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Questions and Answers
What is considered a 'lagged' measure of performance?
What is considered a 'lagged' measure of performance?
- Return on capital employed (correct)
- The number of complaints received from customers
- The number of hard hats worn on a building site
- The number of training hours per employee
Which of the following is a characteristic of Balanced Scorecards?
Which of the following is a characteristic of Balanced Scorecards?
- Always have four perspectives
- Can be used in not-for-profit organisations (correct)
- Are a feedback mechanism
- Can only be updated on an annual basis
What should organizations consider when designing performance measurement systems to mitigate challenges?
What should organizations consider when designing performance measurement systems to mitigate challenges?
- Implementing a biased set of measures
- Focusing solely on customer feedback
- Incorporating a balanced set of measures (correct)
- Using only financial metrics
Which sequence is recommended for reviewing a balanced scorecard according to the provided information?
Which sequence is recommended for reviewing a balanced scorecard according to the provided information?
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What is NOT a key perspective of Balanced Scorecards?
What is NOT a key perspective of Balanced Scorecards?
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Which statement reflects the importance of measuring performance in organizations?
Which statement reflects the importance of measuring performance in organizations?
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Study Notes
Performance Measurement
- A "lagged" measure of performance is the number of complaints received from customers, as it measures the outcome of past actions.
Balanced Scorecards
- Balanced Scorecards can be used in not-for-profit organizations, demonstrating their versatility.
- These scorecards are not limited to a fixed annual update, but can be updated more frequently.
- Balanced Scorecards always have four perspectives: financial, customer, internal business process, and learning and growth.
- They are a feedback mechanism, providing insights to improve performance.
Designing Performance Measurement Systems
- The order of reviewing a balanced scorecard does not matter, contradicting the maxim 'the order of the scorecard matters'.
- The effects of measuring performance in organizations can be uncertain and vary; thus, it's essential to design systems carefully, considering specific context, objectives, and potential unintended consequences.
- A balanced set of measures should be incorporated to mitigate the challenges.
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