Page 145 - BA2 Integrated Workbook - Student 2017

Performance measurement

3.2 Features of non-financial measures

 they offer a wider view of performance than using financial measures alone

 they are forward looking and can often highlight potential problem areas

 they can be easy to understand as they measure the aspects of the business
area that the manager is interested in

 they are not distorted by inflation and are therefore directly comparable year on
year

 they focus management’s attention on potential problem areas.

However, they are not without their problems:

 it can be time-consuming and costly to set up a system to record a wide range
of performance indicators

 it can be a complex system that managers may find difficult to understand

 there is no clear set of non-financial performance indicators that the
organisation must use

 it can be difficult to measure some aspects such as customer satisfaction

 the scope for comparison with other organisations is limited as few businesses
may use precisely the same non-financial performance indicators as the
organisation under review

 it can lead to indicator overload.

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