The impact of forward-looking metrics on employee decision making
By: Pablo Casas-Arce, F. Asis Martinez-Jerez, V. G. Narayanan
Contributors: Martinez-Jerez, Asís; Narayanan, V. G.; Harvard Business School
Series: Working paper / Harvard Business School -- 11-106; Working paper (Harvard Business School) -- 11-106.
Publisher: Harvard Business School
Published: 2011
Place of publication: [Boston]
Language: eng
Number of pages: 44
Description: This paper analyzes the effects of providing forward-looking metrics on employee decision making. We use data from a southern European bank that, in April 2002, started providing its branch managers with customer lifetime value (CLV) information about mortgage applicants. The data allows us to gauge the effects of enriching the information set of these employees in an environment where incentives and the allocation of decision rights remained unchanged. We find that CLV availability resulted in a significant shift in attention towards the more profitable client segments (the weight of the top segment in the portfolio of customers increases from 26% to 34%), but we do not find evidence of improved cross-selling (except for an increase in the sale of insurance products). Moreover, the use of CLV information did not have a negative impact on pricing, as some of the literature suggests, nor on default risk, indicating that managers increased sales to more profitable customers by providing better customer service.
Notes: "April 2011" -- Publisher's website.

Includes bibliographical references.