BankofAmerica is the nation’s second largest bank, with $37.9 billion (USD) in revenue and 180,000
Consumers or retail customers are its strength among its six customer segments. Of
Bank of America has the most extensive network of branches of any U.S. bank with 5,669 locations
• deposit market share in the United States—9.8 percent;
• active online banking customers—8 million customers;
• small business lender—11,594 loans; and
Performance Measurement Overview and Implementation
refocusing the strategy of the company. most admired companies.” company.”
be the most admired company when it achieves its stated goals for key stakeholders including customers,
associates, and shareholders. Karuturi emphasized that the company’s values focus not only on results,
are critical in the bank’s decentralized environment.
improve processes and expand the customer base. customer retention and places a renewed focus on the voice of the customer. This customer-centric focus
spotlights the customer voice and links all planning back to drivers of customer satisfaction and loyalty.
Karuturi said, “All our strategies, tactics, and goals start from the voice of the customer.”
• Hoshin planning—set direction and alignment across the organization,
• kanri—manage deployment to achieve results,
• Six Sigma discipline—enable execution through excellent processes, and
Hoshin, a Japanese planning process, is akin to a compass, said Karuturi. strategic planning that focuses on the vital few breakthrough strategies and measures for success in the
Hoshin planning is used as the umbrella to integrate fi nancial, personnel,
and risk planning into one strategic plan. business. Using a theme similar to balanced scorecard, Bank of America set its strategic goals and plans
1. Customer: provider of choice—The Hoshin plan benchmark goal for customer delight is based on the
The company focuses on delight rather than satisfaction
2. Associate: employer of choice—The Hoshin plan goal for associate satisfaction is based on best-inclass
benchmarking, at the level that the top companies are performing at.
shareholder return.
BankofAmerica uses kanri, a Japanese performance management process, to manage and achieve its
goals. goals. In the Kanri performance management process, executives review scorecard performance monthly
Six Sigma is viewed as a vital tool in achieving process improvements. Said Karuturi, “Without Six
The company is using Six Sigma
to re-engineer the enterprise-wide core processes, close gaps in Hoshin plan performance, and make
improvements via belt projects.
Benchmarking is another important tool for process improvements. The bank uses benchmarking to
Bank of America initiated its Hoshin planning in June 2001 and by December had a strategic plan
The company started this process at the top level and implemented down through two
levels at fi rst. Concurrently, Bank of America began developing its technology tool for a scorecard system.
Although the bank encountered some challenges getting consistency among the units, Karuturi said
working from the top down, the company produced in six months a Hoshin strategic plan: a three-page
top-down plan that sets the standard for breakthrough performance, with metrics and goals aligned
within the three categories of Hoshin plan. Bank of America continues to refresh these plans on an
annual basis.
corporate level. For example, the customer
metrics include customer delight, market penetration, and productivity through process improvements;
the associate metrics include satisfaction and turnover; and the shareholder metrics focus on shareholder
Driver tree analysis of these top-level metrics is
Unlike other balanced scorecards, the Bank of America scorecard does not include a separate process
category. rather than having a process category for the sake of process, it wanted to link all process improvements
When it began Hoshin planning in 2001, the bank monitored numerous segment process measures
Now process
a productivity measure at the top. This productivity measure is captured in the customer category rather
than shareholder because Bank of America wants to ensure process improvements benefi t the customer,
which reinforces its customer focus. Bank of America also started a process excellence certifi cation so
that, every year, lines of business identify their top few processes on which to focus and strive to achieve
process excellence.
Organizational Support
According to Karuturi, executive support has been key to achieving success. goals are accomplished.
STRATEGIES AND ALIGNMENT OF PERFORMANCE MEASUREMENT
The Bank of America Hoshin planning process is conducted annually and begins at the corporate
level. strategic objectives by business and set breakthrough goals.
