1

ACKNOWLEDGMENT
I would like to thank the numerous friends, colleagues,
classmates and professors that have contributed to help me conduct
this thesis.
Firstly, I would like to show my deep gratitude towards
Associate Prof, Dr. Nguyen Thanh Ha, my thesis tutor for his time
spending on zealous guidance and kind encouragement while
writing the thesis
Secondly, my thankful attitude is expressed for all teachers of
the EMBA program at Business School of National Economics
University as well as Board of Director and staff who teach me
much valuable knowledge including literature and analysis to apply
to the work and life.
Especially, I also have honor of appreciating all my colleagues
at Maritime Bank; whose contributions have supported the data,
intelligent research and knowledge involving the studying areas of
this research.
Finally, I acknowledge the motivation of my family and
dearest friends who have always been besides me to understand and
help me during the writing period.


2

TABLE OF CONTENTS
ABBREVIATIONS..................................................................................................4
LIST OF TABLES...................................................................................................5
LIST OF FIGURES.................................................................................................7
LIST OF CHART....................................................................................................8

EXECUTIVE SUMMARY.....................................................................................9
INTRODUCTION.................................................................................................11
CHAPTER 1..........................................................................................................18
LITERATURE REVIEW.....................................................................................18
1.1KPIs and its role for organization in performance appraisal.................................................................18
1.1.1 Performance appraisal.........................................................................................................................18
1.1.2 Key Performance Indicators its role for organization in performance appraisal.................................21
1.2The balanced scorecard by R. Kaplan and D. Norton...........................................................................25
1.312- Step Model by David Parmenter................................................................................................... 35

CHAPTER 2..........................................................................................................38
SITUATION ANALYSIS......................................................................................38
2.1.Maritime Bank Review...................................................................................................................... 38
2.1.1 Maritime Bank profile..........................................................................................................................38
2.1.2 Objectives and strategy.......................................................................................................................44
2.1.3 Operations and results.........................................................................................................................46
2.2.System of measurement and appraisal of Maritime Bank..................................................................49
2.2.1 System of measurement by KPI...........................................................................................................51
2.2.2 Some results in building KPIs in Maritime Bank..................................................................................58
2.2.3 Advantages and disadvantages of KPI system in Maritime Bank........................................................68
2.2.4 The need of KPIs for Product Development Department of Large Corporate Banking.......................70

CHAPTER 3..........................................................................................................74
KEY PEFORMANCE INDICATORS FOR.......................................................74
PRODUCT DEVELOPMENT DEPARTMENT OF.........................................74
LARGE CORPORATE BANKING.....................................................................74
3.1.Strategy, plan and objectives of Product development department...................................................74
3.2.Job description................................................................................................................................. 75
3.2.1 Product Manager.................................................................................................................................78



3

3.2.2 Advanced Executive.............................................................................................................................79
3.2.3 Senior Executive...................................................................................................................................80
3.2.4 Executive..............................................................................................................................................81
3.3.Identify main indicators and their weights......................................................................................... 82
3.3.1 Identify indicators................................................................................................................................82
3.3.2 Indentify weight...................................................................................................................................98
3.4.Form for evaluating......................................................................................................................... 101
3.5.Some recommendations to apply KPIs successfully..........................................................................101

LIST OF REFERENCES....................................................................................107
APPENDIX..........................................................................................................109


4

ABBREVIATIONS

MSB
LCs
RM
CSO
CA
CPC
KPIs

: Maritime Bank
: Large corporate Banking

: Relationship Manager
: Credit Service Officer
: Consultant Assistance
: Centre of credit process
: Key Performance Indicators


5

LIST OF TABLES
ABBREVIATIONS..................................................................................................4
LIST OF TABLES...................................................................................................5
LIST OF FIGURES.................................................................................................7
LIST OF CHART....................................................................................................8
EXECUTIVE SUMMARY.....................................................................................9
INTRODUCTION.................................................................................................11
CHAPTER 1..........................................................................................................18
LITERATURE REVIEW.....................................................................................18
1.1KPIs and its role for organization in performance appraisal.................................................................18
1.1.1 Performance appraisal.........................................................................................................................18
1.1.2 Key Performance Indicators its role for organization in performance appraisal.................................21
1.2The balanced scorecard by R. Kaplan and D. Norton...........................................................................25
1.312- Step Model by David Parmenter................................................................................................... 35

