Required: For each of the following situations, describe actions managers might take to show improvement in the performance measure but which do not actually lead to improvement in the organization's overall performance. 1. Concerned with the slow rate at which new products are brought to market, top management of a consumer electronics company introduces a new performance measure-speed-to-market. The research and development department is given responsibility for this performance measure, which measures the average amount of time a product is in development before it is released to the market for sale. 2. The CEO of an airline company is dissatisfied with the amount of time her ground crews are taking to unload luggage from airplanes. To solve the problem, she decides to measure the average elapsed time from when an airplane parks at the Page 539 gate to when all pieces of luggage are unloaded from the airplane. For each month that an airport's ground crew can lower its "average elapsed time" relative to the prior month, the CEO pays a lump-sum bonus to be split equally among members of the crew. 3. 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 and the customer agree to a delivery date. If the order is not completed by that date, it is counted as a late shipment. 4. Concerned with the productivity of employees, the board of directors of a large multinational corporation has dictated that the manager of each subsidiary will be held responsible for increasing the revenue per employee of his or her subsidiary. Required: For each of the following situations, describe actions managers might take to show improvement in the performance measure but which do not actually lead to improvement in the organization's overall performance. 1. Concerned with the slow rate at which new products are brought to market, top management of a consumer electronics company introduces a new performance measure-speed-to-market. The research and development department is given responsibility for this performance measure, which measures the average amount of time a product is in development before it is released to the market for sale. 2. The CEO of an airline company is dissatisfied with the amount of time her ground crews are taking to unload luggage from airplanes. To solve the problem, she decides to measure the average elapsed time from when an airplane parks at the Page 539 gate to when all pieces of luggage are unloaded from the airplane. For each month that an airport's ground crew can lower its "average elapsed time" relative to the prior month, the CEO pays a lump-sum bonus to be split equally among members of the crew. 3. 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 and the customer agree to a delivery date. If the order is not completed by that date, it is counted as a late shipment. 4. Concerned with the productivity of employees, the board of directors of a large multinational corporation has dictated that the manager of each subsidiary will be held responsible for increasing the revenue per employee of his or her subsidiary
