In this video tutorial, accounting professor Kay Stice explains that you get what you measure in a business. Using the example of an oil drilling completion, he explores what motivates employees and how that is critical in what is achieved.
- Before we go any further with Key Performance Indicators…and the Balance Scorecard, we need to note…an important concept related to performance measurement…and human behavior.…Here's the principle, simply stated.…You get what you measure, that's it.…If you start measuring something…then people will naturally focus on that thing.…Here's a nice illustration.…In the old Soviet Union, oil drilling teams…were placed in competition one with another…to motivate hard work.…The competition rules were set up so that the teams…received recognition and compensation…based on the number of meters drilled.…
Interestingly, the award-winning team recognized…in the newspaper Pravda, drilled meter after meter,…but never struck oil.…It seems that the clever members of this team…realized that the first 100 meters of drilling…do not require as much effort and expense…as the second, third and fourth hundred meters.…The deeper the oil well, the longer it takes…to drill one incremental meter.…So, the winning team drilled an impressive…
In this course, accounting professors Jim and Kay Stice explain what KPIs your business should consider in a balanced scorecard, from financial goals to employee and customer satisfaction. They describe how to craft a clear mission statement that complements your KPIs, and how to tie performance to incentives. Plus, get a look at KPIs in action, as Jim and Kay break down a case study examining a trucking company's balanced scorecard.
- The importance of KPIs and measuring performance
- Financial goals and measure
- Customer needs and satisfaction
- Employee growth
- Creating an effective mission statement
- Linking measurements and rewards
- Examining a KPI case study