Consider how leading companies in other industries produce sustained high performance. Most start with a formal Strategy Statement with Vision, Mission and Value Statements, and then develop a plan to fulfill the strategy. The plan is usually based on a performance model, like the Balanced Scorecard, Six Sigma, Economic Value Added, and other models. We can say, “That doesn’t apply to us,” or “Only the big companies can do that.” But it does apply to mid-market banks, especially when a good plan and solid execution are required for survival.
A growing number of banks are beginning to use some form of a Balance Scorecard as the basis for developing plans and measuring leading and lagging performance indicators. Lagging indicators are the results we want to see: EPS, Account Growth, Net Income, Asset Growth, etc. These metrics are directly impacted by leading indicators, the business processes that nurture and produce the lagging indicators of growth and profitability. Leading indicators include, but are not limited to: Customer Contacts (e.g., calls, letters, events and meetings), Customer Satisfaction, Associate Satisfaction, Account Attrition Rate and others.
It is an iterative process to define strategically aligned goals and objectives, implement strategic initiatives with business process and outcome metrics, measure activity, analyze results, make adjustments, set new goals and re-execute the plan. If we do this annually, we will all be long dead before any real progress is achieved. Performance Management must be ongoing. Leading Performance Indicators must be measured daily and analyzed weekly to maintain high productivity. Lagging indicators are traditionally measured monthly.
Rather than try to put all my thought into a single message, I’ll submit this for your consideration, and submit additional thoughts about Banking Performance Programs - and Banking Performance Analytics - in subsequent messages.
Comments and challenges are invited and encouraged.