ACCA Strategic Professional · Advanced Performance Management · Performance hierarchy
Ostrava Energy's board wants its performance hierarchy to cascade from mission to operational targets. Its mission is to be the trusted low-carbon supplier in the region. Operational managers in the billing unit are measured only on cost per invoice and have no link to the mission. Which is the most significant weakness in the hierarchy?
The key weakness is lack of goal congruence: operational measures such as cost per invoice do not align with strategic objectives derived from the mission. A performance hierarchy should cascade from mission to operations so that day-to-day targets support the aim of being a trusted supplier.
- AToo many stakeholders have been consulted at the strategic level
- BLack of goal congruence, because operational measures do not align with strategic objectives derived from the missionCorrect
- CThe mission statement is too short to be useful
- DCost per invoice is a financial measure and so should never be used
Explanation
A performance hierarchy should link mission, strategic, tactical and operational objectives so that lower-level measures support higher ones. Billing measured only on cost may drive behaviour (e.g. poor accuracy) that undermines being 'trusted'. Cost measures are acceptable if balanced; the problem is the missing link, not the type of measure.
Did you get it right without looking?
One question tells you little. A timed set on Performance hierarchy shows your real accuracy, how long you take and where you lose marks.
More Performance hierarchy questions
- Eskel Plc links senior managers' bonuses solely to annual EVA. The CEO notes that managers are delaying investment in staff training and bra…
- Zenith Hotels' board states its mission as 'to be the preferred business hotel chain in Asia'. The finance director wants to identify the fe…
- Marlow Health Group's board has published a statement describing the long-term future it hopes to help create: 'A region where every family …
- Dunmore Hospitals has a mission of providing affordable, high-quality care to its community. The board sets a goal of 'improving patient out…
- Orchid Education Trust has a mission 'to widen access to learning'. A trustee proposes that the mission be reviewed annually and amended to …
- Zephyr Hotels Ltd has the mission of becoming the leading boutique hotel brand in its region. Management has identified 'consistently high g…