Deck 11: Performance Evaluation Revisited: a Balanced Approach

Question 1

When choosing the right performance measures,the best measures relate to day-to-day operations.

Answer 1

False

Question 2

The balanced scorecard includes one or two measures in each of six perspectives.

Answer 2

False

Question 3

Lagging indicators can be used to predict future results.

Answer 3

True

Question 4

The balanced scorecard assists in communicating the corporate strategy throughout the organization.

Question 5

Although executives recognize the importance of nonfinancial performance measures,companies are not particularly good at using them.

Question 6

Identifying whether a measure is a leading or lagging indicator can be difficult,because a lagging indicator of one event can be a leading indicator of another.

Question 7

Measures that can be determined only after something is finished are called lagging indicators.

Question 8

Nonfinancial measures,which are not based on accounting results,can be either qualitative or quantitative.

Question 9

A lagging indicator "lags" the time period when a performance is measured.

Question 10

A performance dashboard is a management tool that integrates performance measures performance across four different perspectives dashboard to guide operations toward achieving an organization's strategy.

Question 11

A performance dashboard is a visual display of the key measures related to an organization's operational goals and strategies.

Question 12

Measures that are predictors of your ultimate performance on a particular activity are referred to as predictor indicators.

Question 13

Even if an organization relies solely on one performance measurement,it cannot easily be misled into thinking all is well,when in reality,all is not well.

Question 14

The learning and growth perspective answers the question,"Are we improving our business processes in order to deliver maximum value to our customers."

Question 15

When a company creates a balanced scorecard,managers are stating a hypothesis about the results that will occur if certain performance measures are stressed.

Question 16

The key to using key performance indicators to drive performance is to understand the cause-and-effect relationships they represent.

Question 17

As a measure of a salesperson's performance,"corporate profit margin" is an example of an actionable measure.

Question 18

To be of any value,a measure of performance must be measurable,meaning that it is complete and accurate,and is based on actual results rather than on estimates.

Question 19

Return on investment,residual income,and EVA all have qualitative components.

Question 20

Earnings per share,although taken from accounting reports,is a qualitative measure.

Question 21

Perfect manufacturing cycle efficiency would yield a ratio of zero - that is,no processing time would be non-value-added.
Appendix,

Question 22

Benchmarking is the practice of using data from other organizations to identify the processes and practices associated with world-class performance.

Question 23

Measures that can be determined only after something is finished are called

A)post-operations indicators.
B)lagging indicators.
C)input indicators.
D)objective indicator.

Question 24

Benchmarking is appropriate only within a company's industry.

Question 25

Which of the following is not an example of an internal operating nonfinancial measure?

A)Labor productivity
B)Product defects
C)Product flexibility
D)Setup efficiency

Question 26

Which of the following is not an example of a lagging indicator?

A)Earnings per share
B)Grade point average
C)Number of customer complaints
D)All of these answer choices are lagging indicators

Question 27

Benchmarking participants should adhere to the Benchmarking Code of Conduct which provides general principles to follow during the benchmarking process.

Question 28

The balanced scorecard is a system that forces managers to consider how different parts of their company affect one another.

Question 29

Which of the following is not an example of an employee-oriented nonfinancial measure?

A)Absenteeism
B)Labor productivity
C)Accidents per month
D)Employee empowerment

Question 30

Direct material variance is a measure of

A)outcomes.
B)inputs.
C)qualitative factors.
D)None of these answer choices are correct.

Question 31

In determining whether benchmarking is worth the effort,a company must assess the potential return from a benchmarking project.

Question 32

The goal of benchmarking is to identify those best practices that improve both quality and productivity.

Question 33

Benchmarking is about trying to achieve another company's metrics.

Question 34

Direct materials variances,direct labor variances,return on investment,residual income and EVA are performance measures that are

Question 35

The time between an order's placement and its shipment is referred to as the delivery cycle time.
Appendix,

Question 36

Which of the following is not an example of a customer-oriented nonfinancial measure?

A)Market share
B)Delivery performance
C)Product flexibility
D)Product defects

Question 37

Direct materials variances,direct labor variances,return on investment,residual income and EVA are performance measures that are

Question 38

Residual income is a measurement of

A)inputs.
B)outcomes.
C)quality.
D)None of these answer choices are correct.

