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Canby Insurance Company: Explain the costs and benefits of only having profit as a performance measure.

The president of the Canby Insurance Company has just read an article on the balanced scorecard. A company has a balanced scorecard when there is a set of performance measures that reflect the diverse interests and goals of all the stakeholders (shareholders, customers, employees, and society) of the organization. Presently, Canby Insurance Company has only one performance measure for the top executives: profit. The board of directors claims that profit as the sole performance measure is sufficient. If customers are satisfied and employees are productive, then the company will be profitable. Any other performance measure will detract from the basic goal of making a profit.

Required:
Explain the costs and benefits of only having profit as a performance measure.

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Thanks

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Explain the costs and benefits of only having profit as a performance measure.

The benefits of using profit as a performance measure are:
? It is simple
? Easy to understand.
? It is within the control of the top executives so they feel that they are controlling for what they are responsible.
? The market value of the firm is dynamic and changes every moment so controlling it is difficult for the top ...

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