ACCA Strategic Professional · Advanced Performance Management · Performance hierarchy
Calder Pharma has a CSF of 'rapid development of new products'. The board is debating KPIs. Which of the following sets is best designed to avoid KPI weaknesses while providing balanced, actionable information on this CSF?
The best set combines time to launch, first-release quality and R&D cost per launched product, each with a target and owner. This covers speed, quality and cost together, so managers cannot improve one dimension at the expense of others, and the measures are controllable and linked to the CSF.
- AAverage time from concept approval to launch, percentage of launches meeting quality standards at first release, and R&D cost per launched product, each with a defined target and ownerCorrect
- BTotal R&D spend only, reported annually to the board
- CNumber of patents filed, with a bonus paid to scientists for each filing
- DShare price movement, as the market reflects the quality of development
Explanation
Good KPIs are linked to the CSF, balanced, controllable by the owner and have targets. The first set covers speed, quality and cost, discouraging trade-offs such as rushing to launch with poor quality. Total spend is an input, patent-linked bonuses encourage quantity over value, and share price is not controllable or specific.
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