ACCA Strategic Professional · Advanced Performance Management · Non-financial performance measurement
Tamsin Pharma has the strategic objective of becoming the leading supplier of generic medicines through faster product development. It wants measures on its scorecard that are linked to strategy rather than simply listing existing KPIs. Which approach best achieves this?
Measures should be derived from the strategic objectives in each perspective and linked by cause-and-effect, as shown on a strategy map. Merely regrouping existing KPIs, using easy data, or copying competitors does not translate Tamsin's own strategy into measurable terms.
- ASelect measures for each perspective by deriving them from strategic objectives, and show the cause-and-effect links between them, for example via a strategy mapCorrect
- BKeep all existing KPIs and group them under the four headings
- CChoose only measures that are easy to collect from the existing ledger system
- DUse identical measures to those of the main competitor to allow benchmarking
Explanation
The scorecard is a strategy translation tool, so measures must derive from objectives and be linked through cause-and-effect, as a strategy map shows. Simply regrouping KPIs, choosing easily collected data, or copying a competitor's measures does not tie them to Tamsin's own strategy.
Did you get it right without looking?
One question tells you little. A timed set on Non-financial performance measurement shows your real accuracy, how long you take and where you lose marks.
More Non-financial performance measurement questions
- Orlin Logistics uses the Building Block Model to design a performance system. Its directors have set the standards for each measure, but dri…
- Halden Retail's board compares two frameworks. Its Balanced Scorecard has four perspectives. The board wants a framework that explicitly mea…
- Karvale Bank has set a scorecard objective of cutting loan approval time from 10 days to 3 days. Management believes this will raise custome…
- Quillon Bank's internal business process perspective currently measures cost per transaction only. Management wants a measure that captures …
- Orlando Pharma uses a quality measure: defects found per 1,000 units. Last year production was 2,400,000 units with 7,200 defects found at f…
- Karst Logistics is implementing a balanced scorecard. The finance director suggests that, for the internal process perspective, the company …