Page 504 - SBR Integrated Workbook STUDENT S18-J19

Chapter 25

Example 5

Non-financial performance measures

There are many ways of interpreting the data, and there is no right or wrong
answer.

However, one interpretation would be that Bibby is requiring its staff to teach
more courses – as evidenced by the large increase in staff utilisation. The
increased workload may lead to dis-satisfied and demotivated employees,
who deliver poorer quality courses. This may have resulted in lower customer
satisfaction during the current period.

The increase in staff utilisation may also explain the higher rate of staff
turnover. Or it might be that a lack of staff means that the remaining
employees are required to teach more courses. Either way Bibby will need to
spend extra money on recruitment and training, thus reducing its margins in
the future.

If experienced staff members are leaving Bibby and joining competitors then
this may lead to a loss of competitive advantage.

Bibby may struggle to recruit new staff in time for scheduled courses,
potentially leading to disruption and cancellations. Moreover, newer members
of staff may not deliver courses to the same standard as experienced staff
members. This may cause customer satisfaction to drop.

Dissatisfied customers are unlikely to purchase more CPD courses from
Bibby. Moreover, poor customer satisfaction may lead to a loss of reputation
and damage the Bibby brand. If so, Bibby may experience a loss of revenue in
the future.

As can be seen, non-financial performance measures provide a wealth of
information for assessing an entity’s future prospects.

498