Module 11 Performance Measurement and sustainability Flashcards
What is a NFPI? (Also known as Non-financial metrics or KPIs)
They are measures used to evaluate and assess aspects of an organisations performance that are not directly tied to monetary figures.
Who uses Non-financial indicators?
Often used only by shareholders to monitor and evaluate operational efficiency and effectiveness in achieving strategic objectives.
Which one is a NFPI?
1) Customer satisfaction survey for a furniture supplier
2) Return on equity for an investment management business
Customer satisfaction survey for a furniture supplier
What does SMART stand for?
S- Specific
M- Measurable
A- Achievable
R- Relevant
T- Time based
What is benchmarking?
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
What is strategic benchmarking?
Are performance measures that relate to the specific industry in which an organisation operates
What is Functional benchmarking?
Are performance measures of support functions. These can therefore be compared with levels achieved by companies not necessarily in the same industry
What are some examples of functional benchmarking?
- The cost of processing sales invoices
- The cost of processing payroll payments
- Warranty costs as a percentage of sales
- On-time shipments to customers
What is customer retention rate?
How many customers return to a company to purchase goods or services
What does churn rate mean?
How many customers stop buying a business’s goods or services after an initial purchase
What is take up rate?
How many potential customers do something after receiving a call to action, such as clicking a ‘Contact now’ button
What are some disadvantages of NFPIs?
- Can be very backward looking
- Can be interpreted in many different ways
- Can be a costly process
What are some advantages of Quantitative measures?
- Easily standardised
- Enables comparisons
What are some disadvantages of Quantitative measures?
- Lack of context (just numbers)
- Limited insight into customer preferences (fail to provided reasons)
What are some advantages of Qualitative measures?
-Provides contextual understanding
- Captures subjective insights
- Allows for a rich exploration of complex issues
What are some disadvantages of Qualitative measures?
- Subjectivity
- Challenges in analysis
- Limited comparisons (hard to standardise and compare)
What is an absolute measure?
Absolute measures represent the total quantity or value of a non-financial KPI without consideration for the size or scale of the organisation
What is an intensity measure?
Express non financial KPIs relative to a specific unit of output, such as revenue, production volume or number of employees
What is TCFD?
Task Force on Climate Related Financial Disclosures
The TCFD recommends disclosures in four key areas:
- Governance
- Strategy
- Risk Management
- Metrics and Targets
What are scope 1, 2 and 3 emissions?
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
What is Green hushing?
When an organisation choose to under report or hide their green or ESG in fear of being accused of Greenwashing
What is Green wishing?
When a company truly believes in ESG but fails to achieve the communicated and intended impacts and results
What is Green lighting?
When a company spotlights a particular green feature. This aims to draw attention away from environmental damaging activities happening elsewhere
