Performance Standards to be Monitored — Introduction
Category: Strategy Implementation
A wide range of standards
The management of a bank, as a consequence of its strategy, is interested to establish a set of standards or benchmarks. By nature, this set covers a wide range of topics.
It goes to indicators about the activity in terms of markets, products and customers, to financial results, profitability and productivity standards. These standards will be more or less important for the bank, depending on the focus of its strategy.
The benefits of establishing performance standards
A good way to be sure that the new strategy is correctly implemented is to find a set of standards able to measure what is practically expected from this strategy. Establishing this set implies an accurate formalisation, always more difficult but very useful, than to simply give a subjective opinion about the results of a strategy.
In the same time, defining a set of indicators can highlights some inconsistency between different targets, and can help to adjust the various objectives. This iterative process ensures that the strategy, its objectives, action plan and the standards to follow-up the results are all parts of a consistent framework.
Various needs of information
The detail of the monitoring, as it will be showed in the next session, depends on the level of responsibility of each person in charge. The general manager of a bank would need synthetic indicators, giving him a good overview of the implementation of the strategy.
On the other side, the manager of a branch would need more detailed and precise information about the branch’s performance, because it is of his (her) responsibility to follow the targets determined in the strategic and action plans.
The situation is the similar for the chief financial officer, who is in charge of consolidating a set of financial standards, and to inform as quickly and efficiently as possible, the top management of the bank about the last trends and possible problems.