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

Which of the following is a characteristic of a well-designed performance management system, as opposed to merely a performance measurement system?

A well-designed performance management system uses measured results to drive decisions, learning, corrective action and strategic alignment. Measurement alone only records outcomes. Effective management goes beyond reporting by feeding results back into planning and behaviour across the organisation.

  1. AIt records historical results and stops at reporting
  2. BIt uses the measured results to drive decisions, learning, corrective action and alignment with strategyCorrect
  3. CIt relies exclusively on financial ratios
  4. DIt is designed and run by the finance department alone without employee involvement

Explanation

Measurement only quantifies results, whereas management uses those results to inform action, learning and strategic alignment. Stopping at reporting, relying only on financial ratios or excluding employees are weaknesses, not features of a good system.

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