Bus 400 Sec A
30 October 2007
"Citibank Case Analysis"
Through reading the article titled "Citibank: Performance Evaluation" and performing my own in-depth case analysis, I was able to analyze the issues Citibank California was confronted with and determine possible solutions to help run their business more successfully. Although Citibank is a well-run corporation that made necessary improvements in an effort to gain a competitive advantage over their main competitors, Bank of America and Wells Fargo, a main area that needs improvement is clear: customer satisfaction. As Frits Seegers, President of Citibank California, identified, without improving customer satisfaction, the extreme success that Citibank was experiencing through financial profits, would be extremely temporary. As a result of reading this article and through concepts learned in class and through the text, I have developed some recommendations that may help Citibank in the future.
James McGaran was the manager of the most important of the 31 Los Angeles area Citibank locations and as a result, his Performance Review was perhaps the most important for the expected success of Citibank California. Located in the financial district, the branch had a staff of 15 people, revenues of $6 million, and $4.3 million in profit margin. With a diverse customer base, this specific branch reached many different business people as well the typical home banker. Competition for the branch was extremely intense with competitors branches within a block of McGaran's branch.
McGaran's performance reviews exceeded expectation every single year and he delivered impressive financial statistics in yearly reviews. However, when the company implemented a New Performance Scorecard that measured non-financial statistics for each branch, McGaran's performance was sub-par thus exposing a need for improvement within the customer service department.
Citibank was a niche competitor in the California banking market with only 80 branches compared to the 400 of the biggest competitor. In other words, "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" (p. 76). Like most businesses, customers' expectations rose with their net worth, in addition to providing a greater profit margin for the company itself. While financial measures typically were the way Citibank measured success in the past, they recognized a need to measure customer service as well and thus developed a Performance Scorecard. The six different types of measures the Performance Scorecard evaluated were: financial measures, strategy implementation, customer satisfaction, control, people, and standards. By developing this Performance Scorecard, Citibank believed they could better analyze where each branch needed specific improvements and where each branch was excelling. Citibank felt it was necessary to update the previous evaluations to include non-financial measures because they recognized that these measures may in fact be more critical to the long term success of the franchise. As a result, by adding the non-financial measures to the current measures, Citibank was able to reflect competitive dimensions in the bank's strategy.
After performing an evaluation using the Performance Scorecard, Seegers recognized the need for increased customer service at their most important branch. Through their measurements of customer satisfaction, it was realized that McGaran's branch was sub-par when it came to meeting customer's needs. Without the Performance Scorecard this may not have been realized and as a result, Seegers and his fellow executives can become proactive in addressing this issue.
Recommendations and Case Analysis:
Through my analysis of the article and through the application of concepts we have learned in class, I have developed a few recommendations for Citibank California. For instance, on the performance scorecard, customer satisfaction was rated 55 (26 below the goal of 80) due to short staffing. As a result, I feel as though by spending more time on these internal issues, such as increasing the workforce and spending more time on training, the company can eliminate this issue and focus more on giving individual customers the attention they need. By increasing the staff and spending more time on training, employees will be able to better service customers and thus may increase customer retention. In addition, customer satisfaction could be increased by giving customer incentives in an effort to retain customers as well.
Although I feel as though this company is extremely successful and taking steps to improve their company, I definitely feel as though in order for them to retain profits and to continue to thrive, drastic improvements to customer service must be taken. As Seegers stated, non-financial measures ultimately will decide whether a company succeeds or not. Therefore, because this particular branch is already thriving financially, by improving their non-financial measures as well, they will be able to incur long lasting success.