Performance Measurement & Management Flashcards
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Read the first 7 Performance Measurement & Management flashcards as text
Which performance measurement pitfall occurs when employees focus efforts on improving measured metrics while neglecting unmeasured but important outcomes?
Answer: Goal displacement
Goal displacement happens when employees optimize for the metrics being tracked rather than the underlying organizational goals those metrics were intended to represent.
A hospital's emergency department tracks 'door-to-doctor time.' This KPI is best classified as:
Answer: A leading indicator predicting patient satisfaction
Door-to-doctor time is a process metric that leads to downstream outcomes like patient satisfaction and clinical quality, making it a leading performance indicator.
In performance management, a 'cascading scorecard' means:
Answer: High-level organizational objectives are translated into aligned metrics at each lower level
Cascading ensures that team and individual scorecards align with and support departmental and corporate strategic objectives, creating vertical coherence throughout the organization.
A retail chain calculates inventory turnover as 4.2 against an industry average of 6.8. What is the most direct operational implication?
Answer: The company is holding excess inventory relative to industry peers
Lower inventory turnover compared to industry peers indicates the company holds more inventory relative to sales, tying up capital and increasing holding costs.
Which management approach involves regular short review meetings where teams assess performance metrics and commit to immediate corrective actions?
Answer: Tiered Daily Management (TDM)
Tiered Daily Management uses layered, brief daily huddles at each organizational level to review metrics, surface problems, and assign same-day corrective actions.
An operation uses cost per unit as its primary performance metric. A manager reduces cost per unit by cutting preventive maintenance. What risk does this create?
Answer: Higher future costs from unplanned equipment failures
Cutting preventive maintenance lowers short-term unit costs but increases the likelihood and cost of unplanned breakdowns, creating a false picture of performance improvement.
When establishing KPIs for a new operational process, what should be done FIRST?
Answer: Define the strategic outcomes the process is designed to achieve
KPIs must be grounded in clearly defined strategic outcomes; without understanding what the process should achieve, any metric selected risks measuring the wrong things.