On Commercial Bank Performance Management Based On The Balanced Scorecard

With the economic globalization, China’s financial market is gradually incorporated into the ranks of the international financial markets. Commercial banks are facing unprecedented challenges, and compete with not only local banks but also foreign banks, facing this situation, the traditional commercial banking performance management system is clearly unable to meet its development trend. The traditional performance management system mainly uses financial indicators to measure its operating performance, ignoring the important role of non-financial indicators in the bank’s future development strategy, therefore, for the commercial banks, a scientific and perfect performance management system is essential. As a new strategic performance management tools, Balanced Scorecard internalizes strategies into four dimensions, including financial, customer, internal processes, learning and growth of specific indicators by decomposing the overall strategic objectives, in order to overcome limitations that the traditional system focuses on financial indicators. Based on the theory of business performance management, this paper introduces the theoretical model of the Balanced Scorecard, analyses a case of performance management of A branch of Bank of China through redesign of this system, combines the theory and practice, and then explain the process, possible problems and the corresponding safeguards of Balanced Scorecard in the practical application.This first part in the paper is mainly introduces the research background, purpose and significance of this, and sorts out the relevant literature review, as well as provides research ideas and methods.The second part, through the introduction of performance management theory, familiars with performance management processes, and highlights the methods of traditional commercial bank performance management.The third part summarizes domestic and foreign researches on the Balanced Scorecard and thus the introduction of theoretical models, describes core ideas and four dimensions.The fourth part points out the basic principles, and analyses applicability and necessity of the Balanced Scorecard in commercial banks.The fifth part takes an example of Bank of China branch A, analyses its basic situation, organizational structure and operating status, in accordance with its strategic organizational planning targeted index system at all levels. The sixth part proposes risks of performance management of branch A, and makes the appropriate safeguards.The main contribution of this paper is to build a performance management system of commercial banks based on the Balanced Scorecard, to provide an effective method changing the traditional performance management tools for commercial banks. In addition, the theory of branch A closely integrates with the practice, and this has a certain guiding significance.