Performance Measurement & KPIs Flashcards

A retail chain tracks 'average transaction value' as a KPI. This metric is BEST categorized as:

Answer: An output KPI

Average transaction value measures the result (output) of sales interactions rather than the activities or resources that drive them.

Which scenario represents a risk of 'gaming' a KPI system?

Answer: A sales team increases pipeline volume by adding unqualified leads to hit their activity metric

Gaming occurs when employees manipulate inputs or activities to hit a metric without creating real value.

What is the PRIMARY purpose of a performance dashboard in strategic management?

Answer: To provide real-time or near-real-time visibility into key metrics for informed decisions

Dashboards aggregate and visualize KPI data to enable rapid, data-driven strategic decisions.

An airline measures on-time departure rate. This KPI would be classified under which Balanced Scorecard perspective?

Answer: Internal Business Process

On-time departure rate measures operational execution quality, which falls under the Internal Business Process perspective.

When setting KPI targets, what does 'stretch target' mean?

Answer: An ambitious goal that requires significant improvement and innovation to reach

Stretch targets push teams beyond comfortable levels to drive significant performance improvements.

Which formula correctly calculates Net Promoter Score (NPS)?

Answer: % Promoters − % Detractors

NPS equals the percentage of Promoters (scores 9–10) minus the percentage of Detractors (scores 0–6).

A strategist recommends reducing the number of KPIs tracked from 40 to 8. The MAIN benefit of this change is:

Answer: Improving focus by concentrating attention on what matters most

Fewer, well-chosen KPIs drive focused action, whereas too many metrics dilute attention and obscure priorities.