ACCA Strategic Professional · Advanced Performance Management · Non-financial performance measurement
Zentra Retail's board uses the Performance Pyramid (SMART system) developed by Lynch and Cross. The managing director wants to identify the measures that managers in each operating department should use to monitor daily activity such as waiting time and waste. Which level of the pyramid contains these measures?
Daily operational measures such as waiting time and waste belong at the bottom level of the Performance Pyramid, departments and work centres, where quality, delivery, cycle time and waste are monitored. Higher levels deal with system-wide objectives such as customer satisfaction, flexibility and productivity.
- ACorporate vision at the top of the pyramid
- BBusiness units, with market and financial measures
- CBusiness operating systems, with customer satisfaction, flexibility and productivity
- DDepartments and work centres, with quality, delivery, cycle time and wasteCorrect
Explanation
In the Performance Pyramid, the bottom level covers departments and work centres, where operational measures of quality, delivery, cycle time and waste are used. Business operating systems sit above this and focus on customer satisfaction, flexibility and productivity. Choosing that level confuses the system-wide objectives with the daily operational measures.
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