PROJECT REPORT

ON
BALANCE SCORE CARD
IN BANKING INDUSTRY

Anshul goel

CONTENTS
1. CHAPTER 1 Introduction Balance Score Card Framework Functions Implementation Limitations Solutions 2. CHAPTER 2 Survey of literature 3. CHAPTER 3 Research Methodology Need of the study Objectives of the study Scope of the study Sample technique Statistical tool Limitation of the study Future scope of the study

Chapter 1

Balance Score Card

Among the newer techniques used to measure the performance of an organization is that of the balance score card. Balance score card is considered as A set of measures that gives top managers a fast but comprehensive view of the business. It includes financial measures that tell the results of actions already taken. And it complements the financial measures on customer satisfaction, internal process and organizations innovation and improvement activities operational measures that are drivers of future financial performance.1 In 1992, Robert S. Kaplan and David Norton introduced the balanced scorecard (BSC), a method for measuring a company's activities in terms of its vision and strategies. It gives managers a comprehensive view of the performance of a business. They developed an innovative and multinational corporate performance scorecard known as balanced scorecard. It compels the firm to align its performance measurement and controls from customer perspective and investigate their financial index.2Balanced scorecard among the newer technologies used to measure performance of an organization is balance scorecard. It is considered as a set of measures that gives top managers a fast but comprehensive view of business. It is a strategic management system that forces managers to focus on the important performance metrics that drive success. It balances a financial perspective with customer, internal process, and learning & growth perspectives. The system consists of four processes:1. 2. 3. 4. Translating the vision into operational goals; Communicate the vision and link it to individual performance; Business planning Feedback and learning and adjusting the strategy accordingly

Framework
The BSC provides a framework, which encourages the use of financial and nonfinancial measures of performance, allowing the organization to pinpoint its strategic objectives. The balanced scorecard (BSC) framework is a system that measures both current

performance of the firm and drivers of future performance. Specifically, the BSC framework seeks to identify the critical economic activities of the company that generate current and future cash flows and to build a causal model of the process by which the company generates profits by focusing on both financial and non-financial indicators of firm performance. The balanced scorecard approach involves identifying the key components of operations, setting goals for them, and then finding ways to measure progress toward achieving those goals. Taken together, the measures provide a holistic view of what is happening both inside and outside the organisation or operational level, thus allowing each constituent of the organisation to see how their activities contribute to attainment of the organisation's overall mission.Such a system of measures is therefore driven by a strategy where success is defined and a method of achieving it is established. Management works out how to monitor progress and establishes the investment needed to make this self-sustaining .The framework is based on the premise that those properties of the financial accounting system such as conservatism, transaction emphasis, and dollar base unit of measurement, prevent it from measuring the key activities of the company adequately. Rather, Kaplan and Norton suggest supplementing the traditional

financial measurement system with non-financial measures of customer relations, internal business processes, and organisation learning and growth in order to specify what the organization expects to receive from and give to the various stakeholder groups in exchange for those groups continued contribution toward the organizations pursuit of its objectives. Figure 1 identifies relationships and premises of the BSC. The BSC is explicitly based on the growing acceptance of two related premises. The first is that future success involves providing superior value to customers, employees, and shareholders. The second is that attracting shareholder funds, employee talent, and customers are the three fundamentals of sustainable competitive advantage and superior returns to investors .Within the BSC framework, four perspectives - financial, customer, processes and learning and growth - represent the views of four essential stakeholders in any business.

All stakeholders have choices - shareholders can sell stock; customers can buy from another provider; and employees can work for another company. If value is created for each of these three essential stakeholder groups, the company will be more likely to produce superior return for investors for a longer period A company can ignore the expectations of one of its

stakeholders and still succeed in the short run. But in the long run, the business cannot ignore any of these stakeholders. This is because all three stakeholders are interrelated. Employee

attitudes and behaviours impact upon the level of customer satisfaction and retention, while customer Finally, options, attitudes shareholder or further and behaviours influence shareholder satisfaction through and retention. stock

satisfaction investment

affects employee

satisfaction

bonuses,

in employee growth and development . Although the

selection of relevant performance measures will depend upon the specific situation facing each company, the BSC is perhaps most groundbreaking in stressing the necessity of both financial and non-financial indicators and putting them on a more or less equal footing.

