Project Report Anshul

8/2/2019 Project Report Anshul

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PROJECT REPORT

ONBALANCE SCORE CARD

IN

BANKING INDUSTRY

Anshul goel


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CONTENTS

1. CHAPTER 1

Introduction Balance Score Card Framework Functions Implementation Limitations Solutions

2. CHAPTER 2

Survey of literature3. 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


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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

Nortonintroduced 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. Translating the vision into operational goals;2. Communicate the vision and link it to individual performance;3. Business planning4.

Feedback and learning and adjusting the strategy accordingly
http://en.wikipedia.org/wiki/1992http://en.wikipedia.org/wiki/1992http://en.wikipedia.org/w/index.php?title=Robert_S._Kaplan&action=edithttp://en.wikipedia.org/w/index.php?title=David_Norton&action=edithttp://en.wikipedia.org/w/index.php?title=David_Norton&action=edithttp://en.wikipedia.org/w/index.php?title=David_Norton&action=edithttp://en.wikipedia.org/w/index.php?title=David_Norton&action=edithttp://en.wikipedia.org/w/index.php?title=David_Norton&action=edithttp://en.wikipedia.org/w/index.php?title=Robert_S._Kaplan&action=edithttp://en.wikipedia.org/wiki/1992


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Framework

The BSC provides a framework, which encourages the use of financial and non-

financial 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.


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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 attitudes and behaviours influence shareholder satisfaction and retention.

Finally, shareholder satisfaction affects employee satisfaction through bonuses, stock

options, or further investment 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


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satisfaction leading to increased

customer loyalty, which boosts revenues and margins

Internal business process measures relate specifically to the operational processes of

the business unit. 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 .

Learningandgrowth 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


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Financial prospective

Goal Measures

Survive Cash flow

Succeed Growth in sales&operating income

Prosper Increased marketshare and return onequity

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 strategicmeasures.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.

Customer prospective

Goals Measures

New product Percent sales from newservice

Responsive suuply On-time delivery

Pererred supplierpurchases

Share of key accounts

Customer partenership Co-operaive effortsbetween the firm and thecustomers

Internal business perspective

Goals Measures

Technology

capability

Measuring geometry vs. competition

Manufacturing

excellence

Reduction in cycle time

,improvement in quality,reduction in

unit cost ,increase in yield

Design

productivity

Silicon efficiency engg. Efficiency

Introduction of

new product

Actual introduction schedule vs plan

Innovation & learning perspective

Goals Measures

Technology

leadership

Time to develop next generation

Manufacturing

learning

Process time to maturity

Product focus Percent of products that equal 80%

sales

Time to market New product introduction vs.

competition


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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,


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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 onlya 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


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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 processesand 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


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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. Public value2. Client service3. Financial cost4. Internal processes5. Learning and growthDSHS 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.


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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 in helping

organisations cope with external systemic change. Secular changes to 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;


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(5) especially in the early stages of its introduction, requiring that such leadership sections

not give up the operating reins.


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Sriwan Tapanya Phd Doctorate Survey On Balance Score Card

Study conducted by Sriwan Tapanya PhD Doctorate examined the factors which influenceperformance 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.


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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% feltstrongly 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
http://www.ais.ucla.edu/scorecard/#customerhttp://www.ais.ucla.edu/scorecard/#satisfiedhttp://www.ais.ucla.edu/scorecard/customer.htm#surveyhttp://www.ais.ucla.edu/scorecard/customer.htm#surveyhttp://www.ais.ucla.edu/scorecard/#satisfiedhttp://www.ais.ucla.edu/scorecard/#customer


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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.


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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.


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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 pr oj ec t 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 backward-

looking. 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 andmonitoring 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 non-

financial 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


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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. Fur ther 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


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Formulating Hypothesis Collecting, Organizing and Evaluating Data Making Deductions Reaching Conclusions Testing that conclusion Fit the Hypothesis or notKeeping 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


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collection. The first step in convergent interviewing is to set up the

exploratory research questions.The second step involves identifying the

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 also 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 servicerepresentatives on six performance measures of customer service and customer

satisfaction


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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 datainterpretation technique.

4)Research Design:

Research Design specifies the procedure for conducting and controlling research projects.

a)Problem Definition:


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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

suitable for exploratory or descriptive types of work .Thus, in this s tudy exploratory

research v ia the convergent interview technique were used to obtain qualitative data based

on a number of factors. Interviews were conducted with branch managers at two banks .

The questions were prepared in advance as a guideline, although not all 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.


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Limitation of the Study

1) Unable to examine effectiveness of the banks strategy choices and performance managementsystems 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


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Documents

Project Report Anshul