CHAPTER 2..........................................................................................................38
SITUATION ANALYSIS......................................................................................38
2.1.Maritime Bank Review...................................................................................................................... 38
2.1.1 Maritime Bank profile..........................................................................................................................38
2.1.2 Objectives and strategy.......................................................................................................................44
2.1.3 Operations and results.........................................................................................................................46

2.2.System of measurement and appraisal of Maritime Bank..................................................................49
2.2.1 System of measurement by KPI...........................................................................................................51
2.2.2 Some results in building KPIs in Maritime Bank..................................................................................58
2.2.3 Advantages and disadvantages of KPI system in Maritime Bank........................................................68
2.2.4 The need of KPIs for Product Development Department of Large Corporate Banking.......................70

CHAPTER 3..........................................................................................................74
KEY PEFORMANCE INDICATORS FOR.......................................................74
PRODUCT DEVELOPMENT DEPARTMENT OF.........................................74
LARGE CORPORATE BANKING.....................................................................74
3.1.Strategy, plan and objectives of Product development department...................................................74
3.2.Job description................................................................................................................................. 75
3.2.1 Product Manager.................................................................................................................................78
3.2.2 Advanced Executive.............................................................................................................................79
3.2.3 Senior Executive...................................................................................................................................80


6

3.2.4 Executive..............................................................................................................................................81
3.3.Identify main indicators and their weights......................................................................................... 82
3.3.1 Identify indicators................................................................................................................................82
3.3.2 Indentify weight...................................................................................................................................98
3.4.Form for evaluating......................................................................................................................... 101
3.5.Some recommendations to apply KPIs successfully..........................................................................101

LIST OF REFERENCES....................................................................................107
APPENDIX..........................................................................................................109



7

LIST OF FIGURES
Figure 1.1: .........................Main reasons for measuring performance
.......................................Error: Reference source not found
Figure 1.2: .............................................Strategic Alignment Pyramid
.......................................Error: Reference source not found
Figure 1.3: .............Four business perspectives of Balance Scorecard
.......................................Error: Reference source not found
Figure 1.4: ..................Cause-effect relationship in four perspectives
.......................................Error: Reference source not found
Figure 1.5: .......................................Managing strategy: Four process
.......................................Error: Reference source not found
Figure 2.1: ....Rapid growth of Maritime bank over the development
history...........................Error: Reference source not found
Figure 2.2: .............Ranking by total assets of top Vietnamese banks
.......................................Error: Reference source not found
Figure 2.3: .......................................Overall structure Maritime Bank
.......................................Error: Reference source not found
Figure 3.1: ....................................................................Business Areas
.......................................Error: Reference source not found


8

LIST OF CHART
Chart 2.1: ..........Top 10 banks by total assets, in billion USD (2010)
.......................................Error: Reference source not found
Chart 2.2: .............Top 10 banks by net profit, in billion USD (2010)
.......................................Error: Reference source not found

Chart 2.3: .....................................Staff‘s general satisfaction of KPIs
.......................................Error: Reference source not found
Chart 2.4: ............................................................Staff‘s belief in KPIs
.......................................Error: Reference source not found
Chart 2.5: ...................................Staff‘s belief in fitness of indicators
.......................................Error: Reference source not found
Chart 2.6: ..............................Contribution of new product in volume
.......................................Error: Reference source not found
Chart 2.7: .................................Contribution of new product in profit
.......................................Error: Reference source not found


9

EXECUTIVE SUMMARY
Key Performance Indicators is a quite new concept in
management but many organizations all over the world have
recognized as a useful tool. In recent years, organizations in
Vietnam started to use KPIs for managing their targets and
operation. Especially in human resource management, KPIs are
often used to appraisal employee‘s performance.
This research provides an analysis and evaluation of Key
Performance Indicators system which supporting personnel
appraisal activities of Maritime Commercial Join Stock Bank
(Maritime Bank), and then develops Key Performance Indicators for
employees at Product development department of Large Corporate
Banking of Maritime Bank.
The research idea was formed when the researcher monitored
and summarized results of personnel appraisal in Maritime Bank.
Based on the fact of Maritime Bank’s rapid growth in recent years,

knowledge about usefulness of Key Performance Indicators in
employee appraisal, and current situation that employees at Product
development department of Large Corporate Banking (Maritime
Bank) haven’t evaluated by Key Performance Indicators system yet,
researcher chose this thesis. The main target is to develop a more
effective appraisal system for employees of Product development
department by using KPIs.
Method of research is analysis, comparisons, synthesis to


