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Exercise 11-4 (continued)
3. Management will be able to tell if a hypothesis is false if an
improvement in a performance measure at the bottom of an arrow does
Exercise 11-7 (continued)
2. The hypotheses underlying the balanced scorecard are indicated by the
arrows in the diagram. Reading from the bottom of the balanced
scorecard, the hypotheses are:
° If the amount of compensation paid above the industry average
increases, then the percentage of job offers accepted and the level of
billable hours to total hours should increase while the average
number of errors per tax return and the average time needed to
prepare a return should decrease.
° If employee morale increases, then the ratio of billable hours to total
hours should increase while the average number of errors per tax
per employee should increase.
° If the average number of errors per tax return decreases, then the
customer satisfaction with effectiveness should increase.
° If the average time needed to prepare a return decreases, then the
customer satisfaction with efficiency should increase.
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