Chamical Bank Case
CHEMICAL BANK CASE
Executive Summary
The retail bank division of Chemical Bank was performing a radical organizational transformation into a market-focused and customer-focused organization after the 1991 merger with the Manufacturers Hanover Corporation. The new vision of the bank was to shift its image from a narrow provider of traditional financial services to a broader and innovative provider of superior financial service and advice for targeted customer groups. The objective was to position the bank in order to remain competitive in a very challenging and changing business environment characterized by intense price competition, outflow of deposits to mutual funds, rapid technological change and more sophisticated and demanding clients.
Micheal Hagerty, head of this division, envisioned Balanced Scorecard (BSC) as a powerful tool to achieve the organizational and cultural transformation required by the Retail Bank in order to articulate and implement this new vision, mission and strategy across all levels of the organization. A main objective was to create a performance focused organization.
The process of implementation of the BSC systems proved very successful for the Retail Bank because it allowed managers and overall organization to stay focused on key consumer segments and profitability targets. In addition, the process helped the Retail Bank to clarify its main strategy statements, develop clear and well-articulated business objectives for each business dimension and implement a performance measure system to monitor progress. The final outcome was learning and more unified organization and a deeper understanding of key business value drivers and activities.
The process of implementation posed many challenges that the Retail Bank needs to overcome such as in communication, compensation linkages, information infrastructure, and data reliability to measure performance among others.
Case Background
The case presents an industry facing an
Executive Summary
The retail bank division of Chemical Bank was performing a radical organizational transformation into a market-focused and customer-focused organization after the 1991 merger with the Manufacturers Hanover Corporation. The new vision of the bank was to shift its image from a narrow provider of traditional financial services to a broader and innovative provider of superior financial service and advice for targeted customer groups. The objective was to position the bank in order to remain competitive in a very challenging and changing business environment characterized by intense price competition, outflow of deposits to mutual funds, rapid technological change and more sophisticated and demanding clients.
Micheal Hagerty, head of this division, envisioned Balanced Scorecard (BSC) as a powerful tool to achieve the organizational and cultural transformation required by the Retail Bank in order to articulate and implement this new vision, mission and strategy across all levels of the organization. A main objective was to create a performance focused organization.
The process of implementation of the BSC systems proved very successful for the Retail Bank because it allowed managers and overall organization to stay focused on key consumer segments and profitability targets. In addition, the process helped the Retail Bank to clarify its main strategy statements, develop clear and well-articulated business objectives for each business dimension and implement a performance measure system to monitor progress. The final outcome was learning and more unified organization and a deeper understanding of key business value drivers and activities.
The process of implementation posed many challenges that the Retail Bank needs to overcome such as in communication, compensation linkages, information infrastructure, and data reliability to measure performance among others.
Case Background
The case presents an industry facing an