The financial perspective, as reflected in financial measures, is the most

traditional and still most commonly used measurement tool. Financial measures are valuable in conveying the readily measurable economic consequences of action already taken. Financial measures are typically focused on profitability-related measures (the basis on which

shareholders, in turn, typically gauge the success of their investments), such as return on capital, return on equity, return on sales, etc., These measures are necessary for any organisation trying to measure performance for a number of reasons. First, reporting of financial measures is expected and governed under law. Second, reporting of certain types of financial measures of firm performance is required by institutional bodies.

The customer perspective typically includes several core or general

measures derived from the desired successful outcomes of a well-formulated and implemented strategy. These core measures may include overall indicators such as customer satisfaction, customer complaints, customers lost/won, sales from new products, and on-time delivery. Measures related to customers include results from customer surveys, sales from repeat customers, and customer profitability. The customer perspective is a core of any business strategy which describes the unique mix of product, price, service, relationship, and image that a company offers..Of the four BSC perspectives, the customer is at the core of any business and is crucial to long-term improvement of company performance point out the customer-based virtuous circle, whereby investment in employee training leads to improved service quality; which in turn results in higher customer

satisfaction leading to increased customer loyalty, which boosts revenues and margins

Internal business process

the business unit.

measures relate specifically to the operational processes of

Internal business process measures represent the perspective of the

operations management within the BSC model. The internal process perspective is based on the notion that to satisfy customers and earn a financial return, the business must be efficient and effective at what it does. The internal process measures are typically

based on the objective of most efficiently and effectively producing products or services that meet customer needs.For example, such measures may include order

conversion rate, on-time delivery from suppliers, cost of non-conformance, and lead-time reduction .

Learning and growth measures represent the employees as part of the four pillars used
to measure performance with the BSC framework. The innovation and learning perspective is all about developing the capabilities and processes needed for the future. In the banking industry, for example, for a business to succeed not only must it effectively carry out daily transactions but it must also continually improve in terms of the value and cost of its offerings. This innovation process can be measured in a variety of ways.These may

include the speed of transactions, or the number of people involved in a particular transaction, etc. Again, the choice depends on what is critical for the success of each particular business.11 Acknowledging that performance measures relating to learning and growth are the most difficult to select, Kaplan and Norton suggest measures of employee capabilities, information systems capabilities, and employee motivation and empowerment as examples.declining margins and increasing competition.

Functions Of The Balance Score Card In Real Life Situations

Balance score card has received tremendous application as a acomprehensive multifaceted solution to the day to day business management problems in the U.S.A ,U.K,Japan and other various economically developed countries and the wave of its wider application has also reached over India. Some of the highly professionally managed Indian corporates are also practicing the theory and application of the balance score card and reaping the benefits of the balance score card system of corporate management. The functional map of the balance scorecard may be represented in the model as shown below Fig 2 - How does the balance scorecard function in real life situations

Financial prospective
Goal Survive Succeed Measures Cash flow Growth in sales &operating income

Customer prospective
Goals
New product Responsive suuply Pererred supplier purchases Customer partenership

Measures
Percent sales from new service On-time delivery Share of key accounts Co-operaive efforts between the firm and the customers

Prosper

Increased market share and return on equity

Innovation & learning perspective Internal business perspective

Goals Goals Measures Technology leadership Reduction in cycle time Manufacturing learning Product focus Percent of products that equal 80% sales Time to market New product introduction vs. Process time to maturity Time to develop next generation Measures

Technology capability Manufacturing excellence

Measuring geometry vs. competition

,improvement in quality,reduction in unit cost ,increase in yield

Design productivity Introduction new product of

Silicon efficiency engg. Efficiency

Actual introduction schedule vs plan

competition

Implementation Of Balance score card

The balanced scorecard has made a fundamental contribution to the organization achieving many of its original objectives as both as strategy map and strategic management system. it links three strategic themes to strategic objectives and on to selected strategic measures.14Applying BSC generally begins with an articulation of corporate strategy by top management, followed by a rough sequence of implementation steps: Devising the measure: List the measures that gauge the most critical factors of success. Pinning down causal linkages: Choose measures that fit in a chain of cause-and-effect relationships to come up with a concrete logic for creating value. Cascading the scorecards: Once top managers have devised a scorecard for organization as a whole, the next job is to devise complementary scorecards for each unit.

