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For every bank having its own network of branches it is crucial, self-evident and common to conduct measurements of the operational efficiency of its branches. It is, however, surprising to find that the tools applied in measurement procedures raise many doubts and the very area of measuring the efficiency of a bank’s sales network is ground for disagreement. Adrian Kulczycki, Project Manager at CET Polska, discusses two of the most prevailing myths on the subject as well as proposals of effective solutions in an article in the banking weekly Gazeta Bankowa (“Measurement myths”, Gazeta Bankowa no 38 (1090), September 21st, 2009).
One of the most common myths mentioned by Adrian Kulczycki, the author of the article “Measurement myths”, is related to the effectiveness of the means typically applied in measuring the operational efficiency of bank branches, namely “profit per employee”. According to the CET expert, due to the fact that the information obtained using such means is quite limited, the interpretation of the results is imprecise and unreliable. On the basis of own business experience in the sector, Adrian Kulczycki proposes a concept of efficiency measurement based on methods which allow for an unambiguous and straightforward measurement of x-efficiency and enable a precise calculation of their financial results.
The second myth deals with the opinion that the simplest indicator constitutes the best means of measuring bank branches’ efficiency. According to the CET expert, a simple indicator (such as the abovementioned “profit per employee”) does not take into account a number of vital factors that influence the proper functioning of a given branch. In the opinion of Adrian Kulczycki, a genuinely effective measurement of network efficiency requires the application of at least 70 parameters (and the absolute minimum is 25-30 parameters).
It is very important to define the very purpose of conducting measurements of the efficiency of a bank branch. Adrian Kulczycki believes that if it is to constitute a basis leading to the optimization of the operations of a bank branch, experience and organizational involvement become of crucial importance. – A comprehensive method of efficiency measurement not only points to the areas of highest or lowest efficiency. It additionally shows what should be done to improve the efficiency of the chosen bank branches – emphasizes the CET expert.
Read full article here (Polish version only)
