PROBLEM 11-22 Balanced Scorecards and Incentives ILOSI mith's Family Fashions implemented a balanced scorecard performance measurement system l years ago. Smith's is a locally owned clothing retailer with fashions for men, women, teens. and children. At the beginning of the year. John Smith took over the management of the Women's Wear department from his mother clothing appealing to fashionable local women. Since taking over the department. John has changed the fashion lines he carries to be more appealing to this new target market while still offering well-priced. high-quality clothing that appeals to the store's more traditional customers. en she retired. John recognized there was a need for trendy The management of Smith's Family Fashions is overseen by a board of directors, including several members of the Smith family. John and other department heads have agreed to be evaluated by the board on the basis of performance relative to targets set across balanced scorecard categories. John's targets and actual performance since taking over as department head are provided below. The board decides on year-end bonuses based on each department head's performance relative to target: Target Actual Return on assets employed by department Proportion of repeat customers. Sales generated by new product lines as a 14% 60% 15% 57% percentage of total departmental sales.. Average discount on goods sold 58% 18% 10% Required: Take on the role of a member of the board of directors preparing for a board meeting at which decisions will be made about the payment of annual bonuses to department heads. Discuss the performance of the Women's Wear department as compared to actual based on the metric provided. Where has performance been better (worse) than actual? What do the actual results. taken together, say about the likely success of John's new strategy