Prepare a report to the Board of Directors that explains how the BSC may be used to help TCCB achieve its strategic goals. Include the following in your report: 1) A table that categorizes each of the measures in Exhibit A2 into one of the four BSC perspectives. State why

you placed a measure in a particular perspective. 2) Two cause-and-effect chains similar to the one shown in Exhibit A3. Use the measures listed in Exhibit A2 or

suggest other measures you feel are appropriate. Be sure to include a causal chain explanation with your answer.

KEY BUSINESS PERSPECTIVES: Financial Perspective - How do we look to our shareholders? - The financial objectives of the organization serve as the focus of all activities. Every measure selected for a balanced scorecard should be part of a causal chain that results in improved performance on financial objectives. - Some examples of financial perspective objectives in the hospital industry include operating margins, cost per case, and capital fund-raising. Customer Perspective - How do customers view us? - In the customer perspective, organizations must identify key customers and market segments. Organizations must also determine how they add value for customers and seek to deliver better products and services that are tailored to specific customer needs. - Some examples of customer perspective objectives in the hospital industry include improved recommendation ratings and discharge timeliness. Internal Business Perspective - At what must we excel? - For the internal business perspective, organizations identify those processes that must be improved or created in order to reach the objectives of the customer and financial perspectives. - Some examples of internal business perspective objectives in the hospital industry include reducing the readmission rate (for the same medical condition) and increasing the doctor-to-patient contact time. Learning and Growth Perspective - How do we continue to improve and create value? - To achieve the lofty standards set in the previous three objectives, organizations must invest in their people and infrastructure. For this perspective, organizations identify where resources are needed and craft a plan to enable its employees to achieve the objectives of the other perspectives. - Some examples of learning and growth perspective objectives in the hospital industry include increased employee training and retention, improved information technology systems, and adequate staffing for all shifts. LEAD AND LAG INDICATORS: Nonfinancial measures (NFMs) selected in the customer, internal business process, and learning and growth perspectives serve as lead indicators of improvement in financial objectives because improvement in these NFMs often "lead" or precede the improvement observed in financial measures. Likewise, the financial measures selected in the financial perspective are often called lag indicators because improvement in these financial measures often "lags" or comes after the improvement in the NFMs. *Adapted from Kaplan and Norton's 1996 Translating Strategy into Action: The Balanced Scorecard (1996) and The Strategy-Focused Organization (2001). Notes from Branch Presidents' Meetings The most important financial measures are loan balances, deposit balances, and non-interest income. Everything we do should be aimed toward improving these three financial measures. Customer satisfaction must be improved. Because we are a small community bank, we rely on delivering quality services with a "hometown" feel. We rely on word-of-mouth advertising as much as we do radio and newspaper ads. Our employees must have training in several different areas, including sales techniques, customer service, and product knowledge/profitability. This type of training would improve the interactions between our employees and customers, allowing tellers and customer sales representatives to recognize customer needs and make more effective referrals and new product offerings. Exhibit A3 Cause-and-Effect Chain Illustration for TCCB Causal Chain Explanation: If employees receive training in sales effectiveness, customer service, product profitability, and local bank knowledge, then they can provide better customer service and higher quality interactions with existing clients can take place. TCCB employees will be better able to ascertain the needs of customers, thereby making higher quality referrals and cross-sell proposals to customers, and customers will be more satisfied and choose to continue banking with TCCB. Increased referrals or cross-sales increases non-interest income and provides the basis for growth in deposit and loan balances. Exhibit B1 Branch performance on key financial indicators