HSBC 2007 Annual Report Download - page 15

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In calculating TSR, dividend income is assumed to
be invested in the underlying shares. As the
comparator group includes companies listed on
overseas markets, a common currency is used to
ensure that TSR is measured on a consistent basis.
The TSR benchmark is an index set at 100 and
measured over one, three and five years for the
purpose of comparison with the performance of a
group of competitor banks which reflect HSBC’s
range and breadth of activities. The TSR levels at the
end of 2007 were 95.6, 111.3, and 158.8 over one,
three and five years respectively. HSBC’s TSR over
all above mentioned periods has underperformed the
benchmark. This is attributed largely to the impact
on the share price of the current weakness in the US
sub-prime mortgage business and investor
preference over this time for companies with smaller
market values, particularly those for which there is
the possibility of participating in domestic or
regional consolidation.
Management believes that financial KPIs must
remain relevant to the business so they may be
changed over time to reflect changes in the Group’s
composition and the strategies employed.
Non-financial KPIs
HSBC has chosen four non-financial KPIs which are
important to the future success of the Group in
delivering its strategic objectives. These non-
financial KPIs are currently reported internally
within HSBC on a local basis.
Employee engagement
Employee engagement is a measure of employees’
emotional and rational attachment to HSBC.
In 2007, HSBC conducted its first Global
People Survey. This comprised questions designed to
measure employee engagement levels consistently
across the Group. The survey covers HSBC’s entire
permanent global workforce, and responses were
received from almost 290,000 employees, a response
rate of 88 per cent.
The overall employee engagement index score
was 60 per cent. The 2008 target is 62 per cent.
Survey questions were grouped into twelve
dimensions. Employees rated HSBC above the
external global norms in all these dimensions. In two
dimensions, reputation and corporate responsibility,
employees rated HSBC as achieving the external
best in class norm. The survey results have been
shared with all employees and action plans are being
developed at all levels of the organisation.
Brand perception
The score for brand perception is set by data
from surveys that are conducted by accredited,
independent, third party organisations. A weighted
score card is used to produce an overall score on a
100 point scale which is then benchmarked against
HSBC's main competitors. The scores from each
market are weighted according to the risk adjusted
revenues earned in that market to obtain the overall
company score.
The 2007 brand scores for Personal Financial
Services and Commercial Banking were ahead of the
competitor averages by 6 and 7 points, respectively,
on a 100 point scale. The 2008 brand perception
target is to increase the gap to 9 points and 8 points,
respectively.
Customer satisfaction
HSBC has regularly conducted customer satisfaction
surveys in its main markets over many years. HSBC
now uses a consistent measure of customer
recommendation to gauge customer satisfaction with
the services provided by the Group's Personal
Financial Services business. This survey is also
conducted by accredited, independent, third party
organisations and the resulting recommendation
scores are benchmarked against competitors.
The 2007 customer recommendation score for
Personal Financial Services was ahead of the
competitor average by 1 point on a 100 point scale.
The 2008 target is to increase that gap to 2.5 points.
IT performance and systems reliability
HSBC tracks two key measures as indicators of IT
performance; namely, the number of customer
transactions processed and the reliability and
resilience of systems measured in terms of service
availability targets.
Number of customer transactions processed
The number of customer transactions processed is a
reflection of the increasing usage of IT in each of the
delivery channels used to service customers. Its aim
is to manage the rate of increase in customer
transaction costs effectively and ensure that
customer growth is enabled in the appropriate
channels. The transition of customer transactions
from labour intensive (branch, call centre and others)
to automated (credit card, internet, self-service and
other e-channels) is occurring. The following chart
shows the 2005, 2006 and 2007 volumes per
delivery channel: