The Lunatic Fringe operates a chain of up-scale hair salons. Each salon manager receives a bonus of 2,500 if he or she meets or exceeds the target set for four measures in their balanced scorecard. If they meet three targets, they get a 7,500 bonus. If they meet one target, they receive a 2,500 bonus. The following table defines the four targets:

How much bonus will Lucy Chan, the West End manager of the Lunatic Fringe, receive? Discuss the potential positive and negative effects on the business of the West End salon and of Lunatic Fringe by tying Lucys bonus to these performance measures.

Lunatic Fringe Balanced Scorecard Performance Measure Objectives Target Financial Perspective: Increase shareholder wealth Return on assets 20% Customer Perspective: Customer satisfaction % satisfied through survey 95% Internal Business Process Perspective: On-timic service % customers not waiting for appointment 90% Learning and Growth Perspective: Reduce employee turnover % annual turnover 20% The West End salon of the Lunatic Fringe had the following operating statistics for the fiscal year: Net income 139,500 Total assets 634,000 Number of customer surveys 672 646 Number of customer surveys 'satisfied Number of customers 915 Number of customers served on time 833 5 Employee turnover Number of employees 15