Improving Performance Evaluation At Tri-Cities Community Bank (TCCB)

Introduction

Traditionally, companies collect information regarding past transactions. These are then converted to statements which are used for analysis and regulatory requirements. Financial accounting has been revolving around these financial transactions and ignoring qualitative factors that may contribute to a company’s profit. Nowadays, managers recognize the impact of such qualitative factors since these contribute to the company’s future performance.

There are numerous methods today that measure both financial and nonfinancial factors of a company. For this case, we will be focusing on the Balance Scorecard (BSC) since this is the proposed method of Chris Billing to improve performance evaluation at Tri-Cities Community Bank (TCCB).

Given the responses of some branch representatives, it is evident that there is still some room for improvement in the implementation. However, the root cause of problems faced in some branches has yet to be identified. With this in mind, we decided to formulate assumptions and provide an alternative in each assumption for Chris to improve the implementation of a balanced scorecard in the bank. It is emphasized that assumptions were made, as it was not clear in the case where did the implementation go wrong.

For the first alternative, we assume that employees were not involved in formulating performance measures. We deemed that the current measures were inadequate to capture all non-financial measures. Nonetheless, this can be improved if some scorecard measures can be added and the bank can give employees the power to provide inputs in deciding which measures to use.

Next alternative is to improve communication between the top management and employees regarding the purpose of the balanced scorecard and how it works. In this alternative, it is assumed that the scorecard measures are adequate and would not be changed since the assumption is that the employees just did not fully understand the details about the balanced scored. It is important for the management to clearly explain the purpose of the scorecard and help them understand how to achieve their goals to avoid any conflict and minimize resistance to

An important performance measure for this perspective is process time. However, in the bank’s list of performance measures, there is no measure related to process time. Therefore, it would be beneficial for the bank to include process time as one of its scorecard measures. Examples of process times include the amount of time for bank tellers to be able to serve customers and the amount of time to process loan applications. Aside from process time, there is also no measure for loan quality in the list of measures. Simply increasing the number of loan applications and the loan balances is not enough; the quality of the borrower and the loan should also be ensured. A good measure to include in the list would be the percentage of non-performing loans in the loan portfolio of the