Question

Consider performance measurement in a department that you work in or are familiar with. Do you use a balanced scorecard? What are the key performance indicators that you drive towards? What type of behaviors do they drive? Are they discussed extensively and have become part of the corporate culture? If you don’t use them, do you think they could be useful? What types of KPI’s would you choose for your department or area that you are familiar with that would drive employee learning & growth, customer perceptions, internal processes, and financial growth? If you currently are using them, which of these 4 areas are your KPI’s mostly focused on? How are they measured? If you aren’t using KPI’s yet, how would you measure the ones you have chosen? How easy are these to find?

This question will help the students to understand why they need to study accounting. Question responses should be a minimum of 250 words, with a goal of 500 words with at least 1 outside, academic strength source. A response to at least two of your classmates is required.

Answer 1

Performance measurement is the process of collecting, analysing and/or reporting information regarding the performance of an individual, group, organisation, system or component.A balanced scorecard is a performance metric used to identify, improve, and control a business's various functions and resulting outcomes.The balanced scorecard involves measuring four main aspects of a business: learning and growth, business processes, customers, and finance.Balanced scorecards are used to measure and provide feedback to organisations.

We can use balance scorecard for performance analysis in order to performance measurement in our department. There are five specific types of measures that have been identified, defined and will be applied : input, output, efficiency, quality and outcome. The balanced scorecard includes financial measures that tell the results of actions already taken. And it complements the financial measures with operational measures on customer satisfaction, internal processes, and the organisation’s innovation and improvement activities—operational measures that are the drivers of future financial performance.

The Balanced Scorecard Links Performance Measures

• How do customers see us? (customer perspective)

• What must we excel at? (internal perspective)

• Can we continue to improve and create value? (innovation and learning perspective)

• How do we look to shareholders? (financial perspective)

Key Performance Indicators (KPI) – Key performance indicators are the metrics that may be the part of the balanced scorecard. KPIs are used to present actionable results across the organisation. Key performance indicators that we drive towards:-

• 1) Customer Acquisition Costs.
• 2) Customer Lifetime Value.
• 3) Sales Target.
• 4) Operating Expenses Ratio.
• 5) Net Profit Margin Percentage.
• 6) Return on Assets.
• 7) Return on Equity.
• 8) P/E Ratio.