10

examine both primary data and secondary data.
The report found the necessary of having KPIs for employees
of Product Development Department to improve their activities, and
developed a pilot.
The writer also recommended some factors to apply KPIs
successfully in Maritime Bank:
•Improve plan activity and flexibly adjust target if necessary
•Use tools such as dashboard meeting and working diary to
monitor, record and calculate performance more exactly
•Closely attach KPIs to income, promotion and financial
encouragement
•Use information technology applications to reduce KPI
appraisal costs
•Update and improve KPIs frequently
•Learn and apply 12-step Model of David Parmenter when
implementing KPI



11

INTRODUCTION
 Rationale of the research
Key Performance Indicators, also known as KPIs are essential
in helping organizations better define and measure progress towards
organizational goals and objectives. Once an organization has
identified its specific objectives and key stakeholders in support of
those objectives, it is better prepared to develop a systematic
approach to measure progress towards those predetermined goals.
The main benefit of KPI is to keep the entire organization
working toward common goals. People work only on meaningful
projects and eliminate useless activity. A company is also more
likely to accomplish its objectives if it has clearly defined them.
The importance of KPIs is that they help companies to assess
how it is doing in terms of the targets that it has set itself, and
they can act to incentivize superior performance. Often KPIs are
linked to staff review appraisals - e.g. if the customer support
team meets its customer satisfaction KPI, then its members get
their yearly bonus.
Many organizations measure KPI. For some organizations, the
process of measuring data serves as an exercise in futility-measuring it without using it to reach strategic goals. When used
correctly, KPIs become an important part of a company’s strategy.
For the small business owner, measuring the right KPIs and creating
actionable items from the data can elevate a company above the


12

competition.

Maritime Bank is one of the first commercial banks in Vietnam
and targets to become one of the biggest commercial banks in
Vietnam. To the end of 2011, Maritime Bank’s chartered capital is
at the level of 8,000 billion VND and total assets reach over
115,000 billion VND. From only 16 branches in 2005, it has
extended to 230 branches and transaction points.
Since 2009, Maritime Bank started a new strategy, with the
goal to become the best commercial bank in Vietnam. Maritime
Bank has a new business orientation that directs toward customers’
satisfaction and success by providing high quality product. So that
product development activity is always emphasis.
However up to now, Maritime Bank has not got a KPI system
to evaluate performance of this activity. As we know, product
development, especially in service sector likes banking is difficult to
appraise because products’ effectiveness is not only measured
immediately by revenue or profit that the products bring to
organization.
Now employees in product development department are still
appraised by the old method. Each employee, from executive to
staff, self-appraisal with a common form which contained
absolutely quantitative and general criteria, and then result in
“Excellent”, “Good” or “Standard”. Because of formality reason,
the results hadn’t got differences between individuals also
departments, sometimes thanks to their relationship with leaders


13

evaluating them.
Moreover, Maritime Bank‘s strategic partners such as Vietnam

Post and Telecommunication, Vietnam Maritime Administration,
Civil Aviation Authority of Vietnam required to develop KPI
system for employees. This was expressed in resolutions of General
Assembly of Shareholders 2012 and Maritime Bank’s orientation of
human resources of Talent Management Division.
With such rapid development requirement and ambitious target,
Maritime Bank really needs a practical tool as KPIs to measure
business and operation performance of employees in product
development department.
 Objectives of the research
The general goal of the research is to develop KPIs for
employees of product development department. To do this, writer
described and analyzed the development of Key Performance
Indicator for appraising employees in Maritime Bank from its
inception to date. This is primarily to enable writer myself to review
all aspects of KPI, in order to revise what need to change and
improve the existing KPI systems of Maritime Bank to achieve
more efficient employee assessment.
The following research objectives have been defined:

