Banks R Us Strategic Performance Management - Case Study Example

?Case study of ‘Banks R Us’ Strategic performance management encompasses the process of systematically steering an organization in line with its mission, aims, and strategies. Key performance signs and vital success factors are used to measure strategic performance. These performance measures also help in identifying corrective actions. Besides setting the near-term direction for an organization within budget constraints, the management is also responsible for setting the long-term strategic goals of an organization. Strategic performance directly influences strategic goals; hence, it is even more critical to an organization’s success. On the other hand, operational performance management is defined as the alignment of all business units / functions of an organization to accomplish core business aims of an organization. Organizational performance is measured against standard rates of effectiveness, productivity, efficiency, regulatory compliance and other such indicators. Banks R Us had primarily focused on deposits, withdrawals, and loan facilities by creating brand loyalty. It thrived by providing a low fee as well as a highly personalized realm of banking services. Nonetheless, the low profit margins prevented large-scale growth for the bank. However, with escalated financial competition and emergence of Internet banking, the strategic performance of Banks R Us deteriorated. This is evidenced by a downfall in market share and operating profits. Thus, new strategic goals and plans are being established in order to enhance strategic performance once again. The new strategic goals are two-fold: to widen the current customer base by provision of a variety of financial products and to reduce transaction costs for all customer segments. Strategic goals can be accomplished through successful strategic performance. The success of strategic performance lies entirely upon improvement in operational performance. Therefore, the new strategic aims should be broken down into operational aims to make them more practicable and simpler to implement. Strategic performance would then revolve around these new strategic goals by attracting customers towards knowledgeable advisors who can provide a broad range of financial products, besides the traditional savings, withdrawals, and loan facilities. As more and more customers are provided customized services, the inflow of cash to the bank is expected to increase. In addition, the introduction of Internet banking as currently servicing 80% customers is unprofitable; hence, strategic performance is poor and needs improvement in this area too. Moreover, strategic performance needs to be focused on changing the previous image of Banks R Us as a transactions processor of cheques and deposits to a novel image of an excellent financial advisor. The basic contention is to make the bank as attractive as possible to existing customers as well as potential customers. The bank lacks ‘good advertising, good location, and word of mouth’ as quoted by general manager of operations, Pamela Andrews. Therefore, strategic performance should take the marketing aspect of banking into account. Banks R Us needs to transform the perspective of customers of not being a ‘logical source for products like managed funds, superannuation funds, insurance and financial advice’. Operational performance should involve advertising through various channels, employment of financial product specialists and provision of advisory services to build customer confidence and alter the previously held image. Industry data has revealed the existence of two market segments. The first are interested in the lowest priced personalized services of standard financial products such as savings, loans and withdrawals. Market statistics suggest that Banks R Us’ strategic performance is appreciable in this segment; however, slowly they need to encourage these customers towards Internet banking for reaping even greater profits. The other market segment comprises of customers interested in purchasing all kinds of financial products from a single bank at the cost of a high fee. Thus, strategic performance would focus on Internet banking and provision of a broader range of financial instruments. In this fashion, Banks R Us would be able to capitalize on high volume low fee customers as well as low volume high fee customers. Moreover, industry research indicates that both customer segments want error-free, reliable, and hassle-free services; thus, operational or everyday performance should focus on these demands. If operational expectations are not met by Banks R Us, there is little hope for its survival in the longer run against rising competition. Furthermore, strategic performance would also involve shifting the prevalent reactive organizational culture towards a more initiative based one. Operational performance would then include training the frontline staff to attain a better understanding of the new customer base and become skilful to sell a vast array of financial products. Under the new culture, staff will not help when asked but instead market products. Lastly, but most importantly, the organization’s strategic goals and performance would be largely dependent on transforming the information systems. Bank R Us needs to employ latest information technological banking systems in order to keep up with foreign competition. The need for revamping the current information systems is also necessitated by the inadequate market research. Operational performance would then focus on employing new staff, dexterous in Internet banking, which would be able to train customer service representatives. Moreover, the shift towards technological culture will cause dissent and insecurity amongst staff, which needs to be handled by establishing appropriate working conditions and offering various incentives. This would be an area of operational performance for human resources department. Although, most organizations focus on improving operational performance, but strategic performance is in fact more crucial to organizational success. Strategic performance has a direct bearing on accomplishment of an organization’s strategic goals (Kaplan & Norton 2004). Unlike scoreboards that concern with operational detail, strategy maps are an effective tool to ensure success by capturing, communicating, and managing strategy better. It translates the management team’s planning and focus in an easy to communicate manner by explicitly delineating how each step in the strategy will bring about the required change. Essentially, they elevate the level and quality of ideas by organizational management by discouraging solo thinking. Management comes together to focus on the overall strategic aims and organizational success instead of operational aims and functional success (Armitage & Scholey 2006). Strategy Map References Armitage, HM & Scholey, C 2006, 'Mapping mavens:how private and public companies gain from strategy mapping. (Business Strategies)', CMA Management, vol 77, no. 3. Kaplan, RS & Norton, DP 2004, Strategy Maps: Converting Intangible Assets into Tangible Outcomes, 1st edn, Harvard Business Press, Boston. Read More