Question 39

For processes that are not identical,companies cannot benefit from benchmarking outside their industry.

Question 40

Lagging indicators can be used to

A)measure past performance.
B)predict future results.
C)provide evidence that a certain result has been obtained.
D)All of these answer choices are correct.

Question 41

Measures that provide managers with information they need to take timely,corrective action are referred to as

A)budget indicators.
B)variance indicators.
C)cycle indicators.
D)leading indicators.

Question 42

A difference in quantitative indicators and qualitative indicators is

A)quantitative indicators are the same regardless of who is doing the measuring whereas qualitative indicators will differ among individual since each one has a unique perspective.
B)qualitative indicators are subjective while quantitative indicators are objective.
C)both quantitative indicators are the same regardless of who is doing the measuring whereas qualitative indicators will differ among individual since each one has a unique perspective and qualitative indicators are subjective while quantitative indicators are objective.
D)neither quantitative indicators are the same regardless of who is doing the measuring whereas qualitative indicators will differ among individual since each one has a unique perspective nor qualitative indicators are subjective while quantitative indicators are objective.

Question 43

Which of the following is an example of a customer-oriented nonfinancial measure?

A)Product flexibility
B)Product defects
C)Production volume
D)New product introductions

Question 44

Which of the following is not a reason companies use key performance indicators?

A)To mandate to report company performance to stakeholders
B)To mncrease accuracy of business decisions
C)To improve company performance
D)All of these answer choices are reasons companies use key performance indicators.

Question 45

Earnings per share is a financial measure that is

Question 46

Return on investment is a financial measure that is

Question 47

The best measures relate to corporate strategy and SMART.Which of the following is not a component of SMART?

A)Measurable
B)Timeliness
C)Actionable
D)Responsibility

Question 48

Which of the following is not a main barrier to the effective use of nonfinancial performance measures by organizations?

A)Skepticism that the measures are directly related to the bottom line
B)Lack of management skill needed to implement the measures
C)Lack of familiarity with the measures on the part of the board members
D)Undeveloped tools for analyzing the measures

Question 49

The best measures relate to corporate strategy and SMART.Which of the following is not a component of SMART?

A)Tangible
B)Measurable
C)Relevant
D)Specific

Question 50

Which of the following is an example of an employee-oriented nonfinancial measure?

A)Setup efficiency
B)Labor productivity
C)Accidents per month
D)Time to respond to customer problems

Question 51

Qualitative indicators tend to be based on

A)feelings or accounting records.
B)feelings or perceptions.
C)accounting records or perceptions.
D)None of these answer choices are correct.

Question 52

Nonfinancial measures can be

Question 53

Before deciding whether a measure is a leading or lagging indicator,a manager should be sure to know

A)what event the measure is related to.
B)whether the measure is used by other companies in the industry.
C)both what event the measure is related to and whether the measure is used by other companies in the industry.
D)neither what event the measure is related to nor whether the measure is used by other companies in the industry.

Question 54

Measures that help predict a future result are referred to as

A)lagging indicators.
B)earnings per share.
C)leading indicators.
D)EVA.

Question 55

For managers to adequately monitor the organization's performance,they need to use

A)leading indicators.
B)lagging indicators.
C)both leading indicators and lagging indicators.
D)neither leading indicators nor lagging indicators.

Question 56

Leading indicators provide managers with the information they need to

A)prepare direct material and direct labor variances.
B)take timely,corrective action.
C)prepare GAAP- based financial statements.
D)All of these answer choices are correct.

Question 57

Qualitative indicators

A)tend to be based on feelings.
B)tend to be based on perceptions.
C)do not rely on accounting records.
D)All of these answer choices are correct.

Question 58

Which of the following is not a reason companies use key performance indicators?

A)To align business activity with corporate strategy
B)To improve company performance
C)To improve timeliness of business decisions
D)All of these answer choices are reasons companies use key performance indicators.

Question 59

Which of the following is an example of an internal operating nonfinancial measure?

A)Accidents per month
B)Labor productivity
C)Market share
D)Product flexibility

Question 60

Which of the following not a qualitative measure that McDonald's would use?

A)Accidents per month
B)Customer retention
C)Current ratio
D)Number of orders filled incorrectly

Question 61

A performance measure is measurable if it

A)measures only one activity.
B)relates clearly and directly to the process it measures.
C)relates to a corporate strategic objective.
D)is complete and accurate.

