Alternative Measures of performance Flashcards
What is balance scorecard?
The balanced scorecard “comprises an integrated framework of performance measurements that aim to clarify, communicate and manage strategy implementation”
Four different aspects of performance:
Customer perspective
Internal business process perspective
Learning and growth perspective
Financial perspective
What is the customers perspective of balance score card?
Key question: what do customers want from us?
Customer profitability
Customer retention
Customer satisfaction
Market share
% of sales from new products
Number of customer complaints
What is the internal business process perspective of balance score card?
Key question : What processes must we excel at to achieve our objectives?
% of sales from new products
Manufacturing process capabilities
Time to develop next generation of products
Cycle time
Unit cost
Efficiency
What is the learning and growth perspective of balance score card?
Key question: How can we learn and improve and create value?
Employee satisfaction
Employee retention
Employee productivity
Time to market
What is the finance perspective of balance score card?
Key question: How do we create value for our shareholders?
Cash flow
Gearing
Sales growth
Operating income
Increase in market share
ROI
What is benchmarking?
Used for continuous improvement
Process of measuring a firm’s products, services and activities against other best-performing organisations or divisions
Reasons for undertaking benchmarking:
To receive an alarm call
Learning from others in order to improve performance
Gaining a competitive edge
Improving services (public sector)
What is competitive benchmarking?
Competitive benchmarking – look for best practice in successful competitor
Internal benchmarking – look for best practice in business unit in organisation that performs similar activities
What is functional benchmarking?
Functional benchmarking – comparison with similar function in non direct competitive firms
What is strategic benchmarking?
Strategic benchmarking – form of competitive benchmarking aimed at reaching decisions for strategic action and organisation change
What are NFPIs?
In order to achieve the longer-term objectives of a company, management should give attention to a range of NFPI issues as well as to profitability
“Measures of performance based on non-financial information that may originate in, and be used by, operating departments to monitor and control their activities without any accounting input”
What are some examples of NFPIs?
Competitiveness
Activity level
Productivity
Quality of service
Customer satisfaction
Quality of staff experience
innovation
What are financial indicators?
Important for responsibility accounting
Controllable and uncontrollable costs
Fixed and flexible budgets
Variance analysis
What is reporting like in a not for profit organisation?
Issue with assessing performance:
the problem of identifying and measuring objective
the problem of identifying and measuring outputs
Objectives:
Usually to provide the best possible service within a limited resources budget
Output:
Often not valued in monetary terms
Not driven by profit motive – economy, efficiency, effectiveness
