibank of Los Angeles was the most performing branch in the California

city and at a certain point they were used as a benchmark for other branches. Although

the branch manager was rated below par, he out performed in the financial measures

because of vest experience in the banking sector. Below are the summary of the

overall performance of the of the banks financials from quarter 1 to quarter 4. The

financial reporting looks at the Actual Revenue versus Targets (see graph 1), Actual

Expenses versus Targets (see graph 2) and Actual Margins versus Targets (see graph

3).
 Assignment: Citibank: Performance Evaluation 17

Graph 1: Revenue
+9

1st Quarter 2nd Quarter 3rd Quarter

The above graph depicts the revenue and the targets that were set by the area

managers and shows that the revenue was growing at compound average growth rate

of 9% from Q1 to Q4.

Graph 2: Expenses

+3%

Actual

Target

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

The graph above looks at the actual expenses and the target, and depicts that

the expenses were kept below the set target this was due to good management and

accountability of the branch manager.

 Assignment: Citibank: Performance Evaluation 18

Graph 3: Margins

+12

Actual Margin

Target Margins

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Although the case study reported that the customer satisfaction rate was poor,

the profit margins of the Los Angeles branch was growing at 12% compounded

average growth rate and the margins were above the set targets.

5. Generation and Evaluation of Alternative Solutions

Alternative 1: Survey Monkey

Citibank can use the Survey Monkey web based software application to

conduct its survey to measure customer satisfaction amongst others. According to

(Knussen and McFadyen, 2010), SurveyMoneky is an online tool that has built in

format for asking questions (multiple choice, true false, open-ended, etc.).

(Knussen and McFadyen, 2010), identified few advantages and disadvantages,

the advantages, it has the ability to track respondents and re contact non-respondents.

Can export data into programs like SAS or SPSS for more complex analysis. Great

tool for attracting large number of respondents and another ethical advantage is that of

the IP addresses are not collected; there is no way of tracing the respondents. No need

to use emails and there is less likelihood of invading privacy

 Assignment: Citibank: Performance Evaluation 19

Disadvantages, survey monkey has few ethical issues. 1. Anonymity; by

default this option is set to Yes. This means that anonymous option is not activated

and user/customers information will be visible. 2. Confidentiality; all survey monkey

users seem to have access to the data from all surveys. 3. Informal consent; its not

possible to provide oral presentation. 4. Right to withdraw and omission of items;

customers cannot withdraw any responses that have been made at the point of exit.

As per the above advantages and disadvantages, SurveyMonkey is a reliable

information gathering tool and inexpensive when conducting survey such as customer

satisfaction. It is able to reach the different customers in different geographical

environments.

Alternative 2: Performance of Routine Information System Management

Framework (PRISM)

The proponents of the performance prism Adam and Nelly (2002), argue that

one of the greatest fallacies of measurement design is that performance measures

should be derived from strategies. It is the wants and needs of stakeholders that must

be considered first and consequently the strategies can be formulated. Furthermore

they submit the advantages of the prism management system are that it considers:

stakeholders satisfaction, stakeholder contribution, organisation strategies, processes

and capabilities and most importantly suitable for organisation which creating

stakeholder value is first priority (Najmi et al, 2011).

 Assignment: Citibank: Performance Evaluation 20

Alternative 3: outsourcing theerformance evaluation to a reputable

company.

Clearly, Citibank does not have the necessary skills and capacity to implement

a proper performance evaluation system they can opt to outsource this project. Key

dimensions that influence the degree of outsourcing are: expertise of vendor, the

environmental stability and physical barriers (Banerjee, 2009). Advantages are; lower

cost, According to Mary Amiti, et al. (2005), firms that have outsourced may become

more efficient and expand employment in other lines of work. Sankalp Pratap, (2014),

has identified these advantages, 1. Cost benefits; 2. Access to innovation and niche

capabilities. 3. Greater focus on core competencies. Outsourcing is seen as an

essential component of a firms competitiveness in the new millennium (Pratap,

2014).

Disadvantages, such as fear of losing jobs and as per Sankalp Pratap, (2014),

in practice, numerous studies have shown that a high proportion of outsourcing

arrangements delivered results unacceptable to the client. Sometimes cost are not

reduced but rather increased. Threat of confidential information revealed to

competitors.

In the case of Citibank, Outsourcing might not be an ideal solution, as the

disadvantages as stipulated above are to high risk. If Citibanks confidential

information is revealed to its competitors, they will lose their competitive edge.

6. Decision/Recommendation

Citibank had two challenges, conducting a properly survey for customers and

implementing a proper performance evaluation system that can include non-financial

measures in its rating or evaluation.

 Assignment: Citibank: Performance Evaluation 21

Its clear that Citibank did not conduct a survey that included a large portion of

its customers, thus causing unreliable results; its recommended for them to use the

SurveyMonkey web-based survey tool to conduct customer satisfaction survey. This

tool has easy to use inbuilt quality survey templates that are designed to produce

reliable and accurate information. With this, Citibank management can use it for

accessing most of its customers all at once and does not need to call the customers

when conducting interviews, and this turn out to be cost effective for Citibank in a

long run.