Question 62

A balanced scorecard

A)integrates performance measures across four different perspectives.
B)assists in communicating the corporate strategy throughout the organization.
C)helps managers understand the interrelationships between various areas of an organization.
D)All of these answer choices are correct.

Question 63

Which of the following uses five to seven measures of performance across four perspectives?

A)Balanced scorecard
B)Key performance measure
C)Performance dashboard
D)Leading and lagging indicators

Question 64

A visual display of the key measures related to an organization's operational goals and strategies is referred to as a

A)balanced scorecard.
B)performance dashboard.
C)strategy map.
D)benchmark report.

Question 65

A performance measure is actionable if

A)something can be done to influence its value.
B)it is complete and accurate.
C)it is clearly and directly related to the process it measures.
D)it is based on actual results rather than on estimates.

Question 66

Which of the following is not one of the four balanced scorecard perspectives?

A)Internal business processes
B)Customer
C)Industry
D)Financial

Question 67

A performance measure is specific if it

A)measures only one activity.
B)relates clearly and directly to the process it measures.
C)is either qualitative or nonfinancial,but not both.
D)is complete and accurate.

Question 68

A measure is relevant if it

A)is complete and accurate.
B)is clearly and directly related to the process it measures.
C)relates to a corporate strategic objective.
D)None of the these answer choices are correct.

Question 69

According to a Bain & Company survey,approximately what percentage of global business executives use a balanced scorecard to monitor performance?

A)16%
B)72%
C)38%
D)91%

Question 70

Indicators that measure successful progression toward the organization's goals are referred to as

A)key performance indicators.
B)specific indicators.
C)lagging indicators.
D)dashboard indicators.

Question 71

When using the balanced scorecard to monitor performance,the learning and growth perspective answers which of the following questions?

A)Are we developing employees and providing technologies that facilitate change and improvement?
B)Are we creating products and hiring employees with skills to create product and deliver them in a timely manner?
C)Are we meeting our stakeholders' expectations?
D)Are we growing in a manner to be competitive in the industry?

Question 72

Which of the following is not one of the four balanced scorecard perspectives?

A)Learning and growth
B)Production
C)Customer
D)Financial

Question 73

When using the balanced scorecard to monitor performance,which of the following perspectives is the foundation for improvement in all other areas?

A)Internal business processes
B)Financial
C)Learning and growth
D)Customer

Question 74

A balanced scorecard does not

A)integrate performance measures across four different perspectives.
B)provide a visual display of the key measures related to an organization's operational goals and strategies.
C)help managers understand the interrelationships between various areas of an organization.
D)All of these answer choices are correct.

Question 75

Which of the following is not one of the four balanced scorecard perspectives?

A)Customer
B)Financial
C)Learning and growing
D)All of these answer choices are balanced scorecard perspectives.

Question 76

A performance dashboard is most helpful when it

A)directly links employee satisfaction with customer satisfaction.
B)identifies and measures cause-and-effect relationships.
C)is customized for particular managers.
D)identifies whether a measure is leading or lagging.

Question 77

A performance dashboard does which of the following?

A)Offers a visual display of key performance measures
B)Offers managers the opportunity to drill down into the data to obtain information
C)Both offers a visual display of key performance measures and offers managers the opportunity to drill down into the data to obtain information
D)Neither offers a visual display of key performance measures nor offers managers the opport

Question 78

Before a balanced scorecard can be developed,managers must

A)be clear about the strategy they are trying to achieve.
B)understand the cause-and-effect relationship between various measures.
C)both be clear about the strategy they are trying to achieve and understand the cause-and-effect relationship between various measures.
D)neither be clear about the strategy they are trying to achieve nor understand the cause-and-effect relationship between various measures.

Question 79

A manager can use a performance dashboard for

A)driving business operations.
B)focusing on critical measures.
C)both driving business operations and focusing on critical measures.
D)neither driving business operations nor focusing on critical measures.

Question 80

A management tool that integrates performance measures across four different perspectives to guide operations toward achieving an organization's strategy is called

A)performance dashboard.
B)balanced scorecard.
C)key performance measures.
D)None of these answer choices are correct.