Controllership Chapter Question Discussion

What is a performance measurement system

A performance measurement system is a mechanism that improves the likelihood the organization will implement its strategy successfully . It blends financial information with non-financial information in selecting measures that best represent the company 's strategy and has a series of measures that provide information about the operation of many different processes

Provide four reasons why the exclusive reliance on financial measures of performance can be inadequate and even dysfunctional

1 . It may encourage short-term actions that are not in the company 's long term

interests

2 . Business unit managers may not undertake useful long-term actions to obtain short-term profits

3 . Using short-term profit as the sole objective can distort communication between a business unit manager and senior management

4 . Tight financial control may motivate managers to manipulate data

Explain the past and present use of financial and nonfinancial performance measures

Companies used non-financial measures at lower levels in the organization for task control and financial measures at higher levels for management control

What are the four components of the balanced scorecard

1 . Financial

2 . Customer

3 . Internal Business

4 . Innovation and learning (5 ) What are the goals of the bal . scorecard

Balanced scorecards should foster a balance among different strategic measures in an effort to achieve goal congruence to encourage employees to act in the organization 's best interest (6 ) What are the processes of the balanced scorecard

accurately reflect the critical factors that will determine the success of the company 's strategy

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