CBC Performance Metrics 2 — Questions and Answers
Question 1: A business coach wants to measure whether a client's team is improving output relative to hours worked. Which metric is most appropriate?
- Labor productivity ratio (Correct answer)
- Gross profit margin
- Customer churn rate
- Brand awareness index
Correct answer: Labor productivity ratio
Labor productivity compares output produced to labor hours invested, directly measuring efficiency gains.
Question 2: Which characteristic distinguishes a leading indicator from a lagging indicator in coaching engagements?
- It predicts future performance rather than confirming past results (Correct answer)
- It is always financial in nature
- It can only be measured annually
- It reflects outcomes that have already occurred
Correct answer: It predicts future performance rather than confirming past results
Leading indicators forecast future outcomes, while lagging indicators confirm what has already happened.
Question 3: A client's sales rose 20% but net profit fell. Which metric should the coach examine first to diagnose the disconnect?
- Operating expense ratio (Correct answer)
- Website traffic
- Employee headcount
- Social media engagement
Correct answer: Operating expense ratio
Rising costs relative to revenue, shown by the operating expense ratio, commonly erode profit despite sales growth.
Question 4: In the SMART framework for goal setting, what does the 'M' require of a performance goal?
- It must be measurable with quantifiable criteria (Correct answer)
- It must be managed by a senior executive
- It must be marketable to customers
- It must be modified monthly
Correct answer: It must be measurable with quantifiable criteria
The 'M' in SMART stands for Measurable, requiring quantifiable criteria to track progress.
Question 5: A coaching client tracks 45 different KPIs and feels overwhelmed. What is the best coaching recommendation?
- Prioritize a small set of critical KPIs aligned to strategic goals (Correct answer)
- Track all 45 more frequently
- Delegate all metrics to an outside firm
- Stop measuring until the business stabilizes
Correct answer: Prioritize a small set of critical KPIs aligned to strategic goals
Effective performance management focuses on a limited number of KPIs directly tied to strategic objectives.
Question 6: Which formula correctly calculates return on investment (ROI) for a coaching program?
- (Net benefits minus program cost) divided by program cost, times 100 (Correct answer)
- Program cost divided by revenue, times 100
- Net benefits plus program cost, divided by 2
- Revenue minus expenses, divided by headcount
Correct answer: (Net benefits minus program cost) divided by program cost, times 100
ROI equals net gain from the investment divided by its cost, expressed as a percentage.
Question 7: A coach benchmarks a client's inventory turnover against industry averages. This practice is called what?
- External benchmarking (Correct answer)
- Internal auditing
- Variance forecasting
- Zero-based budgeting
Correct answer: External benchmarking
Comparing a company's metrics to industry peers is external (competitive) benchmarking.
CBC Performance Metrics 2
A business coach wants to measure whether a client's team is improving output relative to hours worked.
Which metric is most appropriate?