Linking to compensation: Pay employees for achieving goals by linking BSC measures to pay. Preparing the information technology infrastructure: Prepare the information. Organize data gathering and reporting to match the logic of the BSC. Prepare the technology. Configure and manage the components of systems appropriate to create an integrated system. Obtaining and using feedback: Conduct periodic meetings and evaluations to provide feedback and support continuous improvement.

Limitations of the Balance Score Card

Financial measures alone are seen as having serious limitations, foremost among them being that they are backward-looking. But, many non-financial measures,

including elements such as customer satisfaction and employee attitudes, can have similar drawbacks, particularly those non-financial measures, like service error rates, which are lagging indicators .Similarly, the effectiveness of the BSC will suffer if the included non-financial measures are not linked to or aligned with the firms strategic objectives. Scorecards built upon lagging, non-strategic indicators represent only a limited application of the full power of the BSC.The BSC is also weakened if too many performance indicators are included, and some researchers have noted a

tendency for the number of performance measures to increase over time with the resultant risk of weakening the critical link between performance measures and organisational strategy BSC can be ineffective or even potentially damaging if it becomes a balanced brainstorm or grab-bag of ideas to satisfy each constituency independent of common strategic objectives or, even worse, as a set of scorecards", pitting different and sometimes conflicting indicators against each other and on an equal footing. 70% of attempts to implement BSC fail. Management behaviour, which the BSC is intended to influence, is often also its undoing as managers may feel threatened by the increased spotlight and greater transparency provided by the BSC framework .The BSC often fails to achieve its goal when it focuses on trying to balance conflicting stakeholder interests or when it acts as a management scorecard . In this case, the BSC ceases to become a focused operationalisation of a coherent strategy. Instead, it has a tendency to become a list of indicators reflecting the

preferences of each stakeholder. This may sometimes have the effect of pitting the interests of stakeholders against each other. In extensive criticism of the BSC, is that the BSCs four pillars do not take account of all of an organisations stakeholders,

that it does not take account of competitor actions, developments in technology or, for that matter, any unexpected event, which makes it static rather than dynamic and thus fails to establish a basis for continuous improvement. This would be especially hazardous in environments classified as uncertain where there is a clear need for organisations to be flexible in meeting unexpected demands . Balanced Scorecard is only a conceptual model and it is very difficult to elaborate this based on the methodology provided by Kaplan and Norton without previous thorough practical experience.

Chapter 2

Literature review

Balanced Scorecard is a management system, not just a measurement system that enables organizations to clarify their vision and strategy and translate them into action. Balanced Scorecard provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the Balanced Scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise.Balanced Scorecard has emerged as a proven tool in meeting the many challenges faced by the modern organization. One should understand the importance of Balanced Scorecard as a very mighty tool. The Balanced Scorecard framework is a good place to start allowing you to align and support key processes and to translate strategy into operational objectives, measures, targets and initiatives.1Surveys undertaken by various agencies, institutions support the BSCs potential applicability to company performance in a wide range of business sectors . Survey of Balance Score Card conducted by American Management Asociation One study, conducted by the American Management Association, showed that out of 203 companies organizations that are "measurement managed" rank in the top third of their industry. According to them Balanced scorecard is an effective technology for measuring and monitoring organizational performance. It enables the assignment of KPIs and provides the ability to track and optimize performance based on those indicators. KPIs are measured based on a set of metrics that consider multiple interdependent perspectives , and they help organizations balance their focus on more than just the "bottom line." This

approach ensures that customer service, employee satisfaction, and sales and marketing are weighted appropriately, resulting in well-rounded and successful companies.

Tob Hatch,BPM Domain Specialist Hyperion Solutions In survey research conducted by Toby Hatch,BPM Domain Specialist Hyperion Solutions in April 2005 researcher told the benefits of balance score card and conducted online score card study and explain the issues to resolve .Resercher has also shown the balance score card framwork examples and at last cncluded that scorecard must be the primary tool for reporting.

