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Case Anaysis: Balanced Scorecard Approach in a Bank

** Please see the attached files for the tables **

Here's a review of a recent book by Kaplan and Norton, the gurus of the balanced scorecard, that discusses implementation strategies. While the review is interesting in its own right, even more interesting is the wide variety of reactions to it from readers that follow the review; read through them quickly to get a sense of the diversity of opinions surrounding this topic.

Silverthorne, S. (2008). Executing Strategy with the Balanced Scorecard. Retrieved May 17, 2010, from

Armed with your new sensitivity to implementation, you're now better equipped to to look at an example. A few years ago, the journal Strategic Finance published a very interesting case describing the implementation of a balanced scorecard approach in a bank:;col1

Basically, carry out the case analysis described in the article, with some slight modifications to the questions posed in the article, as follows. Your complete analysis should respond to the numbered points below.

Solution Expectations:

What's referred to as "Case A" in the article tracks the initial implementation of the balanced scorecard through the establishment of the first set of objectives for each of the perspectives. As you'll see, Table 2 in the article (p. 57) presents a list of performance measures suggested by bank personnel as intermediaries toward the achievement of the three main financial goals: loan balances, deposit balances, and non-interest income.

The first step is to categorize each of the performance measures in Table 2 as belonging to one of the four perspectives (to start you off, we've put the three financial goals in the table already). Here's a table that you can copy and paste into your solution that might be helpful toward this end (see attached doc 1):

Then, following the procedure described in Figure 1 of the article (p. 58), you are to connect these objectives and measures into two or more causal chains, indicating how the achievement of one objective leads to the potential achievement of another such that ultimately one or more of the financial performance objectives are achieved. You can do this by drawing arrows, or if this is too complicated, by simply specifying the chain in order. As noted, Figure 1 shows one chain; it is highly recommended that you find two others rather than including this one as one of your two. There are numerous possibilities.

For each chain, please include a brief paragraph describing the logic of the chain, and why you see the objectives as connected in the way you do.

Once you've accomplished Case A, then you can move on to the second part of the solution, Case B, which involves looking at the implementation of the balanced scorecard approach and its apparent consequences. There are two sources of information available to you here: Table 3 (p. 59), which lists the before and after performance of each of the branches of the bank, and the interviews with bank personnel in each of the branches where the system was implemented (pp. 57-59). Here's what you need to do to accomplish this part of the exercise:

Review Table 3 in a comparative way and try to decide if there is evidence for the effectiveness of the balanced scorecard approach in terms of improving the key financial measures. Remember, the balanced scorecard was implemented in branches A-E , and not in branches F-J. To help you make this comparison, I have attached Doc 2. The important part is to present a brief but cogent analysis of the relative performance of the balanced scorecard branches versus the branches that did not use the approach, using appropriate comparative numbers to support your argument.

Then, to finish the analysis, review the relative performance of the five implementing branches in relation to the information you have presented in the interviews about how the balanced scorecard was used in each of the branches -- apparently, there were significant differences in implementation, and there are significant differences in the relative performance of the branches (A-E). Briefly describe the relative performance of these branches, and any conclusions you can draw about how the system was implemented in each of them.

Conclude with a brief statement of advice that you might give to the board of the bank about the use of the balanced scorecard overall, and how it ought to be implemented to achieve maximum effectiveness, citing appropriate information and data to support your argument.

-Attach in Microsoft Word - times new roman 12 point
-List references APA format


Solution Preview

Case A
Tri-Cities Community Bank (TCCB) is a successful bank which continues to explore ways to further improve its performance. Chris Billing, the new president of TCCB believes that Balanced Scorecard could be used to boost the bank's financial performance. The CEO however is not very convinced of the potential benefits of BSC and hence Chris has been given a go ahead to implement BSC in five of the bank's branches. The BSC helps an organizational align activities to its vision and strategy, enhance external and internal communications, and evaluate organizational performance in comparison to achievement of strategic goals ("What Is," n.d.). One of BSC's major benefits relate to causal relationship mapping from nonfinancial performance measures to key financial measures monitored by TCCB. Nonfinancial measures of TCCB are classified into Learning and Growth Perspective, Internal Business Process Perspective, and Customer Focus Perspective (Stan, 2001).
Measures of Balanced Scorecard
Internal Business Processes
Customer Service
Employee Training hours

Employee satisfaction
Employee turnover
New Products introduced

Sales calls to potential customers

Cross sells
Customer Retention
Customer Satisfaction
New Accounts
New Customers
Products per Customer

Thank-You calls/cards to new and existing customers
Loan balances
Deposit balances
Non-interest income
New Loans

Employee training hours, satisfaction, and turnover are measures for the Learning and Growth perspective which indicate areas where TCCB should create and improve value. The measures of Internal Business perspective are based on areas where TCCB has an opportunity to outperform others in the market. These measures must be created ...

Solution Summary

The solution involves putting together an analysis about setting objectives for each of the four perspectives, establishing measures and targets for them, and identifying action plans that might put them into effect. The trick in putting things together under the balanced scorecard involves creating "causal chains" linking together the objectives in such a way that achieving one objective makes it possible to achieve another in sequence. Thus, when we have a series of objectives defined for each of the perspectives, we should be able to start with actions to achieve objectives in the learning and growth domain and ultimately achieve objectives in the financial return/effectiveness domain. This solution puts together such causal chains and see how they might work.