Performance Management and Impact of Measures on Behavior

Question 1

Explain the purpose of a balance scorecard

Answer 1

A balanced scorecard is a framework used for implementing strategy that converts an entity’s strategic objectives into a set of performance measures.

Question 2

What are total factor productivity ratios (TFP) and partial productivity ratios (PPR)?

Answer 2

TFP and PPR are two types of productivity measures used as external benchmarks.

Total factor productivity ratios (TFPs) reflect the quantity of ALL output produced relative to the costs of all inputs used.

Partial prodcutivity ratios (PPRs) reflect the quantity of output produced relative to the quantity of INDIVIDUAL inputs used.

Question 3

What is a control chart and how is it used as a statistical quality-control tool?

Answer 3

A control chart is used to plot a comparison of actual results by batch or other suitable constant interval to an acceptable range.

Control charts effectively indicate whether there is a trend toward improved quality conformance or deteriorating quality conformance.

Question 4

How are Pareto diagrams and fishbone diagrams used to identify quality-control issues (defects)?

Answer 4

A Pareto diagram identifies the frequency (highest to lowest) of defects or problems that demand management attention.

Once initially identified in the Pareto diagram, the individual defects/problems are further analyzed by cause and effect in a fishbone diagram.

Question 5

What are the characteristics of effective performance measures?

Answer 5

Effective Performance Measures:

1. Relative to the goals of the organization
2. Balance long-and short-term issues
3. Reflect management of key activities sometimes referred to as critical success factors in the balance scorecard.
4. Are under the control of influence of the employee
5. Are understood by the employee.
6. Are used to both evaluate and reward the employee or otherwise constructively influence behavior.
7. Are objective and easily measured.
8. Are used consistently.

Question 6

Define transaction marketing

Answer 6

Customers are attracted for the sake of a single sale.

Question 7

Define interaction-based relationship marketing

Answer 7

When customers are attracted for the purpose of a sale that serves as the basis for an ongoing relationship

Question 8

Define database marketing

Answer 8

Information is gathered on customers and the information from that database is used to segment customers into target markets for a more effective selling effort.

Question 9

Identify three types of compensation generally available

Answer 9

1. Fixed Salary
2. Bonuses
3. Perks

Question 10

List five issues related to incentive compensation

Answer 10

1. Time horizon–Does the plan exclusively emphasize current reward for current performance or does it promote ongoing performance?
2. Fixed vs. Variable Bonuses–Is the incentive pay formula driven or subjective?
3. Stock vs. Accounting-based performance evaluation–is the measurement of performance based on accounting data or equity values.
4. Local vs. Company-Wide performances–Does the incentive reward for local(division) or company-wide?
5. Cooperative vs. Competitive plans–Does the incentive reward group or individual accomplishment?