Cobbold and Lawrie Survey On Balance Score Card In 2002, Cobbold and Lawrie developed a classification of Balanced Scorecard designs based upon intended method of use within an organisation. They describe how Balanced Scorecard can be used to support two distinct management activities, management control and strategic control, and assert that due to differences in the performance data requirements of these applications, planned use should influence the type of Balanced Scorecard design adopted. They also describe characteristics of Balanced Scorecards appropriate for each purpose, and suggests a framework to help select between them. Department Of Social And Health Services(DSHS) ,Washington Survey Washington State's Department of Social and Health Services (DSHS) has drafted goals for a "balanced scorecard" with which to evaluate itself. The scorecard goals cover five areas of expectation: 1. 2. 3. 4. 5. DSHS Public value Client service Financial cost Internal processes Learning and growth checked public and client reactions to the first three sets of goals. More

specifically, the study was undertaken to explore how well the goals are understood, whether they are perceived as suitable for DSHS, and whether there are any other goals that should be included.

Gumbus Et Al.Survey On Balance Score Card A study by Gumbus et al., of Bridgeport Hospital, a member of Yale New Haven Health System Hospital, highlights the role BSC can play to in helping

organisations cope with external systemic change. Secular

changes

Americas

health care system brought on by financial pressures from the federal government, the move toward managed care and a general shift toward more outpatient care forced many hospitals to close or downsize. Though fully utilised, Bridgeport Hospital was still suffering losses and introduced the BSC as a strategic tool to link performance appraisal to the capital budgeting processes and to better engage the hospitals sometimes-difficult medical staff.

After just one year, the hospital was able to demonstrate improvement in Organizational Health,Quality and Process Improvement, Volume and Market Share Growth and Financial Health, translating into healthy operating margins and

restored profitability for fiscal year 2001. Bridgeport CEO, Robert Trefry, attributed the turnaround to Bridgeports success inmonitoring and measuring key metrics that drive the business Nomura Research Institute, ltd. Survey According to a survey conducted by the Nomura Research Institute, Ltd. in June 2003, about one-third of the 35 companies that responded to questions about the introduction of the BSC approach reported that they felt "Dissatisfied, as it left much to be desired." Therefore, unless appropriate measures are taken to correct these deficiencies, the concept may simply collapse under the weight of a growing number of failed cases in Japan and be regarded in the future as little more than a passing fad. As identified in the survey, the major requirements for the successful introduction of the BSC methodology can be summarized in the following areas: (1) clarifying the objectives for its introduction; (2) securing a firm commitment by top management for its introduction; (3) increasing the level of the understanding in organizations in which the BSC is introduced; (4) fostering BSC experts both in organizations where it is introduced and the BSC implementation office;

(5) especially in the early stages of its introduction, requiring that such leadership sections not give up the operating reins.

Sriwan Tapanya Phd Doctorate Survey On Balance Score Card Study conducted by Sriwan Tapanya PhD Doctorate examined the factors which influence performance measurement systems within the context of a highly uncertain and rapidly changing environment via the application of the Balanced Scorecard framework. This framework is a strategic management system and its four pillars of measurement financial, customers, learning and growth, and internal business process - are influenced by the vision and strategy adopted by the specific organisation. study uses the Miles and Snow (1978) typology to identify the strategic orientation of the Thai banks in order to make some predictions about the type and number of performance measures utilised by these banks. Results from this study show that bank managers identified their banks strategy as prospector, defender or analyser irrespective of firm ownership. Extramural Research Administration Survey On Balance Score Card In an effort to assess the performance of the National Institutes of Health (NIH) Grants Management function,the Office of Policy for Extramural Research Administration (OPERA), NIH, conducted a survey of Business Officers, Principal Investigators and Program Directors. This survey is a p U.S. Department of Health and Human Services survey Grants and Acquisition Management in the U.S. Department of Health and Human Services (HHS) has been engaged in an initiative to establish a new performance measurement system for HHS grants management operations. This measurement system is being based on a performance and strategic planning methodology called the "Balanced Scorecard." Balanced Scorecard methodology enables management to look at processes more broadly, from multiple perspectives. Specifically, from four prespectives, which are: the Financial Perspective, the Customer Perspective, the Internal Business Processes Perspective, and the Learning and Growth Perspective. Using multiple perspectives to examine an operational process enables an organization to gain a more complete picture or balanced perspective on an organizational operation. These perspectives provide the user of the BSC methodology with the basis for measuring performance and making process improvements.