The fi nal product is a three-page document. Page one details the vision and three- to fi ve-year goals
and strategies in three categories: customer, associate, and shareholder. initiatives to achieve the stated goals. Page three details
the measures of success on a balanced scorecard. For each strategic objective, Bank of America has one
benchmark.
As a large organization comprised of customer-facing business units, as well as support units (e.g.,
technology, which considers internal businesses as customers) with numerous interdependencies, Bank
objectives.
The Hoshin plan is deployed across the organization by beginning at the top with the overall bank.
strategies and page three goals. page two tactics,” said Karuturi.
At the individual associate level, plans are summarized in a one-page performance plan that outlines
annual tactics each associate must achieve. company-wide Hoshin plan. Pages one and two of the Bank of America Hoshin plan are posted on its
intranet and made available to all associates; page three scorecard goals are made available as needed.
The BankofAmerica Hoshin numbering system, similar to a library indexing system, helps associates
Alignment
In addition to the Hoshin planning process, in which alignment is inherent, Bank of America uses a
metric driver tree to ensure alignment vertically and horizontally. Once company metrics are identifi ed,
then the drivers and enablers to achieving each goal are identifi ed for each metric. As measures cascade
customer delight and associate satisfaction; goals for the Bank of America Spirit Program are incorporated
and assigned accountability on lower level scorecards.
PROCESSES FOR SUSTAINABILITY
The Kanri process at Bank of America is a closed-loop management process.
1. The Hoshin plans set direction and align the organization.
Hoshin tactics that feed back into the Hoshin plans (page two). The management-by-fact report
report and also support performance discussions in step four scorecard reviews.
3. Nested management-by-fact reports, Black Belts, and Green Belts drive results. Project results/
performance show on the scorecards.
4. Scorecard reviews monitor performance. management-by-fact reports.
An executive is accountable for each strategy and metric. Executives conduct monthly performance
A scorecard summary categorizes performance
indicators into green, yellow, and red for review. run charts and status. Executives are expected to closely monitor any metric with a red or yellow status
each of the metrics based on latest data points for actual results and goals. results would show actual results for the fi rst quarter compared to fi rst quarter goals. These results are
For executive reviews,
any metric. Data gathering and reporting is a decentralized process. Karuturi said each business unit leader is
tool, which shows monthly performance (when available) of the top 50 business units.
ENABLERS FOR SUSTAINING A PERFORMANCE MEASUREMENT SYSTEM
When it started its Hoshin journey, Bank of America had good databases for fi nancial reporting but
not for associate or customer reporting. valuable tool for executives. • a central database for all Hoshin customer, associate, and shareholder measures, with performance
• links to supporting documents; and
• performance alignment across business segments and organizations.
Bank of America uses a tool called Panorama Business Views, or PBViews, which Karuturi said is an
• monitors progress on Hoshin metrics (i.e., customer, associate, and shareholder);
• displays easy visual to metrics gaps and successes displayed in red, yellow, and green;
• houses consistent metrics and analysis across organizations;
• links to key supporting documents (management-by-fact reports and Hoshin plans).
Metrics are available for the top 50 units, from the CEO and down two levels. Executives can
review their own scorecards as well as drill down one level. system automatically from the production systems. Customer data has proven more challenging because
metrics come from different sources and often entail manual processes. some quarterly.
The company’s preliminary scorecard reporting system was paper-based—even fi nancial reports—
According to Karuturi, disparities
existed in defi nitions. For example, for the customer delight metric, different businesses were using
different surveys, processes, and measurement schemes. In 2001 the bank’s customer delight rating was 42 percent. 12.6 percent to 10.2 percent over that same time period. that, Karuturi said, adds results in terms of earnings per share growth. Consequently, the company has
Important to its progress and reaching its ultimate customer and process goals, executive commitment
share one or two examples of where Bank of America is using six Sigma tools to improve the process.
3. Train—The Bank of America spirit program entailed massive training, as did the initial Six Sigma
training.
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