Using the Balanced Scorecard and the Analytic Hierarchy Process to Rank the Key Performance Factors in the Iranian Banking Industry

Abstract

Ranking the appropriate Key Performance Factors (KPFs) for banks in Iran is vital for determining the focus of the bank’s economic growth and development. Although identifying the appropriate KPFs is important for the outgrowth of the Iranian banks, one of the most critical performance drivers is establishing the appropriate strategy management framework and infrastructure to drive strategic performance in Iranian banks. The Balanced Scorecard (BSC) methodology is a multidimensional strategy management performance system that provides leaders with tools to identify industry forces, to develop a strategic plan with causal linkages, to align an organization, to drive performance, and to evaluate organizational growth and development. The BSC was the conceptual framework used in this study along with the Analytic Hierarchy Process (AHP) method. The population of this study consists of 25 professionals of the Iranian Banking Network (IBN). A purposive judgmental sample was used to arrive at the sample size. The aim of this study was to identify, rank, and prioritize the appropriate KPFs to determine the best path forward to advance the bank’s economic goals and to strengthen the nation’s economy. The AHP method guided the decision of the banking professional in determining the KPFs for the Iranian banking industry. The KPFs were grouped together according to the BSC’s four perspectives: financial, customer, inner process, and learning & growth. The study provided implications for decision makers in the Iranian banking industry that the highest KPFs for the financial perspective is economic value-added, for the customer perspective is future years profit, for the internal process perspective is given facilities, and for the learning and growth perspective is the average work life of an employee.