Asked by Alyssa Squissato on Jul 28, 2024
Verified
One of the signs that a firm's performance measurement system is inadequate is when performance measures show improvement but this is not translated into profit. In which of the following circumstances may this occur?
i. Resources freed up through improvements may not have been utilised to improve profitability.
ii. Factors being measured are not critical success factors.
iii. Too many similar measures are used.
iv. There is a time lag between improved performance and improved profitability.
A) i, ii and iii
B) ii, iii and iv
C) i, ii and iv
D) i, iii and iv
Critical Success Factors
Essential elements or conditions that must be met for a project, venture, or business to achieve its objectives.
Performance Measurement
The process of evaluating and assessing an individual's or organization's work or performance against predefined objectives or standards.
Time Lag
The delay between a cause or action and its effect or outcome.
- Determine non-financial metrics that may not convert directly into financial results.
- Gain insight into the procedure and value of benchmarking in facilitating improvements within an organization.
Verified Answer
HB
Hallie BrownAug 03, 2024
Final Answer :
C
Explanation :
Inadequate translation of improved performance into profit may occur when resources freed up through improvements are not utilised to improve profitability (i), the factors being measured are not the critical success factors (ii), and there is a time lag between improved performance and improved profitability (iv). Measure proliferation (iii) can lead to confusion and difficulties in tracking progress, but that alone does not necessarily lead to inadequate translation of improved performance into profit.
Learning Objectives
- Determine non-financial metrics that may not convert directly into financial results.
- Gain insight into the procedure and value of benchmarking in facilitating improvements within an organization.
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