ACCA Strategic Professional · Advanced Performance Management · Non-financial performance measurement
Karst Logistics is implementing a balanced scorecard. The finance director suggests that, for the internal process perspective, the company should choose measures by first identifying the strategic objectives and critical success factors, then deriving KPIs. Which statement best reflects why this sequence is preferable to selecting measures that are easy to collect?
Starting from strategic objectives and critical success factors ensures the measures are aligned to strategy rather than chosen for convenience. Convenient data may be irrelevant and steer managers toward the wrong behaviour, whereas strategy-derived KPIs focus attention on what actually drives success.
- AEasily collected data is always inaccurate
- BIt ensures measures align with strategy rather than measuring what is convenient, which may drive the wrong behaviourCorrect
- CIt removes the need for targets
- DIt guarantees that financial results will improve
Explanation
Deriving KPIs from objectives and critical success factors ties measurement to strategy. Convenient measures may be irrelevant and encourage effort in the wrong areas. Easy data is not necessarily inaccurate, targets are still needed, and no guarantee of financial results exists.
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