The recommendation for dealing with the performance evaluation for

managers and include non-financial measures is to use the prism evaluation tool. As

per the above analysis, this tool will be able to identify both the financial and non-

financial measures for each manager evaluated. Citibank changed they business

strategy to include non-financial measures in performance evaluation. Main reason for

this is that non-financial elements run ahead as compared to financial measures, this

will help the management to make calculated and informed decisions for the current

and future business decision. Apart from the technical factors such as number and

type of indicators, data generation architecture, and decision support that PRIMS

assessment comprises, it also includes behavioural and organisational factors that are

influencing performance.

However, since performance evaluation deals with humans the following are

few advises for Lisa, the area manager and management of Citibank. The

management should develop a scorecard or evaluation system that will measure each

branch individually as each branch is in a different competitive environment. Also, as

for the ratings a proper customer satisfaction rating should be established that can be

meaningful and informative to the management and as for the overall rating, the
 Assignment: Citibank: Performance Evaluation 22

management should classify the ratings and not only focus on customer satisfaction as

the overall performance indicator.

7. Implementation plan for Citibank

Implementing the SurveyMonkey is going to cost citibank U$779 per annum

and utmost period 7 weeks and 4 days to complete. The implementation schedule is
as follows;

No Project Phase Responsible Duration Cost implication

. Entity
1 Identify a focal team Lisa and 1 week none
implement the Citibank
surveyMonkey tool management
(mgt)
2 Determine the type and Focal team, mgt
2 weeks none
format of the questions,
what to ask the
customers
3 Identify the Focal team 3 days none
SurveyMonkey
vendor/supplier
4 Procure the Vendor and focal 2 weeks U$ 779
SurveyMonkey tool team, finance (platinum
department version) per
year
5 Edit the templates Focal team, 2 weeks none
survey question to Lisa, vendor
Citibank
recommendations
6 Deploy the Focal team, 1 day none
surveyMonkey vendor
7 Create awareness of Focal team, On-going none
the survey link for the marketing
customers to
participate

Implementing the PRISM will not cost Citibank since it will be done internally
and utmost it will take 2 months and 3 weeks to complete. The implementation
schedule is as follows;
 Assignment: Citibank: Performance Evaluation 23

No Project Phase Responsible Duration Cost implication

. Entity
1 Convene a high level Frits Seegers 2 weeks None
management meeting and
deliberate on the revision
of the performance
scorecard to improve
customer satisfaction.

2 Draft a working / white Lisa Johnson 1 Month None

paper on the intended
revision of the scorecard to
included management
prism and redesign the
scorecard.

3 Prepare a brief for the Frits Seegers 2 Weeks None

Board of Directors on the
intended revision of the
scorecard.

4 Formally adopt a Lisa Johnson 2 Weeks None

resolution to amend the
scorecard.

5 Implementation Lisa Johnson 1 Week None

8. Conclusion

Lisa and Fritz should first talk to James and explain their dilemma and why

they have to give him a par rating, this will prevent losing James as a competent and

excellent manager for the whole company, however giving James an above par would

likely decrease the morale of the other managers. Since Frit has identify the need to

change the banks business strategy include and measure non-financial measures this

will be very helpful information for future planning purposes because the non-

financial measures run ahead of the financial measures, these can be simply put as

qualitative measures run ahead of the quantitative measures. This will be able to

prepare the business for the future in terms of financial implications that may arise in
 Assignment: Citibank: Performance Evaluation 24

the future. This is what Frit has identified and decided to act on it by implementing

the balanced scorecard.

9. Appendices

Appendix 1: Assets/Liabilities of Citibank

Source: Citibank Annual Report, 2008

Assignment: Citibank: Performance Evaluation 25

Appendix 2: Net Income

Source: Citibank Annual Report, 2008

Appendix 3: Prisms
 Assignment: Citibank: Performance Evaluation 26

10. References

Sankalp Pratap, (2014),"Towards a framework for performing outsourcing

capability", Strategic Outsourcing: An International Journal, Vol. 7 Iss 3 pp. 226 252
Mary Amiti, Shang-Jin Wei, Jonathan Haskel and Emmanuelle Auriol Source:

Economic Policy, Vol. 20, No. 42 (Apr., 2005), pp. 307-347

Sankalp Pratap, (2014),"Towards a framework for performing outsourcing

capability", Strategic Outsourcing: An International Journal, Vol. 7 Iss 3 pp. 226 252

Arindam Banerjee, Scott A. Williams, (2009) "International service

outsourcing: Using offshore analytics to identify determinants of valueadded

outsourcing", Strategic outsourcing: An International Journal, Vol. 2 Iss: 1, pp.68 79

Christina Knussen, Angus McFadyen, (2010), Ethical issues involved in using

Survey Monkey
 Assignment: Citibank: Performance Evaluation 27

Imtiaz Ahmed Ineen Sultana Sanjoy Kumar Paul Abdullahil Azeem,

(2013),"Employee performance evaluation: a fuzzy approach", International Journal
of Productivity and Performance Management, Vol. 62 Iss 7 pp. 718 - 734

Khim Ling SimHian Chye Koh, (2001),"Balanced scorecard: a rising trend in

strategic performance measurement", Measuring Business Excellence, Vol. 5 Iss 2 pp.
18 - 27

Pieter J.A. Nagel Willem W. Cilliers, (1990),"Customer Satisfaction: A

Comprehensive Approach", International Journal of Physical Distribution & Logistics
Management, Vol. 20 Iss 6 pp. 2 - 46

www.wikiswot.com/SWOT/4_/citibank.html

https://www.citigroup.com/citi/investor/quarterly/2015/annual-report