How the Bank of Montreal Keeps Score on Success

In 1990, when Matthew W. Barrett became Bank of Montreal’s chairman and Tony Comper became president, they had one major goal: To focus the entire workforce on success. It’s a simple idea, but not so easy in execution. How would they get entry-level tellers to think of their work not just as a means to a paycheck, but as a direct contribution to BMO shareholders? How would they remind corporate executives that their jobs were not just to boost the bottom line, but to charm entire communities?

The answer was what BMO executives call a balanced scorecard approach. To be competitive, executives decided, the bank had to meet the needs of four stakeholders: BMO shareholders, customers, employees and communities.

Executives translated that idea into four goals: shareholders needed a return on equity, customers needed good service, employees needed to feel loyal and satisfied, and communities needed to feel the bank made a difference in their neighborhoods. Return on investment would determine satisfaction for shareholders; surveys and feedback would determine satisfaction for customers, employees and communities.

So far, so good, but every single department and every employee in every department had to understand how their work contributed to the success of those four goals. So each employee’s and department’s performance ratings now are dependent on their contribution toward each goal. Employees in the customer-service department, for instance, are rated by their return on equity (judged by their cost-effectiveness), their customer satisfaction (judged from customer feedback), and their community involvement (judged by any outreach programs or increase in customers).

Departments may be assigned a specific stakeholder. HR is in charge of the employee piece, ensuring competent, committed workers in a cost-effective way. Harriet Stairs, senior vice president of HR, uses training and education to ensure competency, and work/life and career-development programs to help commitment. Knowing she’s rated on the cost-effectiveness of all this, she also keeps her eye on the price tag. “It encourages everyone to do his or her job with the exact same issues in mind,” Stairs says.

At the end of the year, the scores from everyone’s performance ratings are translated into indexes, ratings from one to 10. The index for the employee stakeholder piece would be determined by ratings for competency, commitment and cost-effectiveness. The four indexes — for BMO shareholders, customers, employees and communities — are then rolled up into one figure of merit. At the end of each year, Barrett presents this to the board of directors, who use it to determine his bonus.

Workforce, December 1997, Vol. 76, No. 12, p. 36.