Being exposed to performance management and measures in Class 18 triggered a memory of an experience I had working in retail. The store that I worked at had a heat sensor installed at the entrance of the store, allowing the company to keep track of its performance. Everyday, it presents the company with data of the number of customers that walked into the store, and hence the average sales per customer is easily able to be calculated. The company is also able to measure the percentage of customers who walked in and made a purchase. By comparing last week’s or month’s numbers, the company is able to determine whether its performance has enhanced or worsened. Likewise, Hitachi was able recognize that there was an increase in average sales per customer by 15% with the use of a similar device. However, the issue with the heat sensor is that even babies in strollers and young children are classified as adults and considered as potential customers.

One might ask, why do companies use a performance management system, like a balanced scorecard? To me, the obvious main benefit is that it allows managers and management accountants to simultaneously view the several aspects of the company (ie, financial, customer).

Photo Credits:

The Balanced Scorecard. N.d. Photograph. The Agile Executive. Web. 7 Nov. 2012. <http://theagileexecutive.com/2010/01/28/use-the-agile-triangle-instead-of-the-balanced-scorecard/>.