3.7.3 Non-financial Perfomance Data Flashcards
What is Capacity utilisation?
Measures the extent to which a business uses the resources available to it
What is absenteeism?
Occurs when an employee is not present at his or hers place of work
What are unit labor costs?
Measures the labor costs per unit of output produced
What is laybour turnover?
Is the percentage of a business employees who leave the business over some period of time (normally a year)
What is laybour or employee retention
Is the extent to which a business holds onto its employees
What are the limitations of financial data
-Tend to look backwards at historical financial performance
-Focus on measures that are possibly most important to shareholders than business management
-Not the best way of understanding how a business is performing in terms of key competitive performance
How can you judge a businesses performance without financial information
Efficiency (unit costs)
Laybour productivity
Capacity utilisation
Break even output
Quality(reject)
Quality (lead time)
Labour turnover
Unit laybour costs
Absenteeism rate
Revenue per employee
Staff retention rate
Job satisfaction
Market share
Sales per employee
Sales growth
Customer retention rate
Brand reputation and awareness
Environmental performance
Compliance regulation
Health and safety
Social media reach
Short termism
Is where a business prioritises short-term rather than long term performance
Core compliancies
The unique ability or abilities of a business to enable it to achieve a competitive advantage
What performance measures does short-termism emphasise
Share price
Revenue growth
Gross and operating profit
Unit costs and productivity
Return on capital employeed
What long term measures does short term ism not emphasise
Market share
Quality
Innovation
Brand reputation
Employee skills and experience
Social responsibility and sustainability
Why might businesses be concerned with short-term performance
Stock market
Investor focus on latest financial performance
Reliance on bonuses based on short-term performance
Frequent changes in leadership strategy
Possible indicators of short-termism
Bonuses based on short term objectives
Low investment in R&D
High dividend payments rather then reinvesting profits
Overuse of takeovers rather then internal growth
Elkington’s triple bottom line (profit, people, planet)
A way of assessing business performance based on three important areas: profit people and planet
Sustainable production
Occurs when the supply of a product does not impose costs on future generations, for example depleting non-renewable resources
Social responsibility
Is managing a business so as to take into account the Interest of society in general and especially these groups and individuals with a direct interest in the the business
Social responsibility
Is managing a business so as to take into account the Interest of society in general and especially these groups and individuals with a direct interest in the the business
Fair trade
Is a social movement that exists to promote improved trading terms and living conditions for products of products in less- developed countries
Fair trade
Is a social movement that exists to promote improved trading terms and living conditions for products of products in less- developed countries
The traditional “bottom line”
Business assumed to be profit maximisers
Traditional measure of business success
Closely linked with business value (eg share price)
Often the basis for financial incentives (eg bonuses)
The traditional “bottom line”
Business assumed to be profit maximisers
Traditional measure of business success
Closely linked with business value (eg share price)
Often the basis for financial incentives (eg bonuses)
The “triple bottom line” suggests there is more to business success than profit
It aims to measure the financial, social and environmental performance of a business over a period of time
Triple bottom line- profit
Familiar to managers
Identified from income statement
Audited= reliable figure
People - Triple bottom line
Measures extent to which businesses is socially responsible
Hard to calculate and report reliability and consistency
