Balanced Scorecards typically include multiple measures in a variety of areas. One of the challenges in developing an effective Balanced Scorecard is to come up with measures that create the proper incentives. Unfortunately, actions that can be taken to improve some measures may actually create unintended behaviors that harm the organization.

For each of the following situations, describe two actions (or inactions) that employees might take that would improve the metric on which they are measured yet would not lead to the intended improvement in the organization's performance.

1.)A manufacturing company has been plagued by the chronic failure to ship orders to customers by the promised date. To solve this problem, the production manager has been given the responsibility of increasing the percentage of orders shipped on time. When a customer calls in an order, the production manager provides the customer with a promised delivery date. If the order is completed by that date, it is counted as shipped on time. Otherwise, it is a late shipment.

2.)Concerned with productivity, the board of directors of a large multinational corporation has dictated that the executives of the company will be held responsible for increasing the EBITDA (earnings before interest expense, tax expense, depreciation expense, and amortization expense) per share of the organization.