ACCA Applied Skills · Performance Management · Performance analysis in private sector, public sector and not-for-profit organisations
A local council measures its refuse service by the number of tonnes collected per employee. A manager argues that this indicator encourages crews to ignore recycling, which takes longer per tonne. Which performance measurement problem does this best illustrate?
Measure fixation. Staff concentrate on improving the measured indicator, tonnes collected per employee, and neglect unmeasured aims such as recycling because it lowers the measured figure. The indicator drives behaviour that conflicts with the council's wider objectives.
- AMeasure fixation, where behaviour is distorted to improve the indicatorCorrect
- BLack of a profit motive making outputs unmeasurable
- CInterdependence between different councils' services
- DDifficulty of identifying the correct cost of inputs
Explanation
Measure fixation occurs when staff concentrate on what is measured at the expense of unmeasured aims, here recycling. The indicator is measurable and its inputs are not the issue. The problem is a behavioural distortion caused by the chosen measure.
Did you get it right without looking?
One question tells you little. A timed set on Performance analysis in private sector, public sector and not-for-profit organisations shows your real accuracy, how long you take and where you lose marks.
More Performance analysis in private sector, public sector and not-for-profit organisations questions
- Fenwick Co reports revenue of $800,000, cost of sales of $520,000 and operating expenses of $160,000. Which of the following is Fenwick's op…
- A charity has a surplus of $50,000 this year, higher than last year. Which of the following is the main reason why profit is an unreliable m…
- Holm Co has current assets of $540,000, of which inventory is $210,000, and current liabilities of $360,000. Which of the following is the q…
- Garrow Co has operating profit of $90,000, revenue of $600,000, and capital employed of $450,000. Which of the following is its asset turnov…
- Which of the following is a common advantage of using non-financial performance indicators alongside financial ones?
- A school's board sets a target of 90% of pupils achieving the pass grade. This year 270 of 300 pupils passed, against 240 of 300 last year. …