Administrative Information Systems, California survey Administrative Information Systems, California conducted survey on the customers to know about the quality of service, responsiveness, and easy to do business with. The complete results are listed below: ratings, percentage of satisfied customers, and the themes derived from omments. Approximately 60% of our clients are either "Very Satisfied" or "Extremely Satisfied" with our staff, services, and direction. Another 30+% are "Satisfied" and less than 10% indicated that they are "Not Very Satisfied" or "Not At All Satisfied". The greatest support continued to be for our staff, where again 80% felt strongly that staff is courteous and helpful. The scores for our main measures of success, and a pie chart that highlights the ratios of clients who are "very-to-extremely satisfied" with AIS, "satisfied", and not satisfied, can be seen on Customer Perspective of the current Scorecard.

Charles J. Pineno Survey On Balance Core Card Survey by Charles J. Pineno describes current measurement practices of companies in the manufactured homes industry and the motor homes industry and checks for the applicability of balanced scorecards. An analysis of survey results shows how much the balanced scorecard is understood and applied in these two industries. The analysis also compares the similarities and differences of scorecard knowledge based on company size, sales, number of employees, educational level, and experience of executives.Extending beyond that, a scorecard methodology that quantifies the intuitive understanding most managers have about the relationships between and among performance measures is discussed. Applying the methodology to project possible results yields explicit bottom-line results--both financial and nonfinancial--that enable a strategy to be managed and validated. An example is provided that can be expanded so the chain of cause and effect could pervade all four elements of the balanced scorecard. Andrasson, Magdalena Survey On Balance Score Card Survey conducted by Andrasson, Magdalena focuses the Balanced Scorecard provides a new way to manage more of a company's resources than just the financial, by offering a widened scope for essential management activities and processes for future

competitiveness. The knowledge management concept aims at increasing the effectiveness of a company's internal processes, and provides insight of how to manage intangible resources and personnel, which is an important part when developing a company's competitive strengths. The main purpose of the survey has been to explore whether the Balanced Scorecard is a proper tool for managing knowledge in an organisation.The knowledge management concept is extensive and cannot, as a whole, be incorporated in a single management control tool like the Balanced Scorecard. Still it is useful for putting knowledge into focus in an organisation and showing that knowledge management a strategic issue. It also indicates that all hinds of companies, in different businesses, seem to need a tool for managing knowledge. How the knowledge management issues are to be implemented in the Balanced Scorecard, and which measures that should be used, has to be individual to each company. Harlem, Malin Sofia. Survey On Balance Score Card Harlem, Malin Sofia. looks at the relationship between strategy implementation and the use of Balanced Scorecard. He Investigated On question: Is Balanced Scorecard a solution to strategy implementation problems? Kaplan and Norton present four barriers they claim the Balanced Scorecard can overcome. Based on these barriers,reearcher developed five hypotheses investigating whether Balanced Scorecard enables more successful strategy implementation. The hypotheses are investigated in a case study of the Balanced Scorecard project at Telemark County Tax Office. Conclude that the use of Balanced Scorecard has improved the strategic understanding and contributed to more explicit and actionable strategies. I also conclude that the Balanced Scorecard supplies valuable strategic information. I have not managed to find support for the hypothesis that it clarifies the linkage between the goals at different organisational levels. This is most likely caused by a partial implementation of the concept in the case study organisation.

Chapter 3

A balanced scorecard is a structured approach for ensuring alignment of day-to-day business operations with the business strategies determined by the executive team. It helps management think through the areas of strategic importance by addressing financial, customer, business process , and internal learning goals. For example, a global financial services company decided that it needed to improve overall performance as measured by shareholder value. To enhance shareholder value, management established strategies to improve return on equity, enhance customer profitability, streamline the product offerings (by eliminating unprofitable ones), and extend the skills that were present in the executive ranks down to the next two levels of the organization. Rather than the old work harder approach, management established metrics for the executive level and then drove these metrics down through the organization to the first-line supervisors. With everyone understanding the objectives, the organization was better focused. The results exceeded managements expectations and now the balanced scorecard is being extended throughout the organization.

