Page 351 - PM Integrated Workbook 2018-19

Performance measurement in not-for-profit organisation

Example 2

Def Co provides accounting services to government departments. On
average, each staff member works six chargeable hours per day, with the rest
of their working day being spent on non-chargeable admin work. One of the
company’s main objectives is to produce a high level of quality and customer
satisfaction.

Def co has set its targets for the next year as follows:

(1) Cutting departmental expenditure by 5%

(2) Increasing the number of chargeable hours handled by advisers to 6.2
per day

(3) Obtaining a score of 4.7 or above on customer satisfaction surveys.

Which of the following options allocates the above targets to the correct
value for money performance category?

Economy Efficiency Effectiveness

(1) (3) (2)
(2) (1) (3)

(3) (2) (1)

x (1) (2) (3)
Target 1 is a financial target and so assesses economy factors.

Target 2 is measuring the rate of work handled by staff, which is an efficiency
measure.

Target 3 is assessing output, so is a measure of effectiveness.

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