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Creating a performance management system focused on effective strategy execution
Too often, performance management is seen as an HR process that does little for the development of individuals or the organization. Adrian Ward describes how Lloyds TSB revolutionized its approach by linking the objectives of its 80,000 employees to an overarching Balanced Scorecard.
WHEN ERIC DANIELS TOOK over as CEO of the Lloyds TSB Group in May 2003, one of his first decisions was to mandate the use of a Balanced Scorecard across the entire organization. This article details the implementation journey, the role of HR in accelerating its progress and our lessons learned from the whole experience.
Lloyds TSB is a major league player in the financial services sector with a market capitalization of UKf 24 billion, 15 million customers and a workforce of approximately 80,000 - the majority of which are based in the UK. While the "engine room" of the organization continues to be the retail operation, the Group also includes a diverse and profitable range of wholesale and international businesses. The profile of the workforce is typical of the sector, characterized by relatively low turnover, long service and general stability.
A strategic watershed
During the early to mid 1990s, the organizations focus on shareholder value delivered unprecedented levels of capital growth for its investors, many of whom were, of course, also employees. Since this period, the organization has found life a little harder. Consolidation elsewhere in the sector has created conglomerates able to match both franchise size and market positioning and such competitors have proved a more attractive home for investment and pension fund managers. Denied the opportunity to grow through acquisition by government policy, Lloyds had to find other ways of regaining its market leading status.
The appointment of Eric Daniels in May 2003 represented a strategic watershed for the organization. Having originally joined the Group as executive director of the retail bank in 2001, he quickly formed the view that the company had become too narrow in its focus. In an effort to maintain its margins and, therefore, its promises to financial analysts, it had become preoccupied with new sales volume and operating costs as the dominant measures of business performance.
While there's nothing wrong with these metrics...