Need of the Study

The study provides support to managers of the need to examine performance measurement from a variety of perspectives in order to meet the needs of all stakeholders. This project provides an evaluation of the Balanced Scorecard framework as a tool which can assist organisations in developing a performance management framework used to measure performance of an organization which encourages the use of both financial and non- financial measures of performance. Financial measures alone are seen as having serious limitations, foremost among them being that they are backwardlooking. But, using financial measures along with non- financial measures balances a financial perspective with customer, internal process, and learning & growth perspectives and gives top managers a fast but comprehensive view of business. Performance measurement is critical to achieving a firms objectives, translating strategy into action and monitoring progress. Selection of a performance measurement system involves a Selection of a performance measurement system involves determination of the relative importance of various measures of performance. This study examine the type of measure used by the banks and examines whether the focus on financial indicators has impacted upon the nonfinancial measure of customer satisfaction for the banks.

Objective of the study

1.To develop a model of balanced scorecard in context of Indian Banking sector. 2. To identify problems in implementing the balanced scorecard and deliberate on possible solutions. 3. To examine the need for multiple perspectives in performance measurement and comprehend the concept of the balanced scorecard 4. To gain a better understanding of types of measures that are used in firm performance measurement systems within the banks 5. To analyze the significant difference in the use of non-financial and financial measures for

short-term and long-term decision making 6.To observe the level of customer satisfaction in ICICI and HDFC

Scope of Study
The study is undertaken in Bathinda and focus on two banks, ICICI and HDFC. The Study will examine types of performance measures and customer satisfaction in these banks. That become the basis for study. This study uses the Balanced Scorecard (BSC) framework to investigate the performance measures adopted by the banks. The BSC is used because it is effective in looking at an organisations performance across a wide range of measures , allows for quantification of processes and outputs provides a way of categorising non-financial measures across three additional perspectives customer, internal business process and learning and growth - to complement and augment traditional financial measures; and allows for focus on the business unit level .The research design in this study adopted a two-stage process. First, in-depth interviews were used to explore the research questions. Second,

additional data was collected via a self-report questionnaire, which was developed from the research findings obtained from the interview process, on what types of measures are used in performance measurement and whether financial or non-financial measures are more important for short-term and long-term decision making at the banks. F u r t h e r the methodology and outcomes of the qualitative study will be

presented, followed by the methodology and outcomes of the quantitative study.

Research Methodology
Research Methodology is the way to systematically solve a problem. Research Methodology is prepared to describe not only the Research procedure and method adopted

for the achievement of the objective of the project but the logic behind the use of this methodology is that the result can be capable of being evaluated by others. Research is search for information. Research is an academic activity and as such the term should be used in technical sense. Research comprises Defining the problem

Formulating Hypothesis Collecting, Organizing and Evaluating Data Making Deductions Reaching Conclusions Testing that conclusion Fit the Hypothesis or not

Keeping in view the specified objectives and nature of projects, research methods are adopted. Research in the common parlance refers to the search for the knowledge. In fact, it is an art of scientific knowledge. It covers not only the methods but also principles and logics used for study. The Methodology adopted in this study is explained below:Sampling Plan a. Sampling Units: The survey method of marketing research was adopted in this project. The survey is conducted in the service areas and a market area and banks . A Questionnaire was prepared and respondents were personally interviewed. Respondents were taken from the banks. b. Sample Size: A sample size of 60 customers and two branch managers was considered c. Sampling Technique: Branch managers were contacted by personal interview in the survey. The questionnaires were hand-delivered to the branch managers, and completed surveys were collected by the researcher. The questionnaire comprised of two sections: financial measures and non-financial measures.

