Several years ago, United Parcel Service (UPS) believed that the Internet was going to change the parcel delivery market and would require UPS to become a more nimble and customer focused organization. As a result, UPS replaced its old measurement system, which was 90% oriented toward financial performance, with a balanced scorecard. The scorecard emphasized four “point of arrival” measures, which were:
1. Customer satisfaction index—a measure of customer satisfaction.
2. Employee relations index—a measure of employee sentiment and morale.
3. Competitive position—delivery performance relative to competition.
4. Time in transit—the time from order entry to delivery.
a. Why did UPS introduce a balanced scorecard and nonfinancial measures in its new performance measurement system?
b. Why do you think UPS included a factor measuring employee sentiment?