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ACCA Strategic Professional · Advanced Performance Management · Performance and reward

Halden Retail's board has set a strategy of premium customer service. Its performance management system currently rewards store managers solely on quarterly profit, and managers have cut staff training to hit targets. Which action best aligns the performance management system with the strategy?

Adding customer satisfaction and staff capability targets alongside profit, cascaded to store level, best aligns the system with a premium service strategy. It counters the short-term profit focus that led to training cuts while retaining financial accountability.

  1. AAdd targets for customer satisfaction and staff capability alongside profit, cascaded to store levelCorrect
  2. BIncrease the profit target so managers focus harder on results
  3. CReplace all financial measures with non-financial measures
  4. DMove to annual rather than quarterly profit reporting only

Explanation

A system must translate strategy into measures at operating level. Profit alone encourages short-termism, so balancing it with customer and capability measures links behaviour to the premium service strategy. Raising the profit target worsens the problem, and dropping financial measures ignores the need for financial sustainability.

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