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How to Overcome the BIG Challenge of Measuring Performance in Banking and Financial Institutions


The finance industry is dominated by big worldwide players. And while it has been proven that such players can run the greatest financial games ever, it has not been evidenced that they can do so in the best favor of their stakeholders. Needless to say that with the Great Recession of 2007-2008, the future of investment banking, retail banking and any other financial institution is not looking as bright as it once seemed to be.

On the one hand, loose market orthodoxy is falling farther behind, as the demand for increased accountability and transparency forces institutions to follow the doctrine of fair, full-disclosure reporting. With standardized guidelines on ethical reporting such as the GIPS – Global Investment Performance Standards, the great gamers of the financial industry are starting to take a closer look at the way they operate.

On the other hand, measuring performance has always been a major challenge for financial institutions worldwide. And professionals in the field always tend to have this bottom-up approach about the issue. The “glass-ceiling”, they call it, the “point in the hierarchy of a financial institution where performance becomes impossible to measure.” And it is perhaps this very perspective that keeps professionals from overcoming challenges related to performance measurement in the finance industry.

Alignment is a very important concept when it comes to measuring and managing performance. Coming back to the finance industry, alignment may be just the thing to remove the “glass-ceiling” in measuring performance, because in the end, it may not be fair to only think of individual performance, when we relate finance, or banking for that matter, to performance measurement.

What if we were to have an overview of the entire performance measurement system, cascaded across all the levels of an investment bank, for example?


Let us say we are looking to increase our customer base on a corporate level and to achieve this, we have decided to create an effective sales culture. We have put the objective on our corporate scorecard, and we have selected the following KPIs to monitor the achievement of our objective: % Conversion rate and # Meetings created.

At the lower level of the organization, for example, the Private Equity and Investment Banking department, the KPIs selected at the corporate level, under the same objective, will be cascaded into: # Opportunities reviewed, # Offers made or # Deals signed.

Now when thinking of our Analyst in Private Equity and Investment Banking, we would base his performance evaluation on KPIs that are cascaded from our departmental scorecard. Such KPIs can refer to # Presentations developed and # Client meetings handled, but it can also refer to % Opportunity contribution, as a KPI that is more related to the quality of our relationship with the Analyst and the way we work together in order to achieve our corporate objective.

Given a closer look, the brief alignment process described above works in anyone’s advantage. Why? Because of the following reasons and many other:

  • It ensures a progressive view on both corporate and individual performance;
  • It encourages employees to embrace change and accept it;
  • It fosters transparency, open communication and collaborative decision-making;
  • It links apparently different processes together for a better overview of performance;
  • It enables information exchange and cross-organizational dialogue;
  • It eliminates meritocracy and nurtures cooperation;
  • It promotes teamwork and consolidates individual efforts;
  • It shifts focus from quantity to quality as far as outputs are concerned;
  • It works towards the achievement of common objectives to ultimately fulfill corporate goals.

Now, cascading is a valuable technique by means of which we can ensure the alignment of investment banking processes and not only. With the right tools to do so, we will achieve complete alignment between our corporate, departmental and individual levels, which in turn will help our financial institutions shatter the “glass-ceiling” they have come to fear so much. Because, in the end, there is nothing more revealing than the whole truth about performance, and there is nothing more easy about any system than convergence.

A lot of fear and distrust comes out of concealment; however, by making use of KPIs to measure performance, financial institutions worldwide can act in transparency.

Nevertheless, if such organizations look into the benefits of alignment and reveal them to their employees, investment banks, retail banks and other financial institutions worldwide can substantially gain in on their commitment, and through the commitment and engagement of their employees, financial institutions will ultimately get what they have always desired: respect, trust, allegiance.

If you wish to learn more about how you can attain greater clarity & transparency, by selecting the right KPIs to measure performance in your financial institution, The KPI Institute has developed a rigorous KPI Measurement Framework that embeds 10 years of research in the field and relies on best practices applicable in the real business environment – The Certified KPI Professional and Practitioner Course.

This learning program is structured on two levels of certifications:

  • Certified KPI Professional – a three days training course focused on developing know-how in working with KPIs. The certification can be obtained by taking a multiple question Certification Exam in the last day of the course.
  • Certified KPI Practitioner – a two days training course meant to improve the practical skills in working with KPIs and developing instruments like scorecards, dashboards and KPI documentation forms. The applied exercises of this course will enable participants to complete a trial run of all the steps required to complete the portfolio which is the basis of the KPI Practitioner Certification. The exercises will reflect a complete KPI implementation case study, from project planning to KPI data visualization.

Furthermore, alligning individual roles, expectations and results to the departmental and organizational strategy is easier said than done. Efforts are generally dedicated to adapt the JD content to reflect the actual roles of the employees and link them to relevant KPIs, competencies and behaviors. So if you want your financial institution’s Analyst to deliver his best performance, we recommend contacting us to benefit from our  Employee Performance Organizational Alignment service.

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