Identify criteria that KPIs should have when used to
appraisal employees

Develop KPIs for employees of Product development
department

Recommend some conditions to apply proposed KPIs


14


successfully
 Scope and limitation
The utilities of KPIs are very extensive. They are used in every
sector for evaluating annual business result, project effectiveness,
human resource appraisal, etc.
However, in limited condition of time, data and… this research
gave attention to develop KPI system for employees in Product
development department. The research built KPI for four positions:
Product Develop Manager, Advanced Executive, Senior Executive
and Executive.
This research analyzed KPI system Maritime Bank: the way to
built up it, which positions were evaluated by KPI up to now,
advantages and disadvantages of present KPI. After that, based on
framework in literature review, researcher developed KPI for above
positions with expectation of having a KPI that pushes the
advantages and limits the disadvantages of the present system.
Secondary data is the data within two years (2010 – 2011)
 Research Methodology
This research has been carried out in Large Corporate Banking
of Maritime Bank. The researcher used some methodologies such as
statistics, analysis, comparisons, synthesis to examine both primary
data and secondary data.
a. Primary data: The primary data was gathered by using the
following data collection methods: survey and in-depth interview.
Survey
- The purpose of survey was to review the present KPI in
Maritime Bank throughout opinion of some employees that was



15

evaluated by KPI.
- The way to conduct survey: send questionnaire through email
- Content of questions were focused on finding what
employees think about their KPI: it was suitable, fair, reliable or
not; how qualitative indicators and quantitative ones reflect their
responsibility; effect of KPI on compensation and promotion of
employee.
- Survey was carried out with 100 employees, mainly RM and
CSO. Researcher received replies for all 100 questionnaires sent.
- Survey include five (5) Yes- No questions, two (2) questions
comparing KPI with previous methods, three (3) questions that
express the level of employees’ satisfaction and one (1) open
question through which employees make other recommendations.
But not as expected, there are only few people answering this
question.
In – depth interview
- In – depth interview with: 3 Product Manager and 4 Product
Development Officer
- List of interviewees:
1
2
3

Name
Tran Huy Phuong
Hoang Viet Phuong
Nguyen Thi Hang


4
5
6

Product)
Tran Thi Ha
Advanced Executive
Pham Hoang Ha
Advanced Executive
Nguyen Thi Hong Senior Executive
Hai

Position
Product manager (Deposit Product)
Product manager (Credit Product)
Product manager (Trade finance


16

7

Nguyen Thi Thu Executive
Huyen

- The purpose of the interview was to get the opinion on:
review job description for positions and preliminary determine
criteria that can be used for evaluating performance of each task.
- The content of interview included questions to learn more
about job responsibility, job requirement of positions. In which,

focusing on clarifying main tasks of each position, the importance
of tasks, percentage of working time for each task, criteria can be
used for evaluating performance of each task.
- The interviews were held in April and May 2012. The
duration of each interview was an average of 1 hour. The interviews
were conducted in Vietnamese and translated main content into
English by writer.
b. Secondary data: The secondary data was collected basing on
the desk research method. The following data resources were
collected:
- The textbook from EMBA program and other sources.
- Searching information from: internet, professional
magazines.
- Company’s annual business reports, finance reports, policies…
from 2010 – 2011.
 Research Structure
This thesis comprised 3 chapters as bellows:
Introduction: presents the background, problem statement,
scope and limitation of the research as well as methodology
Chapter 1: Literature review - provides the theory information


17

of concepts of Balance Scorecard, Key Performance Indicators.
Chapter 2: Situation analysis of large-corporate banking of
Maritime Bank details a case study: Large-corporate banking of
Maritime Bank with the analyses about current situation applied
from theory. This part also draws out the problem based on
collected data from observation, books, internets, research, and

internal documents, in dept interviews with officers, managers who
directly compose and apply new products
Chapter 3: Proposed KPIs for employees in product
development department of large-corporate banking of Maritime
Bank.
Moreover, third chapter contains the recommendation for
problem draw out.
Conclusion: Summarizes the main points pointed out from the
thesis.


