Question 1

The performance measurement system must ensure that managers know the specific goals and targets for the subunits. This statement reflects which of the following performance measurement goals?

Accepted Answer

The statement indicates that one of the goals of the performance measurement system is to communicate expectations to managers regarding specific goals and targets for subunits. This goal is related to the communication aspect of performance measurement, which aims to ensure that managers are aware of what is expected of them and their subunits.

Question 2

Financial performance metrics are considered to be a lead indicator, providing signs of future performance.

Accepted Answer

Financial performance metrics are typically lag indicators, reflecting past performance rather than predicting future outcomes.

Question 3

Companies benchmark their performance against the performance of their competitors and also against their own past performance.

Accepted Answer

Companies often use benchmarking to evaluate their progress and performance. Benchmarking against competitors allows them to assess their strengths and weaknesses and identify areas for improvement. Benchmarking against their own past performance helps companies track their progress over time and set goals for continued growth and success.

Question 4

The performance measurement system lets upper management know whether the subunits are achieving their goals and targets or not. This statement reflects which of the following performance measurement goals?

Accepted Answer

The statement reflects the goal of providing feedback through the performance measurement system by informing upper management whether the subunits are meeting their goals or not.

Question 5

Which one of the following is NOT a goal of a performance evaluation system?

Accepted Answer

Issuing stock to investors is not a goal of a performance evaluation system. The other choices are common goals of a performance evaluation system, including communicating expectations, benchmarking or comparing performance against standards, and motivating unit managers to improve their performance.

Question 6

Which of the following statements reflects the use of benchmarking in a performance evaluation system?

Accepted Answer

Benchmarking involves comparing an organization's performance metrics with those of other similar companies in the same industry. Option A refers to internal controls, which are important for preventing theft and wastage but do not necessarily involve benchmarking. Option B refers to innovation, which can be important but does not necessarily involve benchmarking. Option D refers to attracting top talent through stock options and financial rewards, which is also important but does not involve benchmarking.

Question 7

The performance measurement system should compare the company's performance against the best practices in the industry. This statement reflects which of the following performance measurement goals?

Accepted Answer

Benchmarking involves comparing an organization's performance against the best practices in the industry. This helps the company set performance targets and identify opportunities for improvement.

Question 8

In designing a balanced scorecard, the company begins with company goals, then develops KPIs, and finally, based on the KPIs that are established, the company identifies the company's critical factors.

Accepted Answer

In designing a balanced scorecard, the process typically begins with identifying the company's vision and strategy, then moves on to developing objectives across four perspectives (financial, customer, internal process, learning and growth), from which KPIs are derived, and finally, critical success factors are identified to support achieving those objectives. The statement's sequence is incorrect.

Question 9

Decentralization increases the difficulty of achieving goal congruence among managers.

Accepted Answer

Decentralization involves giving decision-making authority to lower-level managers, which can lead to different goals and priorities among managers. This can make it more difficult to achieve goal congruence, or agreement on overall organizational objectives, among managers.

Question 10

Which of the following is NOT one of the four perspectives of a balanced scorecard?

Accepted Answer

The four perspectives of a balanced scorecard are financial, customer, internal processes, and learning and growth. Technological perspective is not one of them.

Question 11

The performance measurement system should provide incentives for coordinating activities of the subunits and focusing them toward the overall company objectives. This statement reflects which of the following performance measurement goals?

Accepted Answer

Goal congruence refers to the extent to which goals of individual subunits align with the overall objectives of the company. Incentives can be used to promote goal congruence and encourage subunits to coordinate their activities towards achieving shared goals. Motivating unit managers, providing feedback, and benchmarking are other common goals of performance measurement systems, but they do not directly address the issue of coordinating activities and promoting goal congruence.

Question 12

One part of the balanced scorecard helps management answer the question: "How do we look to shareholders?" Which of the four perspectives is being described here?

Accepted Answer

The financial perspective focuses on financial performance measures such as revenue growth, profitability, cash flow, return on investment, etc. This perspective helps management evaluate the company's financial health and determine how it looks to shareholders.

Question 13

A company that uses a balanced scorecard has established a KPI for employee turnover. If the KPI is negative, that implies a very low rate of employee turnover.

Accepted Answer

A negative KPI for employee turnover does not necessarily imply a very low rate of turnover. It could indicate that the actual turnover rate is worse than the target or expected rate. KPIs are indicators of performance relative to a goal, and negative or positive values depend on the context and definition of the KPI.

