ACCA Strategic Professional · Advanced Performance Management · Performance hierarchy

A not-for-profit housing charity, Brightway, has the mission 'to provide safe, affordable homes for low-income households'. Its trustees want to set performance objectives. Which approach is most appropriate given that profit is not its primary aim?

Brightway should set a mix of financial and non-financial objectives, such as homes let, tenant satisfaction and cost per home, within its funding limits. This links measurement to its social mission. A single ROCE target ignores the purpose, and having no objectives provides nothing to control against.

ASet a mix of financial and non-financial objectives, such as number of homes let, tenant satisfaction and cost per home, within funding constraintsCorrect
BUse return on capital employed as the single objective
CAvoid objectives because a mission is sufficient guidance
DSet objectives only for the finance department

Explanation

Not-for-profit bodies pursue service-related objectives while staying within financial constraints, so a balanced mix of outputs, quality and cost measures fits the mission. A single ROCE target ignores the social purpose. Having no objectives gives no basis for control, and limiting objectives to finance ignores the organisation as a whole.

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