Essay on Balanced Scorecard and Customer Satisfaction

Submitted By cgreenwald
Words: 1146
Pages: 5

1. The primary purpose of the balanced scorecard is to set goals for a well-rounded organizational performance. While financial measures are important in analyzing performance, they do not provide any insight into non-quantifiable measures that can be equally important in performance assessment. According to Jerold Zimmerman (2014), “The balanced scorecard is designed to identify Key Performance Indicators used to focus employees towards those actions required to implement the firm’s strategy.” In other words, the purpose of the performance scorecard is to highlight the importance of a diverse set of measures in achieving the strategic goals.
Citibank's strategy in California was to build a profitable franchise by providing relationship banking combined with a high level of service to its customers. Specifically, from Frits Seeger’s point of view, the high service quality strategy and other dimensions were critical to the long-term success of the franchises. As Jerold Zimmerman (2014) writes, “The ultimate objective of for profit organizations is to generate value for the owners…value for owners results from satisfying customers, operating efficiently, and having the infrastructure necessary to accomplish all those activities.”

2. Objective performance measures are those which are directly quantifiable and are not subject to the beliefs and interpretations of the observer. According to Robert Simons’ Performance Measurement & Control Systems for Implementing Strategy, “an objective measure can be independently measured and verified.” Subjective measures on the other hand require interpretation and judgment, and while numerical scores can indirectly be attributed to them, the interpretive element means they are not necessarily absolute or indisputable.
Citibank’s Performance Evaluation Form: Performance Scorecard includes six measures: Financial, strategy implementation, control, customer satisfaction, and people and standards
Financial measures: focused on actual numbers of total revenue, expense and profit margins taken from accounting system.

Strategy Implementation: measures revenues from retail customers (household, business and professionals). Households include new to bank households, lost to bank households, cross-sell, split, merger households and total households.

Control Measures: included audit and legal/auditory measures. Internal control processes were audited by internal auditors for operating losses and fraud losses.
Customer Satisfaction: This measure evaluated responses from customers. This is a subjective measure which is open to interpretation of the evaluator. See Answer 3.
People and Standards: This measure evaluated managers` efforts in training/ development, teamwork, performance management, employee satisfaction, leadership, business ethics/integrity, customer interaction/focus, community involvement and contribution to overall business.

3. The level of satisfaction a customer has with an organization can have profound effects on revenues. Robert Simmons writes on Performance Measurement & Control Systems for Implementing Strategy, “Studies have shown that businesses with satisfied, loyal customers are significantly more profitable over time.” Aside from the monetary benefits, customer satisfaction leads to building brand image, reputation and public trust.
In the case studied, customer service measure was considered by the top management as the most relevant of all measures on the performance evaluation form and a leading indicator of long term financial performance, yet it failed to receive adequate and careful planning.
Several concerns in regards to the measurement of customer service in this case include:
The number of customers (25) chosen for the survey was extremely small for a proper sample and reliable results.
Telephonic surveys might not be as reliable as surveys conducted face to face at the bank branch.
Questions on customer satisfaction survey