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CMA Final · Strategic Performance Management and Business Valuation · Introduction to Performance Management

In the performance management cycle followed by a manufacturing firm, which of the following activities logically comes first?

Translating strategy into measurable objectives and targets comes first. Measurement, review of variances, corrective action and rewards all depend on targets that flow from strategy, so they come later in the cycle. Without defined objectives there is nothing against which actual performance can be assessed.

  1. AReviewing actual results against targets and recording variances
  2. BTranslating the corporate strategy into measurable objectives and targetsCorrect
  3. CPaying incentives based on achievement of targets
  4. DTaking corrective action on adverse variances

Explanation

Performance management is a continuous cycle that starts with strategy and objectives. Targets and measures can be set only after the objectives are defined. Review, corrective action and rewards follow after results are measured, so option B is first.

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