The Zonal Manager of a new generation commercial bank, who had recently assumed charge of the zonal office, was facing a real problem. Seventy five branches operating in metropolitan/urban areas and 60 branches operating in semi-urban areas reported to her. While all the branches were making profits, some of these had been historically reporting very high absolute profits, but not showing much Year on Year (YOY) increase in percentage terms. Other branches which were opened, being relatively new, generated tremendous increase in liability products without displaying a matching increase in assets; while still others were reporting a substantial increase in credit deployment and increase in interest income without generating adequate deposits. NPAs were still relatively high in a few branches, largely for historical reasons, despite heroic efforts made by the present branch incumbents to reduce the figure of delinquent loans through recovery, compromise and write-offs. Three branches showed significant increase under `non-interest' income, but had little else to write home about. Customer service was rated as `excellent' in only about 90 branches, while it ranged from `good' to `fair' in the rest.
The time to judge the performance of the branch managers was drawing closer and the management had instructed her to rank their performance in a descending order with a view to ascertaining which branch manager should get a promotion and/or variable incentives and/or foreign posting or be reprimanded or replaced forthwith, etc. It appeared that all were performing well in some area or the other. However, the task of developing a common denominator to appraise and compare their overall performance, so that a fair ranking of performance could be attempted, appeared to be daunting. The Zonal Manager's dilemma arose from her belief that the figures of branch-wise profits and profitability alone did not always adequately reflect the true picture as the transfer price mechanism distorted the picture from year to year. Merely comparing actual performance on the business front with the targets set too, did not meet her demanding requirement and she was keen to develop a more objective, rational, number-driven performance indicator. Her senior colleague, who had recently attended a management convention, suggested that she should look at the increasingly popular Data Envelopment Analysis (DEA) technique.
|
