Performance Measurement and Non-Financial Indicators

The measurement and evaluation of performance require answering 4 basic questions :-

• What has happened ?
• Why has it happened ?
• Is it going to continue ?
• What are we going to do about it ?

These questions are taken from a very intersting article well worth browsing which explains that financial indicators (such as KPIs - key performance indicators) are not indicative of effective business management or business progress.

Financial indicators can 'encourages management to take a number of actions which focus on the short term at the expense of investing for the long term'

Research in support of this approach has come up with new dictums for the workplace : "the less you understand the business, the more you rely on accounting numbers" and "the nearer you get to operations, the more non-financial performance indicators you realise could be valuable aids to better management

And the piece continues…

So what do non-financial indicators relate to ? They relate to the following functions :-

• manufacturing and production
• sales and marketing
• people
• research and development
• the environment

You can browse more of the article at www.fpm.com/journal/mattison.htm

By NathanShaw, for Organized Living World.