Module 11 Performance Measurement and sustainability

Question 1

What is a NFPI? (Also known as Non-financial metrics or KPIs)

Answer 1

They are measures used to evaluate and assess aspects of an organisations performance that are not directly tied to monetary figures.

Question 2

Who uses Non-financial indicators?

Answer 2

Often used only by shareholders to monitor and evaluate operational efficiency and effectiveness in achieving strategic objectives.

Question 3

Which one is a NFPI?

1) Customer satisfaction survey for a furniture supplier

2) Return on equity for an investment management business

Answer 3

Customer satisfaction survey for a furniture supplier

Question 4

What does SMART stand for?

Answer 4

S- Specific
M- Measurable
A- Achievable
R- Relevant
T- Time based

Question 5

What is benchmarking?

Answer 5

Business improvement technique that involves comparing an organisations performance to :

• Similar businesses in same market
• Similar international businesses
• other internal group companies
• cross sector
• award winners in same sectors
• and more

Question 6

What is strategic benchmarking?

Answer 6

Are performance measures that relate to the specific industry in which an organisation operates

Question 7

What is Functional benchmarking?

Answer 7

Are performance measures of support functions. These can therefore be compared with levels achieved by companies not necessarily in the same industry

Question 8

What are some examples of functional benchmarking?

Answer 8

• The cost of processing sales invoices
• The cost of processing payroll payments
• Warranty costs as a percentage of sales
• On-time shipments to customers

Question 9

What is customer retention rate?

Answer 9

How many customers return to a company to purchase goods or services

Question 10

What does churn rate mean?

Answer 10

How many customers stop buying a business’s goods or services after an initial purchase

Question 11

What is take up rate?

Answer 11

How many potential customers do something after receiving a call to action, such as clicking a ‘Contact now’ button

Question 12

What are some disadvantages of NFPIs?

Answer 12

• Can be very backward looking
• Can be interpreted in many different ways
• Can be a costly process

Question 13

What are some advantages of Quantitative measures?

Answer 13

• Easily standardised
• Enables comparisons

Question 14

What are some disadvantages of Quantitative measures?

Answer 14

• Lack of context (just numbers)
• Limited insight into customer preferences (fail to provided reasons)

Question 15

What are some advantages of Qualitative measures?

Answer 15

-Provides contextual understanding
- Captures subjective insights
- Allows for a rich exploration of complex issues

Question 16

What are some disadvantages of Qualitative measures?

Answer 16

• Subjectivity
• Challenges in analysis
• Limited comparisons (hard to standardise and compare)

Question 17

What is an absolute measure?

Answer 17

Absolute measures represent the total quantity or value of a non-financial KPI without consideration for the size or scale of the organisation

Question 18

What is an intensity measure?

Answer 18

Express non financial KPIs relative to a specific unit of output, such as revenue, production volume or number of employees

Question 19

What is TCFD?

Answer 19

Task Force on Climate Related Financial Disclosures

Question 20

The TCFD recommends disclosures in four key areas:

Answer 20

• Governance
• Strategy
• Risk Management
• Metrics and Targets

Question 21

What are scope 1, 2 and 3 emissions?

Answer 21

1) Direct emissions from owned or controlled sources
2) Indirect emissions from the generation of purchased energy consumed by the reporting company
3) All other indirect emissions that occur in a company’s value chain

Question 22

What is Green hushing?

Answer 22

When an organisation choose to under report or hide their green or ESG in fear of being accused of Greenwashing

Question 23

What is Green wishing?

Answer 23

When a company truly believes in ESG but fails to achieve the communicated and intended impacts and results

Question 24

What is Green lighting?

Answer 24

When a company spotlights a particular green feature. This aims to draw attention away from environmental damaging activities happening elsewhere

Question 25

What is Green labelling?

Answer 25

When marketing calls something green or sustainable, but closer examination reveals this to be misleading

Question 26

What is a Value Chain?

Answer 26

Focusses on adding value at each stage of the business process, optimising activities that contribute to overall customer value, including the supply chain

Question 27

What does the term upstream mean in supply chain management?

Answer 27

Includes activities related to raw materials and suppliers.

Question 28

What does the term downstream mean in supply chain management?

Answer 28

Refers to activities post-manufacturing, such as distribution to the final customer