Many banks and financial services firms have a far less clear picture of their business, and the factors that will ensure their future success, than they imagine.
Business intelligence software firm Actuate has published a report authored by Bernard Marr, a world expert in Strategic Performance Management and research fellow at the Cranfield School of Management, which reveals the banks’ shortcomings.
The report, ‘Managing Strategic Performance in Banks and Financial Services Firms; From Going through the Motions to Best Practice’, is a comprehensive study on strategic performance management in the financial services industry.
It takes an in-depth look at 15 of the world's leading banks and financial services firms and considers their approaches to performance management to determine where firms are going wrong.
At each company, between two and eight different principals, from managing director to chief operating officer and chief executive officer, were interviewed at length about their performance management strategies.
The report shows that many banks have been lulled into a false sense of security through over-reliance on historical financial information as their guide.
They are failing to measure and manage the likely drivers of future performance - such as reputation, talent, customer relationships and organisational culture.
Distracted by irrelevant and misleading performance indicators, or worse, failing to observe any of these indicators at all (despite being at pains to gather the data) organisations are selling themselves short.
They are charging ahead with new business strategies, says the report, without bringing the rest of the business with them, or ensuring that every part of the firm is aligned with its current goals.
Bernard Marr said, “Despite being overrun with supposedly valuable performance data, many organisations appear to be plodding on regardless of the results.
"Already bloated performance management systems are being further obscured by compliance-related measurements, even though these might have little bearing on the future health of the business, as measured by revenues, profit margins, competitive positioning and customer perception,” he said.
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