Respondents were asked which measures they used in each measure area and, if they indicated use of a particular measure, they were asked how often they used the measure with five response choices: always, often, sometimes, rarely, and never .In this phase, a survey was conducted among a random sample of branch managers among the two banks. A random sample of branch managers participated in this study were collected in Bathinda city. Figure 1 was used as a guide for the development of the interview schedule and analysis of the interviews at each stage of data

collection. exploratory

The

first

step

in

convergent second

interviewing step

is

to

set

up

the the

research questions.The

involves

identifying

information needed from the target population.The information needed relates to the type and application of performance measures within the banks. Based on the research questions previously described, an interview schedule was developed to guide all interviews. A random sample of customers participated in this study through an intercept method involving a face-to-face or personal survey at each branch. The sample in this study was collected in Ambala city with a population of more than 1300000 people. This study al so examined customer perceptions of branch service provided by tellers and customer service representatives via a written questionnaire of customers during service use at branches of both banks. Each survey respondent was asked to rate the service provided by tellers and/or customer service representatives on six performance measures of customer service and customer satisfaction

Research Plan:
Research Planning is the process of developing the most efficient plan for gathering the needed information. 1) Data Source: The major source of data is Primary and Secondary data. Primary Data: Primary data is the data, which is collected afresh and for the first time, and thus happen to be original in character. Primary data has been collected with the help of questionnaires, which were filled by personally visiting the customers and branch managers of two banks. Secondary Data: Secondary data is the data which have already been collected by someone else and which have to already been passed through the statically process. The secondary data was gathered from the literature published by the company, journals, magazines and web sites. 2) Questionnaire Structure: For the research, two types of questions were prepared to collect primary data from the respondents. Close-ended questions Open-ended questions 3) Analyzing the information: The information collected from the survey was analyzed by using statistical, and data interpretation technique. 4) Research Design: Research Design specifies the procedure for conducting and controlling research projects. a)Problem Definition:

In a competitive situation with multiple Private Banks operating in the market, it is necessary to know the measures which are used by different banks for performance measurement and customer's satisfaction regarding the performance of banks .In this project, the analytical study of performance measures in banking sector in two private banks has done. b) Type of Research: A qualitative approach is ideal for exploration of questions that do not have a narrowly defined group of variables but where the relationships among a wide variety of variables are in need of investigation. Specifically, field research in the form of interviews is deemed of work .Thus, in this s t u d y exploratory

suitable for exploratory or descriptive types

research v i a the convergent interview technique were used to obtain qualitative data based on a number of factors. Interviews were conducted with branch managers at The questions were prepared in advance as a guideline, although not all two banks .

were used. The

questions touched on what types of performance measures respondents use as part of managing the branchs overall performance, general performance evaluation at the branch and which measures were most important for short-term decision-making and long-term decision-making (the interview questions for this study are included in annexure 1)The objective of collecting this data was to further develop and improve understanding of the

performance measurement system utilized by prospector, And analyzer banks and explore the measures that influence both their short- term and long-term decision making. Scaling method The method used to analysis the data is likert scale.In Likert scale method the researcher give rate to each statement on the basis of strength. Likert scale uses five gradations like : Strongly disagree(-2),disagree(-1),neither agree nor disagree(0),agree(1),strongly agree(2) Each question in the customer survey consisted of five choices.
1) Strongly disagree 2)Disagree 3) Neither agree nor disagree 4)Agree 5)Strongly agree ( in Annexure 2).

Statistical Tool The statistical tool that is used in this study is F-test which is named is named in honour of the great scientist. Fisher. The object of F-test is to find out whether two independent estimates of population variance differ significantly or whether the two samples may be regarded as drawn from the normal population having the same variance.

Limitation of the Study

1) Unable to examine effectiveness of the banks strategy choices and p erformance management systems under different economic conditions. 2) This study examines only the aspect of customer interaction with bank service personnel and does not look at other aspects of the customer experience, such as phone transaction

banking, automatic teller machines, bank statements, etc 3) The sample selection process for this study involved customer perceptions of branch service provided by tellers and customer service representatives and did not include Interaction with the banks other service representatives 4) The responses in this study were collected only from Bathinda, and it is possible that different results may have been obtained if data had been collected from other cities. 5) It may be necessary to investigate the link between other perspectives ,as this might be the way to gain a deeper understanding of the link to performance outcome by identifying the links that strengthen or weaken the positive effect of service- oriented business strategy on bank

performance.

Future scope of study

As the nature of the banking industry is different from other industries in that bank operations are under the close supervision of central banks,it may be beneficial to explore how firms adopt strategic orientation based on external environment change and how this

impacts on performance measurement systems in other industries or other countries .So further study can be Taken On The operations of other than Banking industry and impact of external factors contingency factors such as cultural factors and other competitive market factors on performance measurement