18

CHAPTER 1
LITERATURE REVIEW
1.1 KPIs and its role for organization in performance appraisal
1.1.1 Performance appraisal
Performance appraisal is one of important contents in managing
human resource of any organizations. Performance appraisal is a
systematic and periodic process that assesses an individual
employee’s job performance and productivity in relation to certain
pre-established criteria and organizational objectives.
Performance appraisal includes the identification, measurement
and management of human performance in organizations.
• Identification means determining what areas of work the
manager should be examining when measuring performance.
Rational

and


legally

defensible

identification

requires

a

measurement system based on job analysis. The appraisal system,
then focus on performance that affects organizational success rather
than performance irrelevant characteristics such as race, age, or
gender.
• Measurement, the centerpiece of the appraisal system,
entails making managerial judgments of how “good” or “bad”
employee performance was. Good performance measurement must
be consistent throughout the organization. That is, all managers in
the organization must maintain comparable rating standards.
• Management is the overriding goal of any appraisal system.
Appraisal should be more than a past-oriented activity that criticizes


19

of praises workers for their performance in the preceding year.
Rather, appraisal must take a future-oriented in the organization.
This means that managers must provide workers with feedback and
coach them to higher levels of performance.
The reason why we measure performance in organizations is

often reduced to simple homilies, such as you can’t manage
anything unless you measure it or what gets measured gets done.
The three main reasons for measuring performance are:
• To learn and improve
• To report externally and demonstrate compliance
• To control and monitor people
Of these three the first is the most important, the second is
something organizations just have to do and the third one can cause
major problems.

Learning and Performance
Improvement

Measuring
Performance

External Reporting and
Compliance

Controlling and Monitoring
People

Figure 1.1: Main reasons for measuring performance
Source: Bernard Marr (2010), How to design key performance
indicators, Advanced performance institute, BWMC Ltd., June 2010
Today managers have a wide array of appraisal formats from


20


which to choose. The most common and legally formats can be
classified in two ways: (1) by the type of judgment that is required
(relative or absolute), and (2) by the focus of the measure (trait,
behavior, or outcome).
Relative judgment is an appraisal format that asks supervisors
to compare an employee’s performance to the performance of other
employees doing the same job.
Absolute judgment is an appraisal format that asks supervisors
to make judgments about an employee’s performance based solely
on performance standards.
Trait appraisal instrument is an appraisal tool that asks a
supervisor to make judgments about worker characteristics that tend
to be consistent and enduring.
Behavioral appraisal instrument is an appraisal tool that asks
managers to assess a worker’s behavior.
Outcome appraisal instrument is an appraisal tool that asks
managers to assess the results achieved by workers.
Knowing how the different areas of the business are performing
can help organizations to assess where the business is strong, where
it is weaker and factors they can change for the better. This should
help them to manage their performance proactively and efficiently.
However, organizations need to make sure that they measure
the correct areas of their business so they get the correct
information. They should focus on specific factors that are easy to
measure and show the areas where their business is successful when
compared to the rest of the market. These are known as key


21


performance indicators (KPIs).
1.1.2 Key Performance Indicators its role for organization in
performance appraisal
Most authors agree that KPIs are quantifiable measurements
that estimate the outcome of CSF (Critical Success Factor), goal,
objective or performance. Furthermore, Hyman (2004) firmly links
KPIs to effective performance management systems, argued that by
measuring correctly; managers will obtain the right information.
Key Performance Indicators (KPIs) help organizations understand
how well they are performing in relation to their strategic goals and
objectives. In the broadest sense, a KPI can be defined as providing
the

most

important

performance

information

that

enables

organizations or their stakeholders to understand whether the
organization is on track or not.
According to David Parmenter, “KPIs represent a set of
measures focusing on those aspects of organizational performance
that are the most critical for the current and future success of the

organization”1.
Indicators identifiable as possible candidates for KPIs can be
summarized into the following sub-categories:
- Quantitative indicators which can be presented as a number.
- Practical indicators that interface with existing company
processes.
- Directional indicators specifying whether an organization is
getting better or not.
1

