Internet Exercises

www: IE10-33 Interpreting the Scores on the Balanced Scorecard A balanced scorecard involves many different measures of performance ranging from the company's net income to the amount of time a customer must wait in line. How does a manager looking at a balanced scorecard know whether a particular score is good or bad? If a customer waits on average 30 seconds, is that good or bad? Is a net income of $10 million good or bad? CorVu Corporation is one of a number of companies that have developed balanced scorecard software. The company discusses the problem of interpreting performance measures on its web site www.corvu.com. Another software developer, Ergometrics, shows how balanced scorecard data can be visually displayed in the form of gauges on its web site www.ergometrics.com.

1.      Explain how CorVu Corporation computes its normalized scores.

2.      Indicate how each of the Key Performance Indicators (KPIs) in CorVu Corporation's example could be displayed as gauges.

3.      Suggest alternative methods for normalizing scores that might be useful to managers. Your alternatives should allow managers to tell at a glance whether performance is good or bad and improving or deteriorating.