“Could you remind me how this trade-weighted cost index is related to our strategic goals?”
“Which of these 50 metrics tells the story about how well we are managing our procured services?”
“How can we assure our clients that our service levels are improving?”
Executives who frequently make statements like these could be wrestling with an issue that is becoming increasingly important in financial services: how to measure and value performance in operations across the organization. This challenge has come to the forefront as complexity has increased in tandem with an emphasis on cost control.
These operations areas, encompassing the front, middle, and back offices, are competitive differentiators for banks, yet the dialogue between operations and revenue-producing businesses has historically been focused on delivery cost. The most forward-thinking financial services companies, however, are expressing greater interest in developing metrics that capture the value of the services being delivered by these areas.
These metrics clearly link operational and individual performance to the corporate strategy and allow operations executives to accurately describe their contribution to business objectives. Such clarity enables operations executives to better articulate their value in the C-suite — or, in the case of companies that provide operations services, to their clients.
These stakeholders, in turn, gain insight into the performance of critical operations. Established correctly, a comprehensive performance measurement program will not just improve performance, but also allow operations managers to better articulate their value (Exhibit 1).