Key Performance Indicators – developing, implementing and using winning KPIs,p.3


22

- Actionable indicators are sufficiently in an organization's control
to effect change.
- Financial indicators used in performance measurement.
KPIs are commonly used by an organization to evaluate its
success or the success of a particular activity in which it is engaged.
Sometimes success is defined in terms of making progress toward
strategic goals, but often, success is simply the repeated
achievement of some level of operational goal (for example, zero
defects, 10/10 customer satisfaction, etc..).
KPIs are useful in many areas. For example, in marketing we
can use some indicators: new customers acquired; demographic
analysis of individuals (potential customers) applying to become
customers, and the levels of approval, rejections, and pending
numbers; status of existing customers; customer attrition; turnover
generated by segments of the customer population; outstanding

balances held by segments of customers and terms of payment;
collection of bad debts within customer relationships; profitability
of customers by demographic segments and segmentation of
customers by profitability.
Roles of KPI for organization can be summarized into the
following contents:
- Quantify criteria to appraisal staff. Criteria that are
measurable ensure the appraisal activity clearly and fairly, so that
avoiding from employees’ argument or dissatisfaction.
- Staff and managers can use day-by-day updated KPIs to
know “the gap” between their plan and recent result, then looking


23

for solutions to get plan. This makes KPIs linking to organization’s
goals and vision.
- KPI system has alignment with strategic direction of
organizations.

Figure 1.2: Strategic Alignment Pyramid
Source: Beuer K., KPIs- The metrics that drive performance
management, DM Review 2004:63
Because of the need to develop a good understanding of what is
important, performance indicator selection is often closely
associated with the use of various techniques to assess the present
state of the business, and its key activities. These assessments often
lead to the identification of potential improvements; and as a
consequence, performance indicators are routinely associated with
“performance improvement” initiatives. A very common way for

choosing KPIs is to apply a management framework such as the
balanced scorecard.


24

A performance indicator or key performance indicator (KPI) is
industry jargon for a type of performance measurement. KPIs are
commonly used by an organization to evaluate its success or the
success of a particular activity in which it is engaged. Sometimes
success is defined in terms of making progress toward strategic
goals, but often success is simply the repeated achievement of some
level of operational goal (for example, zero defects, 10/10 customer
satisfaction, etc.). Accordingly, choosing the right KPIs is reliant
upon having a good understanding of what is important to the
organization. 'What is important' often depends on the department
measuring the performance - the KPIs useful to finance will be quite
different than the KPIs assigned to sales, for example. Because of
the need to develop a good understanding of what is important,
performance indicator selection is often closely associated with the
use of various techniques to assess the present state of the business,
and its key activities. These assessments often lead to the
identification of potential improvements; and as a consequence,
performance indicators are routinely associated with 'performance
improvement' initiatives. A very common way for choosing KPIs is
to apply a management framework such as the balanced scorecard.
A KPI can follow the SMART criteria. This means the measure
has a Specific purpose for the business, it is Measurable to really get
a value of the KPI, the defined norms have to be Achievable, the
improvement of a KPI has to be Relevant to the success of the



25

organization, and finally it must be Time phased, which means the
value or outcomes are shown for a predefined and relevant period.
This research uses two models to demonstrate researcher’s
point. They are Balance Scorecard (BSC) by Robert Kaplan and
David Norton; and 12-step Model by David Parmenter that is
mentioned in his book “Key Performance Indicators – developing,
implementing and using winning KPIs”(2007). The Balance
scorecard is basic for choosing criteria and 12-step model support
for recommendations when implementing KPI in Maritime Bank.
1.2 The balanced scorecard by R. Kaplan and D. Norton
The balanced scorecard was first designed by Harvard business
professor Robert Kaplan (Harvard Business School) and David
Norton. In 1990, R. Kaplan and D. Norton led a research of 12
companies to investigate new methods in productivity measurement
and they have come up the concept of the Balance Scorecard. Then
in 1996, they established “Using the Balanced Scorecard as a
Strategic Management System” to review the definition and research
about it. Up to now, many organizations have applied the balance
scorecard and received good results.
Organizations have used systems consisting of a mix of
financial and non-financial measures to track progress for quite
some time. One example of such a system was created by Art
Schneiderman in 1987 at Analog Devices, a mid-sized semiconductor company; the Analog Devices Balanced Scorecard was