The group meeting on February $25$th did not go as well as Chris had hoped. While the branch presidents had

done a good job of identifying areas that needed attention within each branch, the information presented could, at

best, only be considered as raw materials necessary to build a BSC program. Much work was needed prior to

implementing the program.

With time running out, Chris grew concerned about the scheduled meeting with the Board of Directors on

March $31$st$.$ She had nothing concrete to present at the meeting and worried she might not receive permission to

pursue the program if she did not make a solid presentation to the board. Chris$$s goal is to present a group of

quantifiable measures that are linked through causal relationships and lead to improvement of key financial

measures.

One of the primary benefits of the BSC comes through mapping the causal relationships from nonfinancial

performance measures to the three primary financial measures the bank monitors. Nonfinancial measures are

categorized into three perspectives: Learning and Growth, Internal Business Processes, and Customer Focus. The

cause and effect linkages in the BSC will occur in the following manner: if learning improves, then internal

processes will improve. If internal processes improve, then customer value will increase. If customer value

increases, financial performance will improve. Financial performance is the ultimate evaluation of a firm$$s

strategy. If financial performance improves significantly, the firm$$s strategy is successful. Thus, if the strategy is

good, the measures of the nonfinancial perspectives will be lead indicators of increasing value that will ultimately

be proven by improved financial measures.

Exhibit A$2$ provides a list of performance measures developed by the branch presidents and notes Chris took

during meetings with them. Exhibit A$3$ illustrates a sample cause$-$and$-$effect chain. For example, as shown in

Exhibit A$3,$ if employees receive training in sales effectiveness, customer service, product profitability, and local

bank knowledge, they will be better equipped to provide customers with higher quality service. TCCB measures

the effectiveness of its training programs by having employees take in$-$house tests on various training topics. By

increasing employee knowledge and skills, higher quality referrals and cross$-$sell proposals will take place, leading

to higher customer satisfaction and greater customer retention. Maintaining the current customer base provides the

basis for growth in deposit and loan balances, while a greater number of successful referrals and cross$-$sells

increase non$-$interest income.

Chris wants to prepare a series of cause$-$and$-$effect chains to illustrate to the Board of Directors how the BSC

can be used to improve performance on three key financial measures: loan balances, deposit balances, and non$-$

interest income. She knows that any program emphasizing improvement in these three measures has a strong

chance of receiving approval.

Required:

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 A$2$ 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 A$3.$ Use the measures listed in Exhibit A$2$ or

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