Question 14

A good balanced scorecard focuses only on leading indicators, because lagging indicators that relate to past performance are not important for the scorecard.

Accepted Answer

A good balanced scorecard should have a balance between leading indicators (such as customer satisfaction, employee satisfaction, and innovation) and lagging indicators (such as financial performance and customer retention) to provide a comprehensive view of both current and past performance. Lagging indicators are still important for determining the effectiveness of past strategies and identifying areas for improvement.

Question 15

Which of the following goals of a performance evaluation system is accomplished when targets are compared to actual results?

Accepted Answer

Providing feedback to management is a goal of a performance evaluation system that is accomplished when targets are compared to actual results. This allows management to understand how well the company or specific departments are performing against the set targets.

Question 16

In a balanced scorecard system, the key performance indicators (KPIs)are ways to measure whether the company is meeting its goals.

Accepted Answer

This is correct. KPIs are used in a balanced scorecard system to measure and track the company's progress towards achieving its goals.

Question 17

From the shareholders' point of view, performance measurement should focus on financial performance only.

Accepted Answer

While financial performance is certainly important to shareholders, it is not the only factor that they consider when evaluating a company's overall performance. Shareholders may also be concerned with non-financial factors such as corporate social responsibility, customer satisfaction, employee engagement, and innovation, among others. Therefore, performance measurement should take into account a broad range of metrics that reflect both financial and non-financial aspects of the organization.

Question 18

Each one of the four perspectives of a strong balanced scorecard should have as many KPIs as management can devise, to create a more effective and efficient system.

Accepted Answer

While it is important to have a sufficient number of KPIs for each perspective, having too many can create difficulty in tracking and interpreting data. It is recommended to focus on a few key metrics that are most important for achieving the desired outcomes.

Question 19

If a manager's performance is evaluated solely on the ability to control costs, he or she may sacrifice quality for savings, thus endangering customer satisfaction.

Accepted Answer

If a manager's performance evaluation is based solely on cost control, they may prioritize cost-cutting measures over maintaining quality, which could lead to dissatisfied customers.

Question 20

Which one of the following is NOT a goal of a performance evaluation system?

Accepted Answer

Formulating a budget is not a goal of a performance evaluation system. The primary goals of a performance evaluation system are to communicate expectations, provide feedback, and motivate unit managers to improve their performance. A budget is a separate financial planning tool that is based on performance expectations and goals.

Quiz 24: Performance Evaluation and the Balanced Scorecard

The performance measurement system must ensure that managers know the specific goals and targets for the subunits. This statement reflects which of the following performance measurement goals?

Financial performance metrics are considered to be a lead indicator, providing signs of future performance.

Companies benchmark their performance against the performance of their competitors and also against their own past performance.

The performance measurement system lets upper management know whether the subunits are achieving their goals and targets or not. This statement reflects which of the following performance measurement goals?

Which one of the following is NOT a goal of a performance evaluation system?

Which of the following statements reflects the use of benchmarking in a performance evaluation system?

The performance measurement system should compare the company's performance against the best practices in the industry. This statement reflects which of the following performance measurement goals?

In designing a balanced scorecard, the company begins with company goals, then develops KPIs, and finally, based on the KPIs that are established, the company identifies the company's critical factors.

Decentralization increases the difficulty of achieving goal congruence among managers.

Which of the following is NOT one of the four perspectives of a balanced scorecard?

The performance measurement system should provide incentives for coordinating activities of the subunits and focusing them toward the overall company objectives. This statement reflects which of the following performance measurement goals?

One part of the balanced scorecard helps management answer the question: "How do we look to shareholders?" Which of the four perspectives is being described here?

A company that uses a balanced scorecard has established a KPI for employee turnover. If the KPI is negative, that implies a very low rate of employee turnover.

A good balanced scorecard focuses only on leading indicators, because lagging indicators that relate to past performance are not important for the scorecard.

Which of the following goals of a performance evaluation system is accomplished when targets are compared to actual results?

In a balanced scorecard system, the key performance indicators (KPIs)are ways to measure whether the company is meeting its goals.

From the shareholders' point of view, performance measurement should focus on financial performance only.

Each one of the four perspectives of a strong balanced scorecard should have as many KPIs as management can devise, to create a more effective and efficient system.

If a manager's performance is evaluated solely on the ability to control costs, he or she may sacrifice quality for savings, thus endangering customer satisfaction.

Which one of the following is NOT a goal of a performance evaluation system?