Balanced Scorecard for bank/Investment Bank

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Aligning HSBC Investment Bank to its strategy

The investment banking and global markets division of HSBC was
focused on delivering enhanced shareholder value through a ‘managing for
value’ initiative. However to achieve these challenging targets the
management team knew that they must ensure that all the organisation’s
resources, including its people, were firmly focused on delivering its
strategy. Penna Consulting helped through the use of cascaded balanced
scorecards, to make this a reality.

HSBC

A well-respected global, full-service
financial services institution with over 130,000
employees operating in over 72 countries. It has a
reputation for prudent management and strong
performance. It has expanded widely, with strong
operations in the Far East, Asia and Europe.
The situation

The leadership team of HSBC’s investment banking
and global markets division recognised that it
needed to better align the activities of its employees
with the MFV concepts and the strategy of the
overall bank.
The Chairman realised that to do this he needed a
clear way to engage his employees and ensure that
their contributions fully supported the objectives of
the business. This required two key changes to the
way he ran his division:

• to ensure that all business units within the
division aligned their activities to the overriding
imperatives of the bank
• to demonstrate that the division was effectively
contributing to the overall success of the bank
Previously, Penna Consulting had worked with the
Equities department within the wider division to
create a set of scorecards that identified the linkage
between their activities and the overall achievement
of divisional strategy.

This had been very successful and the chairman
decided to roll the concept out throughout the
division as a result. Penna Consulting was again
asked to help support this process and to ensure
that the right level of alignment was achieved.

Why Penna used the balanced scorecard

Penna chose the balanced scorecard as the
mechanism to create this alignment because it
focuses attention on the critical measures that
determine achievement of organisational strategy.

In essence, the scorecard is a tool that helps
organisations manage their businesses more
effectively and more in line with their strategies.
The combination of measures on the scorecard is
specifically chosen to provide information on the
progress towards achieving its strategic
imperatives/ objectives. In this way it aligns
organisational activity to achieving success in the
areas seen as being most important to the
organisation.

These measures are spread over four quadrants:

1. Financial measures - how well the
organisation is meeting its financial objectives
2. Customer measures - whether the
organisation is adding value to its customers
3. People measures - whether the organisation
has the staff capability to support the present
and future needs of the business
4. Process measures - how well the
organisation is managing risk and protecting its
assets and measures the effectiveness of the
process capability.

Targets are set against each measure to identify the
level of performance that must be achieved.
The Scorecard, for ultimate effectiveness, should be
cascaded from the corporate level to divisional or
departmental scorecards and then on to team and
individual levels. In this way, all performance is
aligned to achieving the overall strategic objectives.

At the organisational level there is ‘line of sight’
between all activities and overall objectives. At the
individual level linking performance to the Scorecard
will determine, manage and monitor their
performance in relation to what the organisation
requires to be successful. This ultimately has a
positive impact on the development of the
individual’s capability and the enhancement of the
organisation’s performance.

Using the scorecard can help organisations to:

• communicate their strategy to their people
• ensure activities are aligned to overall
objectives
• use the scorecard to measure, monitor and
manage performance of the organisation, team
and individual
• deliver their objectives through a managed
process.

What Penna did

As with all major change management assignments,
the delivery of the scorecards has to be done ‘with’
rather than ‘to’ the organisation. To this end a joint client/consultant team ws created with
responsibility for rolling out the planned 500
scorecards.

The team was assembled together and Penna ran a number of
sessions to introduce the concept of the Balanced
Scorecard, explain how it would be used and
describe the tools that were available. Each team
member was given responsibility for a particular
department, function or team. In this way team
members became advocates and champions of the
project.

Every member of the team was provided with a
‘toolkit’ that outlined what he or she needed to do to
roll out the process in his or her own function.
A central team which controlled and managed the
process also provided support. This team was
responsible for ensuring that quality and consistency
was maintained and that alignment to the overall
organisational objectives was achieved.

The team worked hard at getting senior managers
involved and ensuring that the created scorecards
were ‘fit for purpose’.

The results
Over a four month period the joint team worked in
over 23 different areas of the business, producing
over 500 strategically aligned scorecards. Many
gave individuals, for the first time, the opportunity
to see how they could directly contribute to business
performance.

There was a greater understanding of how the
business fitted together and the project created a
platform for future cascades to all individuals in the
business.

The joint team worked very well together, learning
as the project progressed. The internal champions
were able to act as owners of the process and
ensured that their senior teams were fully engaged
with the concept and its benefits.

Introducing balanced scorecards made a significant
change to the way that the investment banking and
global markets division operated. It helped the
Chairman to clearly demonstrate to the HSBC board
the value that his area made to the business. It also
gave him the right mechanism to align his people to
the overall business objectives.

Ultimately, this helped the division gain ‘line of
sight’ and support for delivering shareholder value.
For further information:


If you would like to discuss and know more about this case study you can contact
corporate@penna.com

Website: www.penna.com


Reference
http://www.e-penna.com/casestudies/Case%20study%20-%20HSBC%20-%20Web.pdf