Bank Of Desert

Bank Of Desert

Issue and Problem Recognition
The results of the consultant group report that Bank of Desert’s performance measures are inadequate. As management, you must now evaluate these results and determine what how to adequately measure performance.
Based on these findings, we have identified three main problems with the current performance plan. The current system is inadequate and does not reward the most successful branches, as they are too narrow. Secondly, employees do not understand the current performance measures. Finally, the performance plan does not correlate with the company objective of customer satisfaction.
In this report, these problems will be analyzed and alternative solutions will be evaluated. We will then conclude with a final recommendation. 
Analysis of Issues and Problems
Performance Plan does not Reward Most Successful Branches
Your current performance plan does not reward the most successful branches in the company. Branches are given targets based on previous year’s results, but do not take into account the potential for improvement. They are also too narrow. Managers will begin to focus their attention only of the two areas of measurement, and ignore all other important areas of success such as controllable expense, customer retention and development of employee skill set. Furthermore, some may focus solely on the sales per full-time equivalent (FTE) per day as this contributes to 75% of the bonus. For example, branch 6254 reach their cross sale target, but surpassed their other target by high levels, therefore leading the branch to receiving the highest rating of all branches, even though they did not meet their second target.
In addition, the target of the number of sales does not correlate to division success. The number of sales does not correlate directly to profit, which is key for BoD success. The branch that is selling the most is not always the branch that is the most profitable. This is evident in branch 992, who was ranked...