Question 1

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.

Accepted Answer

For a measure of performance to be useful, it must be concrete and precise, based on facts rather than speculations or guesses. It must also be reliable and consistent, with clear criteria for evaluation and consistent standards. Therefore, only complete and accurate measures that are based on actual results can be considered meaningful and effective.

Question 2

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

Accepted Answer

The best measures relate to corporate strategy and are SMART,

Question 3

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

Accepted Answer

Return on investment, residual income, and EVA are quantitative measures,

Question 4

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

Accepted Answer

The balanced scorecard includes five to seven measures in each of four perspectives: learning and growth, internal business processes, customer, and financial,

Question 5

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.

Accepted Answer

The balanced scorecard is a management tool that integrates performance measures across four different perspectives to guide operations toward achieving an organization's strategy,

Question 6

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

Accepted Answer

A lagging indicator "lags" the performance that is being measured,

Question 7

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

Accepted Answer

A performance dashboard presents important data in an easy-to-understand format, allowing organizations to track progress towards their objectives and make informed decisions.

Question 8

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

Accepted Answer

Many studies have shown that companies struggle to effectively use nonfinancial performance measures, despite recognizing their significance.

Question 9

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

Accepted Answer

Lagging indicators are used to measure the effectiveness of past actions and results. They are determined after a certain event or outcome has occurred. Examples of lagging indicators include financial metrics such as return on investment (ROI) and customer satisfaction ratings.

Question 10

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

Accepted Answer

The balanced scorecard is a tool used to communicate the corporate strategy across different levels of the organization, ensuring that everyone is aligned and working towards the same goals.

Question 11

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

Accepted Answer

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

Question 12

Lagging indicators can be used to predict future results.

Accepted Answer

The answer of Lagging indicators can be used to predict...

Question 13

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

Accepted Answer

Understanding the cause-and-effect relationships behind KPIs helps identify areas for improvement and focus efforts on actions that will directly impact performance.

Question 14

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

Accepted Answer

Financial measures such as net income, earnings per share, and return on investment are based on information taken from accounting reports; they are quantitative and objective,

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.

Accepted Answer

A balanced scorecard is created to identify and prioritize key performance indicators in various aspects of a business. By doing so, managers are stating a hypothesis about what results they expect to see based on the emphasis of certain measures. They are essentially testing their assumptions about cause-and-effect relationships between performance measures and business outcomes.

Question 16

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

Accepted Answer

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

Question 17

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.

Accepted Answer

This statement is true. For example, unemployment rates may be a lagging indicator of an economic recession, but a leading indicator of potential changes in consumer spending. Therefore, it can be challenging to definitively classify certain measures as solely leading or lagging indicators.

Question 18

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

Accepted Answer

Nonfinancial measures can be both qualitative (such as customer satisfaction, employee engagement, or brand reputation) and quantitative (such as number of new customers, website traffic, or social media engagement).

Question 19

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

Accepted Answer

When an organization relies solely on one performance measure, managers can easily be misled into thinking that all is well, when in reality, there are issues that require their corrective attention,

Question 20

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

Accepted Answer

As a measure of a salesperson's performance, corporate profit margin is not actionable, since no one salesperson controls all the components of the corporate profit margin,

Quiz 11: Decentralization and Performance Evaluation